Financial Planning for High Income Professionals

Financial Planning for High Income Professionals

You work hard. You earn well. And yet, at the end of every tax year, you wonder where much of it went.

The truth is that earning £100,000 or more in the UK does not just mean paying more tax – it means entering a system designed to take a disproportionately large share of your income. There are complex rules, hidden tax traps and missed allowances, which quietly erode the income you have worked so hard to build.

This guide explains exactly what you face, and what you can do about it.

Key topics covered in this article

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1. Why High Earners Face Unique Financial Planning Challenges

Most people assume that earning more means keeping more. If your income is above £100,000, that assumption is dangerously wrong.

The UK tax system becomes increasingly punishing as your income rises past this threshold. You face the withdrawal of your personal allowance, a reduced pension annual allowance, the loss of child benefit, and the prospect of effective marginal tax rates that bear no resemblance to the headline 40% or 45% figures you might expect.

At the same time, high earners are almost always time-poor. You have built your career through dedication and focus. Financial planning is often the thing that gets pushed to the back of the queue – not because you lack the intelligence to deal with it, but because you simply do not have the time or bandwidth. The result is that thousands of pounds in tax relief and investment growth go unclaimed, year after year.

A high income is a powerful tool. But without a plan, it is also a leaky bucket.

The challenges that make high income financial planning distinctive include:

• The 62% tax trap
  Your effective marginal rate between £100,000 and £125,140 is the highest of any income band
• Tapered annual allowance
  Those earning above £260,000 face a progressively shrinking pension allowance
• Child benefit clawback
  Income above £60,000 begins to withdraw child benefit via the High Income Child Benefit Tax Charge
• Student loan repayments
  If you still carry a student loan, your effective marginal rate in the £100,000–£125,140 band can reach an eye-watering 71%
• Time pressure
  You are busy, you are capable, and financial planning falls behind other priorities
• Haphazard investment decisions
  Without a structured approach, excess income often sits in low-yield cash or is invested without a clear strategy
• Estate planning blind spots
  High earners often accumulate significant assets without a corresponding plan for what happens to them

The good news?

Every one of these challenges is addressable. This guide shows you how.

The bad news?

2. Understanding Your High Income

One of the most important aspects of financial planning for high earners is understanding the precise nature of your income. Not all income is the same, even if the headline amount sounds like it. The way you are paid determines your tax exposure, your pension planning options, your ability to salary sacrifice, and ultimately how much you keep.

The interactions between different income sources are where the most significant risks and opportunities lie. This section maps out the main income types relevant to high income professionals, the tax treatment of each, and the key planning considerations that apply.

Base Salary

Your base salary is the foundation of your remuneration package and is subject to income tax and employee National Insurance contributions (NICs) via PAYE. For 2025/26, the key rates are:

• Income tax at 20% up to £50,270; 40% between £50,270 and £125,140; 45% above £125,140
• Employee NICs at 8% between £12,570 and £50,270; 2% above £50,270

For those earning between £100,000 and £125,140, the effective marginal rate on salary reaches 60% due to the personal allowance withdrawal.

Annual Bonus

Cash bonuses are taxed identically to salary so income tax and NICs apply in full via PAYE in the pay period when the bonus is received. For high earners, a year-end bonus can push total income into the personal allowance taper, or deepen exposure to the 45% additional rate, making the timing and treatment of bonuses a critical planning point.

Key planning actions:

• Consider sacrificing part or all of a bonus into your pension before it is paid – this can reduce the effective tax rate from 60% to as low as zero in some circumstances
• Bonus sacrifice must be arranged before the bonus is declared – once the right to payment has been established, it is too late to sacrifice it
• If you cannot sacrifice the full amount, prioritise the portion that falls within the £100,000–£125,140 taper band, where the effective relief is greatest

Deferred Remuneration and Long-Term Incentive Plans (LTIPs)

LTIPs are used extensively by large companies to retain and incentivise senior executives. They typically vest over three to five years and are linked to stretching performance conditions such as total shareholder return, earnings per share growth, or a combination.

