UK Tax Planning for High Earners: The £60k to £150k Guide

High earners in the UK face a paradox: the more you earn, the more complex your tax situation becomes. Between £60,000 and £150,000, you encounter multiple thresholds where effective tax rates spike, benefits disappear, and poor planning costs thousands.

This guide covers everything you need to know about tax planning at higher income levels. If you earn above £60,000, at least one of these issues affects you.

#The Thresholds That Matter

Each threshold creates planning opportunities. Reducing your income below a threshold can save more than the income itself would have been worth.

#The £60,000-£80,000 Zone: Child Benefit

If you have children and earn between £60,000 and £80,000, you're in the Child Benefit clawback zone. The High Income Child Benefit Charge takes back 1% of your Child Benefit for every £200 you earn above £60,000.

For a family with two children receiving £2,212 per year in Child Benefit:

• At £65,000 income: lose £553 (25%)
• At £70,000 income: lose £1,106 (50%)
• At £80,000+ income: lose all £2,212 (100%)

The charge applies to the higher earner, regardless of who claims the benefit.

The fix: Pension contributions reduce your adjusted net income. Sacrifice £10,000 into your pension and your income drops from £70,000 to £60,000. The HICBC disappears, you keep the full Child Benefit, and you've added £10,000 to your pension with tax relief.

Read the full Child Benefit High Income Charge guide →

#The £100,000-£125,140 Zone: The 60% Trap

This is the most punishing part of the UK tax system. Between £100,000 and £125,140, your effective marginal tax rate is 60%.

Here's why: for every £2 you earn above £100,000, you lose £1 of your £12,570 Personal Allowance. That £1 then becomes taxable at 40%. Combined with the 40% you're already paying on the income itself, you're effectively taxed at 60%.

A £5,000 bonus at £102,000 salary leaves you with £2,000. The same bonus at £60,000 or £130,000 leaves you with £3,000.

The fix: Salary sacrifice or pension contributions. If you earn £110,000, sacrificing £10,000 into your pension drops you to £100,000 and saves you from the trap. That £10,000 would have netted just £4,000 after the 60% effective rate. Instead, it's £10,000 in your pension.

Read the full 60% tax trap guide →

#Salary Sacrifice: Your Primary Tool

Salary sacrifice is the mechanism that makes most high-earner tax planning possible. You agree to reduce your gross salary in exchange for your employer paying that amount into your pension instead.

The benefit over standard pension contributions:

• Standard contribution: you pay income tax, then contribute from net pay, then claim relief
• Salary sacrifice: you never receive the money as salary, so you pay no income tax or National Insurance on it

At higher rate (40%) tax plus 2% NI, salary sacrifice saves you 42% compared to taking the money as salary.

Your employer also saves 13.8% National Insurance on the sacrificed amount. Some employers add this saving to your pension contribution as a bonus.

Read the full salary sacrifice guide for higher rate taxpayers →

#The £100,000 Benefits Cliff Edge

Several valuable benefits cut off entirely at £100,000 income:

Tax-Free Childcare: The government tops up your childcare payments by 20%, up to £2,000 per child per year. If either parent earns £100,000 or more, you lose access to the entire scheme.

30 Hours Free Childcare: Working parents of 3-4 year olds get 30 hours of funded childcare per week. The £100,000 ceiling applies here too.

A family with two children in childcare could lose £4,000+ in Tax-Free Childcare plus thousands more in funded hours. Reducing income from £101,000 to £99,000 preserves these benefits.

Read the Tax-Free Childcare guide → Read the 30 Hours Free Childcare guide →

#Annual Allowance: The £60,000 Pension Limit

You can contribute up to £60,000 per year to pensions (or your total earnings, whichever is lower). This includes:

• Your contributions
• Employer contributions
• Salary sacrifice amounts

If you haven't maxed out in previous years, you can carry forward unused allowance from the past three tax years. Someone who contributed nothing for three years could potentially put £240,000 into their pension in a single year.

