High earners striving to build wealth, dubbed “Henrys” (high earner, not rich yet), may find their tax position changes drastically as their income grows. Being aware of your tax liability now and in the future could allow you to create a financial plan that helps you get more out of your money by potentially reducing your tax bill. 

There isn’t a clear definition of how much you need to earn to be a Henry or what constitutes being “wealthy”. A huge range of factors could affect your financial position, from where you live in the UK to your long-term goals. 

According to a February 2025 study from HSBC, people in the UK believe you need an average annual income of £213,000 to be wealthy. The figure is around six times the national average income and represents the top 4% of earners. 

However, even people earning below this threshold could find they’re affected by high-earner tax rules. As a result, you may benefit from regular reviews.

If you’re a Henry, here are four tax rules that might affect your long-term finances.  

1. The “60% tax trap” may affect you if your salary exceeds £100,000 

A key tax implication of becoming a high earner is losing the Personal Allowance – the amount you can earn each tax year before Income Tax is due. This could mean you fall into the “60% tax trap”.

While there isn’t an official tax rate of 60% on earnings, tax rules may mean you end up paying more Income Tax than you expect. Indeed, a December 2024 report in the Financial Times suggests the number of people affected increased by 45% between 2021/22 and 2023/24. 

For every £2 you earn above £100,000, you lose £1 of the Personal Allowance, which is £12,570 in 2025/26. So, once you’re earning £125,140 or more, you don’t have any Personal Allowance. 

In real terms, this means for every £100 you earn between £100,000 and £125,140, you pay Income Tax of £40 and lose another £20 because of the tapering of the Personal Allowance. As a result, you’re effectively paying 60% tax on this portion of your income. 

Depending on your circumstances, there are some steps you might take to beat the 60% tax trap, including:

• Increasing your pension contributions 

• Making charitable donations from your salary

• Using a salary sacrifice scheme, where you’d agree with your employer to give up a portion of your salary in return for other benefits, such as higher pension contributions or a company car. However, it is important to note that salary sacrifice is not suitable for all employees. Your pre-tax salary would be reduced, and this may affect your entitlement to state benefits.

It’s important to weigh up the pros and cons of these options, and there might be other ways to manage your Income Tax liability. Please get in touch if you have any questions. 

2. Your pension Annual Allowance could fall to £10,000

The pension Annual Allowance is how much you can tax-efficiently contribute to your pension each tax year. For most people, the Annual Allowance is £60,000 in 2025/26.

However, the Annual Allowance is gradually reduced if you’re a high earner. If your threshold income is more than £200,000 or your adjusted income (your income plus the amount your employer pays into your pension) is above £260,000, you’ll normally be affected by the Tapered Annual Allowance. It reduces your Annual Allowance by £1 for every £2 your adjusted income exceeds the threshold.

The maximum reduction is £50,000. So, if your adjusted income is £360,000 or more, your Annual Allowance would be just £10,000. 

As a result, it could significantly affect how you might effectively save for retirement. 

3. Parents may pay the High Income Child Benefit Charge

Parents claiming Child Benefit may be subject to the High Income Child Benefit Tax Charge, if one of them earns more than £60,000 a year.

Importantly, the tax charge applies if one of the parent’s income exceeds the threshold, rather than the household income. So, if both parents worked and earned £55,000 each a year, the High Income Child Benefit Tax Charge would not be applied.

The Income Tax charge would be 1% of your Child Benefit for every £200 of income between £60,000 and £80,000. The charge will never exceed the amount of Child Benefit you receive and is usually paid through a self-assessment tax return. 

While you wouldn’t receive any Child Benefit if you or your partner’s income exceeds £80,000, you may still claim it for National Insurance (NI) credit purposes. For example, if one partner is not employed because they’re caring for the child, claiming Child Benefit may mean they receive NI credits.

To receive the full State Pension, you usually need 35 years of NI credits on your record. As a result, claiming Child Benefit, even if you exceed the threshold, could be important for your or your partner’s future State Pension entitlement. While the State Pension often isn’t enough to retire on alone, it could still play a valuable role in your long-term financial security. 

4. Inheritance Tax could reduce how much you leave behind for loved ones 

If you’re still building wealth, it might feel too early to think about how you’d like to pass it on to loved ones in the future. Yet, establishing an estate plan now can be valuable and evolve as your wealth changes. 

In 2025/26, the nil-rate band is £325,000. If the total value of your estate is below the threshold, no Inheritance Tax (IHT) would be due when you pass away. 

