HIGHER EARNERS, EMPLOYMENT & PENSIONS
When your income grows, so does the complexity
Salary, bonuses, benefits, pension contributions and other income all interact. We help higher earners understand their tax position and report it correctly, even when most of their income is taxed through PAYE.
Led by Chris Clark, Fellow of the AAT (FMAAT) · AAT licensed practice · Reviewed on Trustpilot
WHO CJC HELPS
Higher earners and their families
As income rises, more parts of the tax system come into play, often at the same time.
Income over £100,000
Where adjusted net income exceeds £100,000, the Personal Allowance starts to be withdrawn.
Bonuses and benefits
Bonuses, benefits in kind and expenses that PAYE may not fully settle.
Share awards
RSUs and share options. See our Employee Share Schemes page.
Families with Child Benefit
Where the High Income Child Benefit Charge may apply to you or your partner.
Several income sources
Rental, savings and dividend income on top of a salary.
Company directors
Salary, dividends and pension contributions alongside your company.
KEY THRESHOLDS
Points where your tax position changes
Figures for 2026/27. Income tax rates and bands outside Scotland.
01
£100,000: Personal Allowance
Reduced by £1 for every £2 of adjusted net income over £100,000, reaching nil at £125,140.
Adjusted net income isn't taxable income: it's broadly your total income before allowances, less grossed-up Gift Aid donations and relief-at-source pension contributions.
02
£125,140: additional rate
Income above £125,140 is taxed at 45%.
Scottish taxpayers have different rates and bands on earnings.
03
£60,000: Child Benefit charge
1% of Child Benefit for every £200 of adjusted net income over £60,000; all of it from £80,000.
It's charged on whichever partner has the higher income.
04
£260,000: pension taper
The £60,000 Annual Allowance reduces where threshold income exceeds £200,000 and adjusted income exceeds £260,000.
It can't fall below £10,000.
EMPLOYMENT INCOME
Why PAYE doesn't always settle the bill
PAYE taxes your pay, but it can't always see the whole picture. Your tax code may not reflect the Personal Allowance taper, benefits in kind, a second job, or income outside payroll such as rent and savings.
If you have untaxed income or a charge such as the High Income Child Benefit Charge, you may need to tell HMRC. If you need to register for Self Assessment, the deadline is 5 October after the end of the tax year. Some amounts can be collected through your tax code instead, depending on your circumstances.
Leaving a job? Termination and redundancy payments have their own rules, including a £30,000 exemption that doesn't cover every payment. We advise on the tax treatment case by case; we don't advise on employment law or negotiate settlements.
What we check
P60s, payslips and P11Ds
Bonuses and benefits in kind
Tax codes and HMRC's year-end calculations (P800s)
Employment expenses
Whether you need a Self Assessment return
If you don't otherwise need a tax return, we also offer individually quoted tax code and P800 reviews.
PENSIONS
Pension tax relief and allowances
We advise on the tax treatment of pension contributions, including tax relief, allowances and reporting. We don't recommend pension products, providers or investments. For regulated financial advice, please consult an FCA-authorised financial adviser.
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You can usually get tax relief on personal contributions up to 100% of your relevant UK earnings for the year, or £3,600 gross if higher. How relief is given depends on how you contribute.
Relief at source. You pay from taxed income and your scheme adds basic rate relief. Any higher or additional rate relief is claimed through Self Assessment or your tax code. The gross contribution is deducted when working out your adjusted net income.
Net pay arrangement. Your employer takes the contribution from your pay before tax, so relief is given through payroll. Your taxable pay is already lower, so the contribution isn't deducted again when working out adjusted net income.
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The Annual Allowance is £60,000 a year. It includes your own contributions, your employer's contributions and any increase in defined benefit pension.
If you were a member of a registered pension scheme, you may be able to carry forward unused allowance from the previous three tax years. If you exceed the allowance, we can calculate and report the charge from your scheme's figures and explain Scheme Pays, where the election is made with your scheme.
Defined benefit schemes, such as NHS and other public sector schemes, rely on figures from the scheme and are considered case by case.
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If your threshold income is over £200,000 and your adjusted income is over £260,000, your Annual Allowance is reduced by £1 for every £2 of adjusted income above £260,000, down to a minimum of £10,000.
Adjusted income includes employer pension contributions, so the taper can apply even when your salary alone looks lower.
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Once you've flexibly accessed a defined contribution pension, for example by taking income from a drawdown fund, the Money Purchase Annual Allowance of £10,000 may apply to future defined contribution savings.
Carry forward can't be used to increase it.