Tax treatment at vesting: The value of LTIP shares at the date of vesting is treated as employment income and subject to income tax and NICs, just like salary. After vesting, if you hold the shares and they appreciate further, any subsequent gain is subject to Capital Gains Tax (CGT) at 24% for higher and additional rate taxpayers, rather than income tax.

Planning considerations:

• Large vesting events can compound your tax position significantly – particularly where the vesting income pushes you into or further through the personal allowance taper
• Pension contributions or carry forward deployed in the same tax year as a major vesting event can materially reduce the tax cost
• Shares received on vesting should be reviewed against your annual capital gains tax position – holding versus selling immediately is a tax timing decision

Restricted Stock Units (RSUs)

RSUs are common in the technology sector and with large multinationals. Unlike LTIPs, they do not typically require performance conditions so shares vest on a time basis, often quarterly over four years. Employers usually withhold tax by selling a portion of the vesting shares on your behalf. This creates a form of variable remuneration.

RSUs are taxed as employment income at the point of vesting, based on the market value of the shares at that date. Income tax and NICs apply immediately. Capital gains tax then applies to any further gain between the vesting value and the eventual sale price.

Planning considerations:

• RSU vesting events can create large, unexpected income spikes – particularly where share prices have risen significantly since grant
• A single vesting tranche can push income through the personal allowance taper, making pension planning in the same tax year essential
• RSUs from US-listed employers introduce cross-border tax complexity – the interaction with US withholding tax and double tax treaty provisions requires specialist advice

Tax-Advantaged Share Schemes

Approved share schemes offer substantially better tax treatment than unapproved LTIPs and RSUs. If your employer offers any of the following, they are worth understanding in detail:

• Company Share Option Plan (CSOP): Options are granted at market value, over shares worth up to £60,000 per individual. No income tax or NICs are payable on the grant or exercise, provided the options are held for at least three years. Gains are subject to capital gains tax on disposal.
• Enterprise Management Incentive (EMI): Available to qualifying smaller companies. No income tax or NICs are payable on grant or exercise if the exercise price equals market value. Gains are typically subject to capital gains tax, often at the 18% Business Asset Disposal Relief rate, on up to £1 million of lifetime gains.
• Save As You Earn (SAYE): An all-employee scheme allowing monthly savings of up to £500, with the option to buy company shares at a discounted price. There is no income tax on the gain at exercise but capital gains tax applies on sale. You pay capital gains tax on the difference between the discounted option price and the sale price.
• Share Incentive Plans (SIPs): An all-employee scheme where shares can be acquired free of income tax and NICs if held for five years. Capital gains tax applies once the shares leave the SIP but gains only accrue from that date onwards.

Employee Benefits

Employer-provided benefits form a significant part of the total remuneration package for many high income professionals, but their tax treatment is often poorly understood. This means that the interaction with the personal allowance taper can be costly.

• Private medical insurance: Treated as a benefit in kind so the premium paid by your employer is taxed as income. T
• Company car and car allowance: Company cars are subject to benefit in kind tax based on the car’s list price and its CO₂ emissions and electric vehicles attract significantly lower rates. A cash car allowance is treated as salary and is subject to full income tax and NICs. For those in the taper band, both options carry a high marginal cost.
• Group life cover (death in service): Typically expressed as a multiple of salary (commonly 4x), paid free of income tax to beneficiaries where routed through a discretionary trust. However, as with personal life assurance, the headline multiple is rarely sufficient for high earners with significant lifestyle commitments and dependents.
• Group income protection: Pays benefits to you in the event of long-term incapacity. Benefits paid under a group scheme are taxable as income in your hands. There is often a cap on the insured income, which is frequently tied to a salary ceiling well below your actual earnings. This leaves a potentially large uninsured gap that a personal policy should address.
• Employer pension contributions: Employer contributions to a registered pension scheme attract no income tax or NICs for either party, making them one of the most tax-efficient elements of any remuneration package. However, they count against your pension annual allowance. If you are subject to the tapered annual allowance, large employer contributions can trigger an annual allowance tax charge that must be modelled in advance.
• Sick pay: Occupational sick pay from your employer is taxed as income.

