UK High Earner Tax Planning Checklist (2026/27)

Above £100,000 in 2026/27 the marginal rate is about 62% until £125,140, then 47%. Eight moves: pension and bonus sacrifice, ISA, CGT, Gift Aid and more.

2026/27 tax year

Income Tax & Allowances
Personal
England
Wales
Northern Ireland

Key figures at a glance

PA-taper marginal rate: 62% £100,000 to £125,140 band
Above £125,140: 47% 45% additional + 2% NI
Pension annual allowance: £60,000 2026/27, plus 3-year carry-forward

Pension contribution calculator Model the sacrifice that brings adjusted net income back to £100,000.

The shape of the £100k+ tax curve

For 2026/27 the marginal rates on employment income (rest-of-UK Income Tax, Class 1 employee NI) are:

£50,270 - £100,000: 40% higher rate + 2% NI = 42%.
£100,000 - £125,140: 40% on the pound + 40% on the 50p of Personal Allowance withdrawn + 2% NI = 62%.
£125,140+: 45% additional rate + 2% NI = 47%.

Computed from the salary engine: a £100,000 earner takes home £68,557 a year. A £125,000 earner takes home £78,057 - only £9,500 more for £25,000 of additional gross, an effective marginal rate of 62.0% across the taper band. A £150,000 earner takes home £91,286: the £25,000 increment from £125,000 to £150,000 adds £13,229, an effective marginal of 47.1%. The High Income Child Benefit Charge can push the rate higher still for parents between £60,000 and £80,000. See the 60% tax trap explainer and extended £100k tax trap worked examples for the full taper arithmetic.

1. Pension sacrifice to keep adjusted net income at £100,000

Benefit: Restores the full £12,570 Personal Allowance and avoids the 62% marginal rate on the sacrificed pounds, which go into your pension instead. For an earner between £100,000 and £125,140 each sacrificed pound saves about 62p of tax and NI now; the pension is taxed later when you draw it, beyond the tax-free lump sum.

How to action it: use workplace salary sacrifice if your employer offers it, or personal contributions to a Self-Invested Personal Pension (SIPP) under relief at source. Both reduce adjusted net income (relief-at-source contributions at their grossed-up amount), but sacrifice also saves the 2% employee NI. Sacrifice cannot take cash pay below the National Minimum Wage. The pension contribution calculator models the effect.

2. Bonus sacrifice before the bonus is paid

Benefit: Bonuses are employment income and count towards the £100,000 line. A £20,000 bonus on top of a £105,000 salary falls entirely inside the taper band. Sacrificing it into a pension means it never becomes taxable pay, saving about 62% on each pound.

How to action it: HMRC treats a sacrifice as giving up the right to future cash pay (EIM42750), so the agreement has to be in place before you become entitled to the bonus. A sacrifice of a bonus you are already entitled to does not work. Schemes differ on how and when you can elect. The bonus tax calculator compares cash and sacrifice.

3. Carry-forward pension annual allowance from up to 3 prior years

Benefit: In a year with spare cash (a sale, a large bonus), carry-forward lets you use unused annual allowance from the three previous tax years (2023/24, 2024/25 and 2025/26 for 2026/27) on top of this year's £60,000. With nothing used in those years, that is up to £240,000 of contributions in one year. Tax relief on your own contributions is still capped at 100% of your UK earnings for the year; employer contributions are not subject to that cap.

How to action it: carry-forward is only available for years in which you were a member of a UK registered pension scheme. The current year's allowance is used first, then the earliest year. If both your threshold income exceeds £200,000 and your adjusted income exceeds £260,000, your allowance is tapered. Adjusted income adds back employer contributions, including those made through salary sacrifice, so sacrifice does not by itself lift you out of the taper. See the pension annual allowance calculator.

4. Use the full £20,000 ISA allowance every year

Benefit: Interest, dividends and gains inside an ISA are free of Income Tax and Capital Gains Tax. Outside an ISA an additional-rate taxpayer pays 39.35% on dividends above the £500 Dividend Allowance and 24% on gains above the £3,000 annual exempt amount.

How to action it: £20,000 per adult per tax year, split across cash, stocks and shares, innovative finance and Lifetime ISAs (the Lifetime ISA limit is £4,000 and you must be under 40 to open one). A couple can shelter £40,000 a year. Unused allowance does not carry forward. See the ISA allowance explainer.

