Earning Over £100,000? Here’s How to Pay Less Tax and Invest More for Your Future

If you're earning a six-figure salary, congratulations but also, commiserations. Higher earners in the UK often find themselves caught in a frustrating zone where increased income doesn't always translate to increased financial security.

At Cleveden Park Wealth, we help high earners make sense of this landscape. If you're earning over £100,000 (particularly if you're in your 30s or 40s) there's a risk you're contributing more to the tax system than you are to your own long-term future.

Here’s what you need to know to reduce your tax burden and strengthen your savings and investments.

The £100,000 Tax Trap

Crossing the £100,000 income threshold isn’t just symbolic, it’s financial quicksand.

Between £100,000 and £125,140, you begin to lose your personal allowance (£12,570) at a rate of £1 for every £2 earned. That means income in this band is effectively taxed at 60%. Once you earn above £125,140, your personal allowance is gone, and you enter the 45% additional rate tax band.

With tax thresholds frozen until at least 2028, and the potential for further changes in upcoming budgets, this issue isn’t going away any time soon.

So, What Can You Do?

There are still smart and strategic ways to reduce your tax liability while building long-term wealth.

1. Pension Contributions

Making contributions to your pension is one of the most effective ways to reduce taxable income. Not only do you get tax relief at your highest marginal rate, but any growth within the pension is free from UK income and capital gains tax.

For higher earners, this could mean:

• Claiming up to 45% tax relief

• Reducing your adjusted net income to reclaim your personal allowance

• Staying below thresholds that affect child benefit or taper allowances

At CPW, we’ll help you determine how much you can contribute tax-efficiently, taking into account annual allowance limits and carry forward rules.

2. Salary Sacrifice

If your employer offers it, salary sacrifice is another powerful tool. By exchanging part of your salary or bonus for pension contributions:

• You reduce your taxable income

• Save on National Insurance contributions

• Allow your employer to make tax-efficient contributions on your behalf

It’s a strategy that benefits both you and your business.

Are You on Track for Retirement?

Despite high earnings, many professionals we meet aren’t saving enough for the lifestyle they envision in retirement.

Recent industry data shows that less than half of those earning between £100,000 and £130,000 are on track for a comfortable retirement.

Even small gaps in your plan can grow over time, especially if investments aren't being used strategically or allowances are left on the table. That’s why it’s essential to have a clear plan that includes:

• Defined retirement goals

• Ongoing tax planning

• Regular pension reviews

• Long-term investment strategy

  
  

Being a higher earner should open more doors, not create more roadblocks. At Cleveden Park Wealth, we help professionals like you turn income into long-term security, by focusing on clarity, tax efficiency, and sustainable investing.

If you earn over £100,000 and aren’t sure whether your money is working as hard as it could be, we’re here to help you plan with purpose.

Get in touch to start a conversation about smarter saving, investing, and tax planning.