Pensions and tax planning for high earners
Mitigating a growing tax bill
If you are a high-earner and feel you are paying more and more tax, you are not alone. More than one in seven income tax payers are taxed at the higher, additional or top rate and they pay about two thirds of all income tax.
Increasing the tax burden for higher earners has been a deliberate policy of successive governments. For instance, the thresholds for phasing out the personal allowance and the start of the additional rate tax threshold have both been unchanged since they came into force in April 2010.
Although the point at which you start to pay 40% income tax is £46,350 for 2018/19 and increases to £50,000 for 2019/20 (except in Scotland, which has different income tax rates and thresholds), overall it has increased at well below the rate of inflation over the past ten years. You may also be feeling the impact of the tax on child benefit, which applies to those with income over a £50,000 threshold (frozen since January 2013), or you may be subject to the increased marginal rates of tax on dividends, introduced in 2016/17.
The message is clear: if you want to reduce the amount of tax that you pay the solution is in your own hands. Planning could help you to lessen the rising tax burden – and we’re here to help.