Self-Employed Income

For self-employed professionals such as consultants, contractors, sole traders and partners, the income picture differs significantly from employment:

• Sole traders and partners pay income tax and Class 4 NICs on profits. The personal allowance taper, 60% trap and tapered annual allowance all apply in the same way as for employees
• Pension contributions must be made personally (via a personal pension) and higher-rate tax relief is claimed via self-assessment – it is not applied automatically
• Self-employed individuals can deduct allowable business expenses, giving more flexibility than employees in managing taxable profits
• IR35 / off-payroll working: Contractors working through their own limited company may be caught by IR35 rules, particularly where they provide services to medium or large clients. Where IR35 applies, income is effectively taxed as employment income, removing the tax advantages of operating via a company

Dividends

For business owners and those operating through a limited company, dividends are a key source of income. Dividend tax rates are lower than the equivalent income tax rates on salary:

• Basic rate: 10.75% from April 2026
• Higher rate: 35.75% from April 2026
• Additional rate: 39.35%
• Tax-free dividend allowance: £500

However, dividends do not count as relevant UK earnings for pension contribution purposes.

Dividends also count as income for the personal allowance taper. A business owner drawing £80,000 salary and £30,000 in dividends has an adjusted net income of £110,000, even though the headline rate on the dividends is only 33.75%.

Commission Income

Commission payments are treated as employment income and taxed through PAYE (for employees) or as trading income (for the self-employed). The variability of commission income creates specific planning challenges:

• Volatile income makes annual allowance and carry forward calculations more complex so you need to model both upside and downside scenarios
• In high years, salary sacrifice and pension contributions become critical to avoid the taper and protect the personal allowance
• In lower years, unused annual allowances can be recaptured via carry forward when income and cash flow allow

Other Income Sources: What You May Have Missed

Beyond the categories above, the following income types and planning opportunities are frequently overlooked by high earners:

• Rental income: Taxed as income and stacked on top of employment income. If combined income exceeds £100,000, rental income contributes to the personal allowance taper. Mortgage interest relief on residential property is restricted to the basic rate (20%) for higher rate taxpayers, a significant concern for those with buy-to-let portfolios.
• Savings interest: Taxable as income. High earners above £125,140 have no personal savings allowance so every pound of bank interest is taxed at 45%. Cash ISAs and investment bonds can provide shelter.
• Redundancy and termination payments: The first £30,000 of a genuine ex-gratia redundancy payment is free of income tax and NICs. Amounts above £30,000 are subject to income tax (but not employee NICs). Post-employment notice pay (PENP) is subject to full income tax and NICs. A large termination payment received in the same year as normal salary can create severe taper issues so pension contributions funded from the tax-free element should be considered.
• Spousal income planning: Where one partner earns significantly more than the other, investment assets held in the lower earner’s name , such as general investment accounts and rental properties, can be structured to use their personal allowance, basic rate band and CGT exemption. Transfers of assets between spouses must be made outright with no conditions, but this is well-established legitimate tax planning.
• State pension: Often ignored by high earners, the state pension is a valuable guaranteed income stream in retirement. Gaps in your National Insurance record should be identified and filled via voluntary Class 3 NIC contributions.

The starting point for any financial planning conversation is a complete map of all your income sources because it is the interaction between them that determines your true tax exposure and your real planning opportunities.

3. The 62% Tax Trap – Personal Allowance Taper: £100,000-£125,140

What happens for income between £100,000 and £125,140?