SEVERAL INCOME SOURCES
When different types of income interact
Savings, dividends and rental income are taxed on top of your employment income, so they often fall into the higher or additional rate bands, and they count towards adjusted net income. For 2026/27, dividends above the £500 allowance are taxed at 10.75%, 35.75% or 39.35%.
From 6 April 2027, property and savings income will have separate rates. Finance Act 2026 has set these at 22%, 42% and 47%; the Budget on 28 October 2026 announced they will instead be 24%, 44% and 49%, which still needs to be legislated. Scottish taxpayers pay different rates on earnings, pensions and rental income; we'll confirm whether we can help when you get in touch. Moving to or from the UK? Residence rules are complex, and we consider those enquiries case by case.
COMPANY DIRECTORS
Your personal tax and your company
If you own and run a company, your salary, dividends and the company's pension contributions affect both your personal tax and the company's.
We consider them together, alongside the company's accounts and Corporation Tax. See our Business Accountancy page for company services.
What we look at
Salary and dividends across the tax year
Employer pension contributions
Dividends and the Personal Allowance taper
Your Self Assessment alongside the company's year end
ILLUSTRATIVE SCENARIO
Bonnie Bonus: tax deducted through PAYE, but more to pay
Bonnie Bonus is a fictional client. Her circumstances and figures are illustrative and simplified.
Bonnie's salary and bonus were taxed through PAYE, so she assumed her tax was settled. But rent from her former flat took her income to £108,000, reducing her Personal Allowance. She lives with her partner, who claims Child Benefit for their two children. Because Bonnie has the higher income, she is liable to the High Income Child Benefit Charge for 2026/27.
With untaxed rent to report, she needs a Self Assessment return for 2026/27. An illustrative gross pension contribution of £8,000 could restore her full Personal Allowance, although the Child Benefit charge would remain unchanged.
Bonnie Bonus – at a glance (2026/27)
Salary and bonus £96,000
Rental profit £12,000
Adjusted net income £108,000
Personal Allowance £8,570
Income tax £32,232
Income tax with an illustrative £8,000 gross pension contribution (£6,400 paid) £29,032
Total tax relief, including £1,600 added to the pension £4,800
High Income Child Benefit Charge 100%
Multiple sources of income and family circumstances can affect the tax position, even when employment income has been taxed under PAYE.
Fictional example using 2026/27 rates outside Scotland. It shows how the rules interact and isn't a recommendation to make a pension contribution.
HOW CJC CAN HELP
The whole picture, not just your payslip
What we do
Prepare Self Assessment returns, including higher-rate pension relief and Gift Aid
Calculate and report the High Income Child Benefit Charge
Check tax codes and HMRC's year-end calculations
Calculate and report annual allowance charges from your scheme's figures
Review how employment, rental, savings and share income fit together
What to have ready
P60, payslips and P11D
Bonus and benefit details
Pension contribution statements and your scheme's pension input figures
Child Benefit details for you or your partner
Rental income and expenses
Dividend and interest statements
FAQ
Questions from higher earners
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Not always. You'll usually need one if you have untaxed income above certain limits, for example rental profit over £2,500 after expenses, or rental income over £10,000 before expenses.
Some adjustments can be made through your tax code instead, depending on your circumstances.
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HMRC adjusts tax codes for things like benefits in kind, untaxed income, underpaid tax from earlier years or the reduction of your Personal Allowance. A code is HMRC's estimate, so it's worth checking.
We offer individually quoted tax code and P800 reviews.
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If your contributions are made under relief at source, higher and additional rate relief is claimed through Self Assessment or, in some cases, by HMRC adjusting your tax code.
If your employer uses a net pay arrangement, full relief is already given through payroll.
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Your Personal Allowance reduces by £1 for every £2 of adjusted net income over £100,000, reaching nil at £125,140.
Personal pension contributions and Gift Aid donations reduce adjusted net income, which can restore some or all of the allowance.
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The partner with the higher adjusted net income pays it, if that income is over £60,000, even if the other partner claims the Child Benefit.
It can be paid through PAYE or Self Assessment. If you need a tax return for another reason, the charge is usually reported there.
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Specialist work is quoted individually once we understand what's involved. You can request a quote, or book a Personal Tax Advisory Consultation : a 30-minute video call with Chris Clark, normally via Zoom, for £150 including VAT where applicable. It includes a concise written summary of the principal matters discussed and any recommended or agreed next steps, emailed within three working days.
Talk to us about your income
Book a consultation to look at your overall position, or request a quote for your return or review.
Related: Personal Tax · Employee Share Schemes · Business Accountancy