If your income is \u00a3100,000\u2013\u00a3125,140, you may fall into the 62% tax trap. This happens because your personal allowance (\u00a312,570) starts to reduce: for every \u00a32 you earn over \u00a3100,000, you lose \u00a31 of your allowance. Combined with 40% income tax and 2% National Insurance, this raises your effective tax rate to 62% on additional income.<\/p>\n\n\n\n
To avoid this:
\u2022 increase pension contributions
\u2022 make charitable donations<\/p>\n\n\n\n
These actions reduce your adjusted net income, allowing you to retain part or all of your personal allowance and pay less tax. Contact us, and we can help you plan your income and optimize your taxes to avoid the trap.<\/p>\n","protected":false},"excerpt":{"rendered":"
If your income is \u00a3100,000\u2013\u00a3125,140, you may fall into the 62% tax trap. This happens because your personal allowance (\u00a312,570) starts to reduce: for every \u00a32 you earn over \u00a3100,000, you lose \u00a31 of your allowance. Combined with 40% income tax and 2% National Insurance, this raises your effective tax rate to 62% on additional…
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