The UK personal allowance  is £12,570. This is the amount of income you can earn free of income tax. When your income exceeds £100,000, HMRC begins to withdraw this allowance at a rate of £1 for every £2 of income above that threshold.

By the time your income reaches £125,140, your personal allowance has been removed entirely. Effectively, your other income gets taxed sooner.

This means every £2 you earn between £100,000 and £125,140 costs you £1 of tax relief, on top of the 40% income tax you are already paying. This makes the tax cost of income in this band an effective 60%. Add in the 2% National Insurance contribution, and the effective marginal rate on income in this band reaches 62%.

In practical terms: if you earn a bonus or a pay rise that takes your income from £100,000 to £110,000, you will keep only £4,000 of that £10,000 increase. Allowing for National Insurance, you only keep £3,800 of your £10,000 increase.

The 62% tax trap visually

When you visualise your high income tax rates like the above, you can see that the UK tax system is not designed logically.

The pain points

• A pay rise or bonus can feel almost worthless once tax is applied
• Many high earners are unaware of this trap until they receive their self-assessment bill
• Those with student loans face an even higher effective rate – up to 71% when Plan 1 or Plan 2 repayments are factored in
• Child benefit is clawed back on top of this if your income exceeds £60,000

What can be done?

The single most effective solution is to reduce your adjusted net income below the threshold, or at least as close to £100,000 as possible. This is most easily achieved through pension contributions. A pension contribution of £10,000 could effectively cost you just £4,000 after tax relief, and simultaneously restore £5,000 of your personal allowance.

This is not tax avoidance. It is using the rules exactly as Parliament intended.

Other high income tax traps

The £100,000 income threshold is not the only tax trap for high earners. The table below shows the various stages your income can create additional tax triggers for the unwary.

4. Pension Planning — Maximising Contributions to Reclaim Your Personal Allowance

For most high earners, pensions are the single most tax-efficient planning tool available. We find that pensions are frequently under-used, often because the rules feel complex.

Claiming tax relief when you start paying higher rate income tax

Most pension schemes pay contributions from your salary after tax. This is known as the tax relief at source method. This means that you pay into the pension plan and the scheme claims the basic rate income tax relief. If you pay in £100, the pension scheme reclaims £25, making a total gross pension contribution of £125. If you pay income tax at 40% or greater you can reclaim additional tax relief as a tax rebate via your tax return.

Many high income professionals miss this step, especially if you do not use an accountant. You have to request this rebate, and HMRC will not pay you what you are owed unless you ask for this money back!

The standard annual allowance

The pension annual allowance is £60,000 per tax year (for the 2025/26 tax year). This is the maximum total pension input (from both you and your employer) that can benefit from tax relief in any one year.

At the 45% or 60% effective marginal rates that many high earners face, the tax relief available is substantial. A £60,000 contribution could cost as little as £24,000 in net terms for a 60% taxpayer.

The tapered annual allowance for high income professionals

Once your adjusted income exceeds £260,000, you become subject to the tapered annual allowance. For every £2 of income above this threshold, your annual allowance reduces by £1, until it reaches a minimum of £10,000 at income of £360,000 or above. Remember that it is not just your earned income that counts towards your total remuneration for the tapered annual allowance. You have to include other income like your investments or rent from property.

If you are affected by the tapered annual allowance, you must be careful. Exceeding your tapered annual allowance triggers an annual allowance charge, which is taxed as income. This requires careful calculation and, for many, a decision about whether to take employer pension contributions as salary in lieu of pension and invest those funds elsewhere.

Carry forward for high income

If you have not used your full annual allowance in the previous three tax years, you may carry forward the unused amount and add it to the current year’s allowance, even if you are subject to the tapered annual allowance. In the right circumstances, carry forward can allow you to contribute up to £240,000 in a single tax year. This is a powerful way to clear a large income tax liability or accelerate retirement saving.

