Tax Planning Advice

Pension contribution timing is the highest-value single intervention for most clients. Higher-rate (40%) and additional-rate (45%) taxpayers get materially more tax relief on pension contributions than basic-rate taxpayers — and the relief is asymmetric (claim at the marginal rate when contributing, withdraw at typically a lower rate in retirement). Specialist accountants model the optimal contribution amount each year, identify carry-forward unused allowance from the previous three years, and time the contribution to maximise the relief without breaching the annual allowance (£60,000 standard, tapered down to £10,000 for very high earners).

The £100,000 personal allowance taper is one of the most pernicious rules in UK income tax. Between £100k and £125,140, the personal allowance tapers away £1 for every £2 of income above £100k. The effective marginal tax rate in this band can exceed 60% (40% income tax + 20% from the lost personal allowance × 60% × marginal rate). Specialist accountants advise on pension contributions, salary sacrifice, or charitable giving to drop income below £100k and recover the full personal allowance — the saving in this band can be £2,000-£4,000+ for a relatively modest pension top-up.

Dividend timing for limited company directors is a year-end planning exercise. Drawing dividends to top up income to the basic-rate threshold uses the basic-rate dividend tax (10.75% from 6 April 2026); the same dividend in higher-rate territory costs 35.75%. Specialist accountants model the year-end income position and advise on the right dividend draw to keep marginal rate as low as possible. For directors with multiple income sources (PAYE salary, dividends, rental, interest), the modelling is complex and gets done correctly by specialists, sloppily by generalists.

ISA and SIPP allowance planning is straightforward but routinely under-used. ISA: £20,000/year (Stocks & Shares ISA, Cash ISA, Innovative Finance ISA, Lifetime ISA). SIPP: £60,000/year subject to taper for high earners. For a couple, that's £40k/year of ISA allowance + £120k/year of pension allowance — substantial tax-efficient capacity that many clients leave unused. Specialist accountants run an annual allowance review.

Capital Gains Tax planning (the work the retired CGT pillar would have covered) — the £3,000 annual exemption, spouse-side restructuring before disposal, timing across tax years to use multiple annual exemptions, share matching rules (especially Section 104 holdings), Business Asset Disposal Relief (formerly Entrepreneurs' Relief) for qualifying business disposals at 10% rate. Specialist accountants run the CGT planning on every disposal; generalists frequently calculate the gain at the standard rate without exploring reliefs.

Inheritance Tax planning (where it overlaps with self-assessment for the high-net-worth client) — the £325k nil-rate band, the £175k residence nil-rate band, the 7-year rule for lifetime gifts, gift-out-of-normal-expenditure exemption, charitable giving for the 36% reduced IHT rate. The Harrow brand network has a separate dedicated IHT pillar on the property tax sister site; this site's tax planning pillar handles the SA-relevant overlap.

The £100k personal allowance taper trap — taxpayers in the £100k-£125k band frequently aren't aware of the 60%+ effective marginal rate. Specialist accountants model the specific cost (e.g., a £108k earner is paying ~£800 of "extra" tax on the £8k above £100k via lost personal allowance). A pension contribution that drops income below £100k recovers the full personal allowance plus gets higher-rate pension relief on the contribution.

Pension annual allowance taper — for very high earners (adjusted income above £260,000), the £60,000 annual allowance tapers down by £1 for every £2 of adjusted income above the threshold, to a minimum of £10,000. Breaching the tapered allowance triggers a tax charge at the marginal rate. Specialist accountants model the taper carefully; generalists frequently miss the breach.

Pension Lifetime Allowance — abolished from April 2024, but the Lump Sum Allowance (£268,275) still applies as the cap on tax-free lump sum withdrawals. Pre-April 2024 the LTA was £1,073,100. For clients with substantial pension pots near or above the historic LTA, transitional protection applies. Specialist accountants navigate the transition; generalists frequently miss it.

Marriage Allowance — £1,260 personal allowance transferable from a basic-rate-tax spouse to a higher-rate-tax spouse provided neither is in higher-rate-tax. £252/year saving. Routinely missed by generalists.

Dividend Allowance — £500/year of dividends can be received tax-free (down from £1,000 in 2023/24, £2,000 before). Above the allowance, dividends are taxed at the dividend tax rates. Specialist accountants advise on dividend timing within the allowance for clients with material dividend income.

Charitable giving for IHT rate reduction — leaving 10% or more of an estate to charity reduces the IHT rate on the rest of the estate from 40% to 36%. Specialist accountants model this for high-net-worth clients planning their will; the saving can offset much of the charitable bequest itself.