5. Time CGT disposals to use the £3,000 annual exempt amount

Benefit: Gains within the £3,000 annual exempt amount are tax-free; above it, gains are taxed at 18% within the basic-rate band and 24% above. Spreading disposals across tax years uses more than one year's exemption. The exemption is per person and does not carry forward.

How to action it: a common year-end move is "bed and ISA": sell a holding in a general investment account to realise a gain within the exemption, then buy it back inside an ISA, where future growth is outside CGT. See the UK Capital Gains Tax calculator.

6. Gift Aid donations and the adjusted-net-income reduction

Benefit: The charity claims basic-rate tax on your donation, so £1 given is worth £1.25 to it. Higher and additional-rate taxpayers claim back the difference between their rate and the basic rate on the gross gift through Self Assessment, so a £1,000 donation costs an additional-rate taxpayer £687.50. The grossed-up donation also reduces adjusted net income for the Personal Allowance taper and the High Income Child Benefit Charge.

How to action it: make a Gift Aid declaration to the charity and record the donations on your Self Assessment return. You can also claim relief on donations made in the current tax year, up to the date you file, on the previous year's return (filed by the deadline), which helps if the previous year was the one in the taper (gov.uk Gift Aid).

7. EIS, VCT and SEIS for high-risk capital - last, not first

Benefit: The Enterprise Investment Scheme gives 30% Income Tax relief on up to £1 million a year (£2 million if at least £1 million goes into knowledge-intensive companies), gains free of CGT on shares that keep their relief, and deferral of other gains reinvested. Venture Capital Trusts give 20% relief on up to £200,000 from 6 April 2026 (30% before), with tax-free dividends and no CGT on disposal. The Seed Enterprise Investment Scheme gives 50% relief on up to £200,000. Income Tax relief cannot exceed your Income Tax bill for the year (HMRC guidance).

How to action it: these are investments in unlisted early-stage companies: illiquid, high-risk and with a real chance of losing the whole investment. Shares must be held for minimum periods (5 years for VCTs) or the relief is withdrawn. Consider them only after pension and ISA allowances are used, with capital you can afford to lose, and normally with regulated advice.

8. Spouse-income shifting and joint asset structuring

Benefit: Moving income-producing assets to a lower-earning spouse or civil partner moves the income to their tax rate. A spouse with unused basic-rate band pays 10.75% on dividends above the £500 allowance against 39.35% for an additional-rate taxpayer, and a basic-rate taxpayer's Personal Savings Allowance is £1,000 against £0 for an additional-rate taxpayer. A couple also has two ISA allowances and two CGT annual exempt amounts.

How to action it: gifts between spouses or civil partners living together are not normally charged to CGT (gov.uk). The gift must be outright: if you keep the benefit of the income it can still be taxed on you. Income from property held jointly by a married couple or civil partners is taxed 50/50 unless your beneficial interests are unequal and you declare this on Form 17, with evidence such as a declaration of trust.

Worked example: £125k earner sacrifices £25k into pension

Sacrificing enough salary to bring adjusted net income back to £100,000 restores the full Personal Allowance. For a £125,000 earner in 2026/27 (rest-of-UK bands, no student loan, computed by the on-site salary engine):

Before sacrifice - £125,000 gross, take-home £78,057 a year (£6,505 a month). Income Tax £42,432, NI £4,511.
After sacrificing £25,000 into pension - taxable salary £100,000, take-home £68,557 a year (£5,713 a month). Income Tax £27,432, NI £4,011, plus £25,000 added to pension.
Take-home difference - £9,500 less in the bank account.
Tax + NI saved on the £25,000 sacrifice - £15,500. The £25,000 reaches the pension at a take-home cost of £9,500.
Combined position - take-home £68,557 + £25,000 in pension = £93,557, against £78,057 take-home with no sacrifice: £15,500 more before any tax due when the pension is drawn.

The pension cannot normally be accessed until the normal minimum pension age, 55 now and 57 from 6 April 2028, so this is a retirement-saving move rather than a cash-flow one.

CGT and dividend interaction for additional-rate earners

Above £125,140, dividends above the £500 allowance are taxed at 39.35% and gains above the £3,000 exemption at 24%. Outside a wrapper, a £20,000 dividend costs £7,673 in Dividend Tax at the additional rate, and a £20,000 gain costs £4,080 of CGT (£17,000 above the exemption at 24%). Inside an ISA both would be tax-free.