Carry forward requires careful records and planning. You must have been a member of a registered pension scheme in each of the relevant years, and you must use the current year’s allowance in full before drawing on carry forward. This is a serious and technical challenge, and you should not undertake these calculations without professional support. To be able to calculate your carry forward for you we need a host of specific detail, including:

• All of your income for the current and previous 3 tax years – from every source
• All of your pension contributions during this period, for every scheme

Pension planning for spouses of high income professionals

It is common for a couple to see one high earner, while the other does not work, or has a lower income. We often find that the couple neglects the pension allowances of the lower-earning spouse, which is a mistake since that means that you are not claiming tax relief that is freely available to you.

Key pension planning actions for high earners

• Claim higher-rate tax relief via self-assessment – many high earners do not do this and lose thousands each year
• Review your pension contributions annually before the tax year end – timing matters as you can lose allowances
• Consider whether your employer pension contributions count against your annual allowance
• If you are close to the tapered annual allowance threshold, model the impact of salary sacrifice before increasing contributions
• Do not neglect your spouse’s pension, especially if they are not a high earner

Worked example of a pension contribution – boost your payment by 230%

You earn £125,000. Your adjusted net income is £25,000 above the £100,000 threshold, meaning you have lost £12,500 of your personal allowance and face a 60% marginal rate on that income. A net pension contribution of £24,000 reduces your adjusted net income to £95,000. This has the following effects:

• Your income tax personal allowance is fully restored
• You generate £6,000 as tax relief in your pension scheme
• You get a tax rebate of £11,000
• £30,000 is paid into your pension scheme (£24,000 plus £6,000) tax relief
• The net cost to you is £13,000 (£24,000 less £11,000 tax rebate)
• The boost to your contribution works out at 230.7%

5. Salary Sacrifice Strategies for High Income Professionals

Salary sacrifice is one of the most tax-efficient tools available to employed high income professionals, but is one of the most under-utilised.

What is salary sacrifice?

Salary sacrifice is an arrangement with your employer to reduce your contractual salary in exchange for a non-cash benefit – most commonly, a pension contribution. Salary sacrifice is used in other areas, such as payment towards other benefits such as cars or protection. Because your salary is formally reduced, you pay income tax and National Insurance on a lower amount. Importantly, you get taxed as if you never received the money, so the tax savings are instant. This can be a convenient way to manage your high income if you are an employee.

The result is:

• You save income tax at your marginal rate (40%, 45%, or effectively 60%)
• You save employee National Insurance contributions (2% above £50,270)
• Your employer saves employer National Insurance (up to 15% on the amount sacrificed)
• Many employers pass on some or all of their National Insurance saving to boost your pension further

Why it matters at £100,000+

For those in the 60% tax trap (income between £100,000 and £125,140), salary sacrifice is particularly powerful. Every £1 contributed by salary sacrifice directly reduces your income, potentially restoring personal allowance and eliminating the 60% effective tax rate.

Salary sacrifice can also be applied to bonuses, not just base salary. If you are expecting a year-end bonus that would push your income above £100,000, or further into the tapered annual allowance, sacrificing part or all of that bonus into pension can be transformational.

Points to consider

• Salary sacrifice must be formally documented in your employment contract
• Your salary after sacrifice must not fall below the National Living Wage
• Mortgage lenders typically base affordability on your reduced salary, so plan accordingly if you are remortgaging
• Sacrificing too much can reduce life assurance or income protection benefits linked to salary so review these before making changes

Example tax savings for high income pension contributions via salary sacrifice

6. Investment Planning for High Income Professionals

A pension is the foundation of high earner financial planning, but it is not the whole picture. Your pension plan is probably the most tax-efficient method of saving tax as a high income professional. What do you do when you run out of annual allowance, or are subject to the tapered annual allowance?

For many people, using investments, especially ISAs, can be an effective method to grow assets almost as tax-efficiently.

