For individuals earning more than £50,000 per year, effective pension tax planning can offer considerable benefits. With income potentially taxed at 40%, 45%, or even an effective rate of 60%, pension contributions can be a key tool for reducing tax exposure and improving long-term financial security. Understanding tax relief on pension contributions Contributions to a registered pension scheme receive tax relief by extending both the basic and higher rate tax bands. For instance, a net payment of £800 into a pension increases those bands by £1,000. HMRC contributes the remaining £200 directly to the pension provider. For those with income over £100,000, pension contributions can restore some or all of the lost personal allowance. At this income level, tax relief can reach up to 60%, making contributions particularly efficient. The annual allowance and carry forward rules The annual pension input limit is £60,000 for 2025/26. Unused allowances from the previous three tax years can also be used, provided the individual was a member of a registered scheme during those years. Once the current year’s allowance is fully used, earlier allowances are applied on a first in, first out basis. Contributions are capped at 100% of an individual’s relevant earnings each year for tax relief purposes. Relevant earnings include: Salary and taxable benefits Profits from self-employment or partnerships Royalty income from patents A flat contribution of £3,600 gross per annum is allowed even for those without earnings. Notably, employer contributions are not subject to the relevant earnings restriction. Tapered annual allowance for high earners Those with threshold income over £200,000 and adjusted income over £260,000 are subject to a tapered annual allowance. For every £2 of adjusted income above £260,000, the allowance reduces by £1 – down to a minimum of £10,000. Contributions exceeding the available allowance attract an Income Tax charge at the individual’s marginal rate. For some, limiting contributions to the tapered amount may be more tax-efficient. Definitions: Threshold income – total net income less gross personal pension contributions made under relief at source. Adjusted income – net income plus any employer pension contributions and salary sacrifice pension contributions. Tax charges on excess contributions Where contributions (including those made by an employer) exceed the available annual allowance, an Income Tax charge applies. Despite this, employer contributions still represent a valuable benefit – even when they incur a tax charge – as the net gain to the pension fund may remain significant. Professional advice is recommended to assess the true value of employer contributions and to manage the risk of triggering a pension savings tax charge. Changes to the lifetime allowance and inheritance tax The lifetime allowance charge was abolished from 6 April 2023 and no longer applies. However, from 6 April 2027, defined contribution pension pots left unspent at death will become subject to Inheritance Tax (IHT). Currently outside the taxable estate, these funds will soon be included and taxed at 40% if the estate exceeds the nil-rate band. Responsibility for paying IHT will lie with pension providers. Those with sizeable pension savings should review their estate planning in light of these changes. Planning opportunities for high earners There are several effective strategies for optimising pension planning: Salary sacrifice – Reducing income via salary sacrifice can preserve personal allowance (if income exceeds £100,000) and avoid 45%/60% tax rates. Both employee and employer benefit from NIC savings, which employers may redirect to the pension. Carry forward unused allowances – Up to £180,000 of additional contributions may be made using unused allowances from the past three years, assuming scheme membership existed during those periods. Inheritance planning – Drawing pension funds and transferring to ISAs, AIM shares, or trusts may reduce IHT exposure. Withdrawn funds may also be gifted under the seven-year rule or annual exemptions. Additional planning considerations Pension contributions can help reduce exposure to the loss of personal allowance for incomes above £100,000. Salary sacrifice not only offers Income Tax savings but also reduces NIC liabilities for both employee and employer. Contributions can be made to another individual’s pension – such as a spouse or family member – which may offer further planning opportunities, though advice should be sought due to the complexity involved. Illustrative examples A £60,000 salary typically results in almost £10,000 taxed at 40%. A pension contribution can eliminate this higher-rate liability and secure tax relief of approximately £1,946. An individual earning £125,000 loses nearly all their personal allowance. A £20,000 net pension contribution restores the allowance and offers £8,000 in additional tax relief. Final thoughts Pension contributions offer high earners the dual benefit of reducing tax today and building retirement wealth. For those earning over £200,000, proper planning is essential to avoid unnecessary tax charges and make the most of allowances. If you’re a high earner looking to make the most of your pension contributions – or want to ensure you’re not missing out on valuable tax relief – our team is here to help. At Navigate, we provide straightforward, expert advice to help you manage your finances efficiently and stay compliant with changing tax rules. Contact us on 01709 589 439 or book a call with our team .

Late payments – the frustration every small business owner knows far too well. You’ve done the work, sent the invoice, and then... silence. Days turn into weeks, and chasing payments starts to feel like a full-time job. If it’s any comfort, you’re not alone. At Navigate, we work with SMEs across Derbyshire and Yorkshire, and late payments are one of the biggest headaches we see – even for businesses that are otherwise thriving. But while you can’t always stop late payers entirely, there are a few practical steps you can take to manage the problem without losing sleep (or your temper). Set clear terms from the start It might sound obvious, but a lot of payment issues start with vague or overly casual agreements. Be crystal clear about your payment terms – when invoices are due, what happens if they’re late, and how payments should be made. And don’t just stick the terms on the invoice – talk about them upfront. It sets the tone and makes expectations clear from day one. Invoice promptly (and correctly) The quicker you send the invoice, the quicker you can expect payment. Simple, but easily overlooked when you’re busy. Make sure your invoices are accurate, include all the right details (like purchase order numbers if needed), and are sent to the right person. A surprising number of late payments happen because the invoice ended up in the wrong inbox. Make it easy to pay The more hoops clients have to jump through, the longer they’ll put it off. Offering different payment options – bank transfer, card payments, even direct debit – removes friction and gives people fewer excuses to delay. If you’re still sending out PDFs and asking people to ‘pay when they get a chance’, it might be time for a rethink. Chase politely – but persistently Nobody loves chasing money, but a polite, firm reminder can work wonders. Start with a gentle email a few days after the due date, and follow up with a phone call if needed. Keep it friendly, but clear – you’re a business, not a charity. There are plenty of online tools that can automate reminders without sounding robotic. A well-timed nudge often gets invoices paid before things get awkward. Know when to escalate If polite nudges aren’t working, don’t be afraid to escalate. Late payment interest is a legal right for businesses, and sometimes mentioning it can encourage quicker action. In serious cases, a debt recovery service might be worth considering – though it’s usually a last resort. The key is to have a process and stick to it. It protects your cash flow and shows you mean business. Chasing payments is never the most glamorous part of running a business – but staying on top of it is vital for keeping your cash flow healthy and your stress levels low. Closing thoughts At Navigate, we help small businesses aput proper systems in place to deal with late payments – so you can spend less time chasing and more time growing. If you’re ready to take the pressure off, we’re just a call away. Contact us on 01709 589 439 or book a call with our team .