Tax planning for high earners
Chris Broome – Chartered Financial Planner
If you’re a high earner, you need to know about these tax-saving strategies to help you make your personal tax situation as efficient as possible.
With the right planning, you could reduce the amount of tax you pay.
Here are 8 tax planning strategies for high income earners:
1. Use a Personal Pension scheme: One of the most effective ways to reduce tax liability for high earners in the UK is by contributing to a pension scheme. Contributions to a pension scheme are eligible for tax relief, which can help to lower the overall tax bill.
2. Make use of your ISA allowances: Another way to reduce tax liability is by making use of ISA allowances. ISAs are tax-free savings accounts, and contributions to them are not subject to income tax or capital gains tax.
3. Consider investing in Enterprise Investment Schemes: High earners can also reduce their tax liability by investing in enterprise investment schemes (EIS). These schemes provide investors with tax relief on their investments, which can help to lower the overall tax bill.
4. Use capital losses: Capital losses can be offset against capital gains, which can help to reduce the overall tax bill. High earners can make use of this by selling investments that have decreased in value to offset gains made on other investments.
5. Use other tax-efficient investments: High earners can also reduce their tax liability by investing in tax-efficient investments such as Venture Capital Trusts (VCTs). These types of investments provide investors with tax relief and can help to lower the overall tax bill.
6. Take advantage of Entrepreneur’s Relief: High earners can also reduce their tax liability by taking advantage of entrepreneur’s relief. This relief allows business owners to pay a lower rate of capital gains tax when they sell their business or shares in their business.
7. Make use of the Married Couple’s Allowance: High earners can also reduce their tax liability by making use of the married couple’s allowance. This allowance allows married couples to transfer some of their unused personal allowance to their partner, which can help to lower the overall tax bill.
It’s important to note that tax laws are subject to change, and it’s always a good idea to consult a professional tax advisor for guidance on tax planning for high earners in the UK.
Next steps
If you have any questions about any of the above, or wish to discuss tax planning in general with us, please get in touch. Contact us
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate will writing, estate planning, or tax planning.