Why pensions alone are not enough

Pensions provide excellent tax relief on the way in, tax-free growth, and tax-free cash at retirement. But from April 2027, pension funds are expected to become subject to inheritance tax on death. Remember that pensions cannot be accessed before age 57 (from 2028). They are also subject to income tax when drawn.

A well-structured plan for a high earner uses pensions alongside a range of other tax-efficient vehicles.

ISAs

The annual ISA allowance is £20,000 per person (£40,000 for a couple). ISA funds grow free of income tax and capital gains tax and can generally be withdrawn at any time without restriction.

For high earners, ISAs serve two important functions:

• Pre-retirement flexibility – accessible capital before pension age, providing financial independence and the ability to retire early
• Post-retirement income – tax-free withdrawals in retirement can be used to manage your taxable income, keeping you in a lower tax band. This can work effectively alongside other taxable sources of income.

Investment planning

Once pension and ISA allowances are in use, additional investment options for high earners include:

• General investment accounts (GIA) – flexible investments that are subject to income tax on dividends and capital gains tax on growth. You can use these accounts to use your £500 dividend allowance and annual CGT allowance efficiently. Importantly, high income professionals can place investments into the name of their spouse if they are not working, or pay tax at a lower rate. This can make your investments much lower-taxed, or even tax-free in certain situations.
• Venture Capital Trusts (VCTs) – specialist investments offering 30% upfront income tax relief, tax-free dividends, and capital gains tax-free growth, provided they are held for 5 years. VCTs can be useful where a high earner has used their available pension and ISA allowances. VCTs are higher risk and are therefore suitable as a complement to core planning, not a substitute.
• Enterprise Investment Scheme (EIS) – these offer 30% income tax relief, capital gains tax deferral, and inheritance tax relief after two years. These investments are even less liquid than VCTs so are generally only appropriate for sophisticated investors.
• Offshore investments – these investments can be attractive for high earners as the growth will be free of UK income tax. Charges can be higher and regulation less stringent, so care should be taken. The major consideration is when you might need to return the proceeds to the UK as this can create a significant tax liability at a later stage.

The key principle for high income investments

The order of priority for high income investment is almost always: pensions first (to maximise tax relief and adjust income), then ISAs (for flexibility and tax-free growth), then GIA (managed for tax efficiency), then specialist investments where appropriate.

Our investment philosophy

A structured investment philosophy should be consistent, evidence-based, and cost-conscious. This produces better long-term results than ad hoc decisions driven by the noise of the moment. Your high income is the foundation on which your future prosperity rests, but you can undo this with investment decisions that are not thought through. This is why we have our investment philosophy. These are our core investment principles, and guide us towards a disciplined, repeatable process.

7. Protection and Income Replacement

High earners often have strong employer benefits, including group life cover, income protection, private medical insurance. But employer cover is rarely enough, and it disappears the moment you change roles.

The income replacement problem

If you earn £150,000 and are unable to work due to illness or injury, what happens?

• Most employer sick pay lasts 6–12 months at full pay, then reduces or stops
• State benefits are minimal and means-tested
• Group income protection, where it exists, typically pays 50–75% of salary, but only to a capped amount that may be well below your income
• Your lifestyle, mortgage, school fees and other commitments do not pause

What cover should high income professionals have in place?

• Personal income protection insurance – covers your earned income if you cannot work due to illness or injury. Premiums are paid from post-tax income, but benefits are paid tax-free. Cover should be reviewed in the context of any employer scheme and designed to bridge any gap.
• Critical illness cover – pays a tax-free lump sum on diagnosis of specified conditions such as cancer, heart attack, or stroke. Particularly valuable if you have high outgoings or dependents.
• Life assurance – if others depend on your income, life cover is essential. The amount required depends on your financial plan, but the principle is that your family’s lifestyle should be protected regardless of what happens to you.
• Relevant life cover – if you are a business owner or director, a relevant life plan is a tax-efficient way to provide life assurance via your company. Premiums are tax-deductible for the company, not a benefit in kind for you.