Two structural moves dominate: (a) outright gifts of income-producing assets to a lower-earning spouse, so the income and gains are taxed at their rates and use their allowances; (b) using both partners' ISA allowances (£40,000 combined) and CGT exemptions (£6,000 combined) every year.

The childcare cliff at £100,000 - especially harsh for parents

Tax-Free Childcare (up to £2,000 per child a year, £4,000 if disabled, until the September after the child turns 11) and the 30 hours of funded childcare for working parents in England (children aged 9 months to 4 years) are not available if either parent expects adjusted net income over £100,000 for the current tax year. There is no taper. A family with two children using Tax-Free Childcare can lose up to £4,000 a year of top-ups, plus any funded hours, on top of the taper-band rate.

Because the loss is all-or-nothing, the cost of the first pound over £100,000 can exceed the pound itself. Keeping adjusted net income at or below £100,000 through pension contributions or Gift Aid is often the most valuable move for these parents. You reconfirm eligibility every 3 months in your childcare account, declaring your expected income for the current tax year (gov.uk Tax-Free Childcare). Other UK nations have their own funded childcare schemes.

Pension contribution calculator Model the sacrifice that brings adjusted net income back to £100,000.

Frequently asked questions

Why is the £100,000 to £125,140 band so expensive?

Every extra £1 of adjusted net income above £100,000 is taxed at the 40% higher rate and also removes 50p of Personal Allowance, which brings another 50p into tax at 40%. That is 60p of Income Tax, plus 2% employee NI on earnings: about 62% in all. Once the allowance has gone at £125,140, the rate falls to the 45% additional rate plus 2% NI, 47%. These are rest-of-UK rates; Scottish rates differ.

Is earning £150k really more tax-efficient than £120k per marginal pound?

Per marginal pound, yes: the next pound at £150,000 is taxed at about 47%, the next pound at £120,000 at about 62%. Total tax on £150,000 is of course higher. A pay rise that takes you well past £125,140 has a lower average rate on the increase than one that ends inside the taper band.

How much can I contribute to a pension if I earn over £100k?

The annual allowance for 2026/27 is £60,000 across all your schemes, employer and employee contributions combined. It tapers by £1 for every £2 of adjusted income over £260,000, down to £10,000, but only if threshold income is also over £200,000. You can carry forward unused allowance from the previous 3 tax years if you were a member of a registered scheme in those years. Tax relief on your own contributions is also capped at 100% of your UK earnings.

Does Gift Aid actually reduce adjusted net income for the £100k taper?

Yes. The grossed-up donation (cash given × 1.25) is deducted from adjusted net income for both the Personal Allowance taper and the High Income Child Benefit Charge. A £4,000 donation grosses up to £5,000 and reduces adjusted net income by £5,000. An additional-rate taxpayer can also claim back the difference between 45% and 20% on the gross gift through Self Assessment, so the £4,000 gift costs them £2,750 net, before any Personal Allowance restored.

Do I lose Tax-Free Childcare immediately at £100k?

Yes. Tax-Free Childcare and the 30 hours scheme for working parents in England are not available if you or your partner expect adjusted net income over £100,000 for the current tax year, and there is no taper. Tax-Free Childcare is worth up to £2,000 a year per child (£4,000 if disabled) until the September after the child turns 11, and you must reconfirm eligibility every 3 months. Keeping adjusted net income at or below £100,000 through pension contributions or Gift Aid can preserve both.

Should higher earners use ISAs, EIS or VCTs?

ISAs first for most people: up to £20,000 a year, with interest, dividends and gains free of tax. For an additional-rate taxpayer dividends above the £500 Dividend Allowance are taxed at 39.35% outside an ISA. EIS gives 30% Income Tax relief on up to £1 million a year (£2 million with knowledge-intensive companies), VCTs 20% on up to £200,000 from 2026/27, and SEIS 50% on up to £200,000. These are high-risk unlisted investments; this is not a recommendation.

How does spouse-income shifting work and is it allowed?

Transferring income-producing assets outright to a lower-earning spouse or civil partner moves the income, and the tax on it, to them. The gift must be genuine: if you keep the benefit, the income can still be taxed on you. For a spouse in the basic-rate band, dividends above the £500 allowance are taxed at 10.75% instead of 39.35%. Income from property held jointly by a married couple is split 50/50 unless you own it in unequal shares and tell HMRC on Form 17.