#Tapered Annual Allowance

If your "threshold income" exceeds £200,000 and your "adjusted income" exceeds £260,000, your Annual Allowance starts to taper. It reduces by £1 for every £2 of adjusted income above £260,000, down to a minimum of £10,000 at £360,000+.

This mainly affects those with very high incomes or large employer contributions. Most people earning £60k-£150k won't hit the taper.

#Gift Aid: Extending Your Basic Rate Band

Charitable donations through Gift Aid don't just help charities. They extend your basic rate band and can restore lost Personal Allowance.

When you donate £100 to charity through Gift Aid:

• The charity claims £25 from HMRC (basic rate tax relief)
• You can claim £25 on your tax return (difference between higher and basic rate)
• Your adjusted net income drops by £125 (the gross value)

For someone earning £105,000, donating £4,000 (grossed up to £5,000) reduces adjusted net income to £100,000, avoiding the Personal Allowance taper entirely.

This works alongside pension contributions. If you're already contributing to your pension and want to reduce income further, Gift Aid is the next lever.

#Timing Income: The Bonus Question

If you have control over when you receive income, timing becomes a planning tool.

Bonuses: Some employers allow you to defer bonus payments to the next tax year. If you're at £95,000 and expecting a £15,000 bonus, deferring half to next tax year keeps you below £100,000 in both years.

Dividends: Company directors can control dividend timing. If your company has retained profits, you can choose when to extract them.

Consulting income: Delaying invoices to January instead of December moves income to the next tax year.

The goal is keeping each tax year's income below a threshold, rather than having one year spike through multiple thresholds.

#Scottish Taxpayers: Different Rates

Scotland sets its own income tax rates. The 2024/25 bands are:

Scottish taxpayers hit higher rates earlier (£43,663 vs £50,271) but the Personal Allowance taper still creates a 60%+ effective rate between £100,000 and £125,140.

The same strategies apply: salary sacrifice, Gift Aid, and income timing all reduce your Scottish tax bill.

#What Doesn't Reduce Your Income

Some deductions reduce your tax bill but don't change your "adjusted net income" for threshold purposes:

• Marriage Allowance (only for basic rate taxpayers anyway)
• Working from home allowance
• Professional subscriptions
• Mileage claims

Pension contributions and Gift Aid are the main levers for reducing adjusted net income below the thresholds.

#The Mortgage Application Question

Salary sacrifice reduces your contractual salary. Some mortgage lenders look at your reduced salary; others use your pre-sacrifice figure.

If you're planning to apply for a mortgage:

1. Ask potential lenders about their policy before you apply
2. Consider temporarily reducing your sacrifice to show higher income
3. Keep payslips from before you increased your sacrifice

The tax savings from salary sacrifice usually outweigh the mortgage impact, but timing matters.

#Building a Strategy

For most high earners, the strategy follows this order:

1. Contribute enough to avoid the worst thresholds

   • If earning £100k-£125k: get below £100k to escape the 60% trap
   • If earning £60k-£80k with children: get below £60k to keep Child Benefit
   • If earning just over £100k with young children: get below £100k to keep Tax-Free Childcare

2. Max out employer matching

   • If your employer matches contributions, always contribute enough to get the full match
   • Free money outweighs any other consideration

3. Use carry forward if you have a windfall

   • Selling shares, receiving inheritance, bonus year: carry forward lets you shelter more in pensions

4. Consider Gift Aid for the final stretch

   • If pensions alone don't get you below a threshold, charitable donations can close the gap

#What BishBashDosh Shows You

The calculator models all of these interactions:

• Your current position across every threshold
• How pension contributions affect your tax, NI, Child Benefit, and childcare benefits
• The optimal contribution level for your circumstances
• Projected take-home pay at different sacrifice levels
• Long-term pension projections with different contribution rates

Enter your salary and family circumstances, and the calculator shows exactly where the planning opportunities are.