The employee benefits trap

Many high earners assume their employer benefits are comprehensive. In practice, group life cover of 4x salary sounds significant, but against a background of a £1 million home, school fees and a high lifestyle cost, it is often far from enough. Do not let a good-looking benefits package substitute for proper planning.

8. Estate Planning – Inheritance Tax for High Income Professionals

The government takes 40% of your estate above the nil-rate band when you die. For high earners who have accumulated significant assets, inheritance tax is not a theoretical problem, it is a real and substantial liability that requires active management.

Understanding your Inheritance Tax exposure

Every individual has a nil-rate band of £325,000. Married couples and civil partners can combine allowances, giving a potential £650,000 threshold on the second death. Where a main residence passes to direct descendants, the residence nil-rate band adds a further £175,000 per person (£350,000 per couple), potentially raising the combined threshold to £1 million.

Above these thresholds, Inheritance Tax is charged at 40%.

For high income professionals, you will quickly exceed these thresholds, even before your working life ends and you start to think about passing money to the next generation.

Why high earners are particularly exposed

• Significant pension funds (currently outside the estate, but changing from April 2027)
• High-value property is typical for high earners
• Investment portfolios accumulated over a working lifetime
• Business interests (Business Relief may apply, but requires careful planning)

Planning strategies for high income

• Gifting – you can give away unlimited amounts, but lifetime gifts remain in your estate until 7 years have elapsed. Annual exemptions (£3,000 per year) and normal expenditure out of income gifts are immediately exempt.
• Trusts – assets placed in trust can be removed from your estate over time, while allowing you to maintain some degree of control over their use.
• Business Relief – assets qualifying as business property attract 100% inheritance tax relief after 2 years of ownership. This applies to shares in unlisted trading companies and certain other business assets.
• Life assurance in trust – a whole-of-life policy written in trust can provide a tax-free lump sum to pay an inheritance tax bill, without the proceeds forming part of your estate.
• Pension planning (post-April 2027) – pension funds are expected to be subject to inheritance tax. If this change proceeds as planned, the strategy of accumulating large pension funds for estate planning purposes will need to be revisited. Drawdown planning and gifting from income will become more important.

The window of opportunity

Effective inheritance tax planning takes time. Many of the most powerful strategies require years to take full effect. The sooner you begin, the more options you have.

For high income professionals, the challenge is not to work out the liability. Instead, financial planning focusses on how much is enough to be sure of meeting your own needs. Once we can establish this figures, stress-testing against possible disasters like care fees, we can establish how much might be available for gifts or other family support. This is often a gradual process rather than a significant transfer of capital.

9. Why high income is even worse with student loans

If you are a graduate or postgraduate, the tax system is even worse once you become a high earner. Earlier in this article, we considered the tax traps for high income professionals. This section shows the horrific position for high earners with student loans. This can create an effective tax rate of 71%.

Student loans and the 71% high income tax trap

The chart below shows the effective marginal tax rates for high earners with student loans. For a plan 2 student loan, the repayment amount is 9% of salary after the initial income threshold. This creates a tax rate of 71% for income over £100,000, once you factor in 45% income tax, 2% National Insurance, and the removal of the income tax personal allowance.

High income tax traps with student loans

The table below shows the various tax levels, which have an impact on you as your income rises, and you have to start repaying student loans.

10. How financial planning works for High Income

High income professionals have different needs, which need careful consideration. You have built your career, and this has brought you success, plus high income to match.

We can help you to evaluate where you are now, so that you can ensure that you are prepared for what comes next.

• Preserving your high income lifestyle, even after retirement
• Getting to financial freedom
• Protecting those who rely on you
• Minimising tax
• Building a system to maximise your resources in a robust and repeatable way
• Making the best choices so you can be sure you are on the right path

Find out how we work with high income professionals.