The £100,000 line that hasn't moved since 2009
A London parent who gets a pay rise from £99,000 to £130,000 ends the year poorer. The reason is a number Alistair Darling picked in 2009 that nobody has touched since.
Jordan Walker
On 22 April 2009, Alistair Darling stood up in the House of Commons with a hole in the public finances and a Budget to fill it.
Most of the attention went on his new 50p tax rate for people earning over £150,000. Underneath it sat a smaller measure that barely made the papers. From April 2010, anyone earning over £100,000 would begin losing their tax-free allowance.
It caught 588,000 people in its first year, out of 31 million taxpayers. A rule for the top 2%.
Sixteen years later the rule is exactly where Darling left it. Everything around it has moved.
The cliff
Here is what the line does today to a parent in London with two children in nursery.
On £99,999 a year, they keep their full tax-free allowance, the government tops up their childcare account, and the state funds 30 hours of nursery a week for each child.
On £100,001 a year, the top-up stops, the funded hours stop, and the allowance begins to shrink. All of it, for £2 more pay.
The Institute for Fiscal Studies did the sums. For that London parent, paying for full-time childcare, the family is around £20,000 a year worse off the moment pay crosses £100,000. They do not get back to where they were until pay reaches £144,500. A pay rise from £99,000 to £130,000 leaves them poorer.
The IFS called it one of the most severe distortions you will ever see in a tax and benefit system.
How a line for the top 2% caught two million people
The rule was never changed, so inflation changed it instead.
Since 2010 the cost of living has risen by about 60%. Wages have followed, in pounds if not in what they buy. A salary that put you in the top 2% in 2010 now puts you somewhere in the top 6%. The line stayed at £100,000 while the people climbing past it tripled.
HMRC expects just over two million taxpayers to be above the line in the coming tax year. That is three and a half times the number Darling's rule was written for.
Had the threshold kept pace with prices, it would sit at about £161,000 today. You can check that on our purchasing power of the pound tool: type in £100,000 and the year 2010.
Then the line picked up new jobs. When tax-free childcare and the 30 funded hours launched in 2017, the Treasury needed a cut-off for who qualified and reached for the £100,000 figure, already seven years stale. When the full 30 hours reached babies from nine months in September 2025, the cap stayed put again.
So a number chosen in 2009 to pick out a sliver of high earners now decides whether a family's nursery bill is £20,000 lighter or not.
What people do about it
People respond to the rules they are given, and these rules could not be clearer: whatever you do, stay under £100,000.
The neat way to do that is a pension. Contributions come off the income HMRC counts, so a parent on £120,000 can put £20,000 into their pot, drop below the line, and keep everything. The IFS worked out that its London parent could earn £139,000, pay £40,000 into a pension, and still have more to spend this year than if they had saved nothing.
The blunter ways are to turn down the promotion, decline the bonus, or go to four days a week until the children start school. None of that is irrational. A system built to reward work now pays this group to do less of it, and they are doing exactly what it pays them to do.
The other set of rules written in 2009
Three months before Darling stood up, on 3 January 2009, someone calling themselves Satoshi Nakamoto switched on a different set of money rules. Bitcoin had a fixed supply of 21 million, a new batch issued roughly every ten minutes, and a schedule that cut the batch in half every four years. Every number was published on day one.
Sixteen years on, both sets of rules are still exactly where their authors left them. The difference is what standing still has done to each.
Darling's line was fixed in pounds, and the pound kept shrinking underneath it, so a rule that never changed has quietly become a different rule. The people it was written for are long gone and two million others have been pulled in, and the incentives have turned inside out: the system now pays parents to work less and stuff their pensions. Nobody voted for any of that. The drift did it, and drift always rewards the workaround over the straightforward thing.
Bitcoin's rules were fixed in a unit nobody can dilute, so standing still means standing still. The cap has not moved. The halvings have arrived on schedule, with everyone knowing the date years in advance. A line drawn in bitcoin in 2009 means precisely what it meant then, which is why there is nothing to game and no reason to do anything clever. Holding is the rewarded behaviour. Its price in pounds swings wildly, and it will do nothing about the Treasury's threshold, but it is the one set of 2009 rules whose incentives still point the way they were designed to. If that idea is new to you, our beginner guide starts from the very beginning.
The Treasury has had 16 years of Budgets to move the £100,000 line, the latest on 28 October 2026, and has left it alone every time. The rest of us might as well keep some savings under rules that do not need moving.
FAQ
What is the £100,000 tax trap? Above £100,000 of income you lose £1 of your £12,570 tax-free allowance for every £2 you earn, until it is gone at £125,140. With 40% income tax on top, every £100 you earn in that band costs you £60 in tax.
Do you lose free childcare if you earn over £100,000? Yes, in England. If either parent's income goes over £100,000, the family loses tax-free childcare and the 30 funded hours. Three and four year olds still get the universal 15 hours.
Has the £100,000 threshold ever been raised? No. It was announced in the April 2009 Budget, took effect in April 2010, and has stayed at £100,000 ever since. Adjusted for inflation it would be about £161,000 today.
Jordan Walker is the founder of The Bitcoin Collective and the Bitcoin Business Network. He organised the UK's first Bitcoin-only conference, hosts The Bitcoin Collective podcast, and writes the weekly newsletter read by thousands of UK professionals.
This article is education, not financial advice. Bitcoin is volatile and you should never put in money you cannot afford to lose.
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