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Tax Planning Strategies for High Income Earners

Reduce the impact of additional tax burdens

In this guide:

  • How to reduce the tax burden on your salary? - This guide contains a multitude of key financial planning tips to help you make your personal tax situation as efficient as possible.
  • Maximising available allowances – Careful consideration of the split of assets between spouses can have a significant beneficial impact on a couple’s income tax burden.
  • Pension planning – Pensions continue to offer significant tax benefits that should not be ignored.

Tax Planning Strategies for High Income Earners

Please note that the Financial Conduct Authority (FCA) does not regulate cash flow planning, estate planning, tax or trust advice.

Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. 
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From this guide:

If you are a taxpayer living in England or Wales, you will pay 40% income tax for an income of over £50,270 (assuming a full personal allowance is available).

Scottish taxpayers will continue to be subject to income tax at 5 different rates, ranging from 19% (Starter Rate) to 47% (Top Rate) for any income in excess of £125,140.

Regardless of whether you are an English, Welsh or Scottish taxpayer, if you claim child benefit and have an income of over £50,000, you will feel the impact of taxation even more keenly.

Taxpayers in England and Wales with a total income above £125,140 will pay the additional rate of 45%.

As tax allowances are progressively withdrawn on any income over £100,000, there is also a marginal effective rate of c.60% that applies to any income between £100,000 and £125,140 regardless of where you reside in the UK.

This increased tax burden for high earners is a deliberate policy by the Government, which stated: “As a clear result of the government’s reforms to tax, welfare and public spending across this parliament, the richest households will make the biggest contribution to reducing the deficit, both in cash terms, and as a proportion of their income.”

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Sarah Beall

Financial Adviser - Chartered Financial Planner, FPFS

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A Fellow of the Personal Finance Society, Sarah has worked in financial services since 2011 and works in partnership with her clients to ensure they understand what they are capable of achieving and how they can get there. In particular, she provides clarity around complex strategies to put her clients at ease.

Merve Oral

Financial Adviser - Chartered Financial Planner, FPFS

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Top Rated Adviser 2022

Merve is a Chartered Financial Planner and a Fellow of the Personal Finance Society. She creates bespoke financial plans in partnership with her clients to help them secure their financial future and enjoy their desired lifestyle with peace of mind. 

Daniel Schofield

Partner - DipPFS

Rated 4.7 out of 5

Top Rated Adviser 2022

Daniel provides advice focused on the disciplines of personal and corporate financial planning, investment portfolio management, Inheritance Tax (IHT) planning and mitigation, and legacy and succession planning.