In addition, some estates may be able to use the residence nil-rate band if the main home is left to direct descendants, such as your children or grandchildren. In 2025/26, this is £175,000. However, the residence nil-rate band is reduced by £1 for every £2 that the estate exceeds £2 million. 

You can pass unused allowances to your spouse or civil partner, so an estate may be worth up to £1 million before IHT is due. Yet, the threshold for paying IHT could be significantly lower if you’re not estate planning with a partner or the estate isn’t eligible for the residence nil-rate band. 

With a standard tax rate of 40% applied to the portion of the estate that exceeds the threshold, your loved ones could face a hefty bill.

The good news is that there are often steps you can take to reduce a potential IHT bill if you’re proactive. So, if you’re a Henry, making estate planning part of your tax considerations now could be useful in the long run and enable you to pass on more to your loved ones. 

Contact us to talk about your tax liability  

Reducing your tax liability now could mean you have more opportunities to invest or build long-term wealth, as well as potentially pass more on to your loved ones. If you’d like to create a tailored financial plan that considers your tax position, please get in touch. 

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance. 

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.  

The Financial Conduct Authority does not regulate estate planning or tax planning. 

One of the retirement challenges many people face is how to handle wealth decumulation. During your working life, you’re typically working to increase your wealth, and this usually shifts as you enter retirement. 

So, if you’re retired or are nearing the milestone, read on to find out more about decumulation dilemmas and how you might manage them. 

Changing your mindset may be the first decumulation dilemma 

You might expect retirement challenges to focus on your money. Yet, one of the first obstacles to overcome is often your mindset.

After decades of saving money or contributing to your pension, it can feel strange to start depleting your assets, even when you’ve built them up to fund retirement.

For some retirees struggling to change how they view their assets, they might spend retirement worrying about their finances, even though they’re secure. Alternatively, they might unnecessarily cut back and miss out on experiences they’ve been looking forward to.

Having a clear financial plan could give you the confidence to use your assets to enjoy retirement. 

You may be responsible for ensuring your pension and other assets last your lifetime 

Many people choose to take a flexible income from their pension to fund their retirement. While this gives you more freedom, you also need to consider how long the money needs to last. If you don’t, there’s a risk you could spend too much too soon.

It’s a common fear among modern retirees. Indeed, according to a January 2025 article in IFA Magazine, half of people over the age of 55, the equivalent of 10.5 million people, worry their retirement savings won’t last their lifetime. Just 27% said they were confident they wouldn’t run out of money. 

It’s easy to see why it’s a concern for so many retirees. Your pension and other assets you use to fund retirement typically need to last for decades.

February 2025 Office for National Statistics data suggests a 65-year-old woman has an average life expectancy of 88, and a 1 in 10 chance of celebrating their 98th birthday. A 65-year-old man has an average life expectancy of 85, and a 1 in 10 chance of reaching 96. 

So, to be certain you won’t run out of money, most retirees need to consider how to create an income for more than 30 years.

As part of your financial plan, a cashflow model can be valuable when you want to understand how to use your wealth in retirement. A cashflow model will show you how the value of your assets will change depending on certain assumptions, such as potential investment returns and the decisions you make. 

You might use a cashflow model to answer questions like:

• Do I have enough to retire five years earlier than planned?

• Could I afford to increase my retirement income by £10,000 a year?

• What would happen if I faced an unexpected expense and needed to withdraw a lump sum?

So, it could help you understand if you have “enough” and if you might run out of money during your lifetime.

It’s important to note that the outcome of a cashflow model cannot be guaranteed, and regular reviews are essential. However, it can be a valuable indicator of whether your plan may provide financial security throughout your life or if you could benefit from making adjustments. 

Inflation could affect your income needs during retirement 

Your income needs during retirement are unlikely to remain static. As well as your lifestyle plans, you might benefit from understanding how inflation could affect you. 

The Bank of England’s (BoE) inflation calculator highlights the effect rising prices could have on your income needs throughout retirement.

Imagine you retired in 2014 and calculated that you needed your pension to provide an annual income of £25,000. A decade later, your income will need to have increased to more than £33,000 simply to maintain your spending power.

So, if you hadn’t considered inflation when reviewing your pension, you could unexpectedly find your income falls short in your later years or that you run out of money sooner than expected. 

With retirements often spanning several decades, even a seemingly low rate of inflation could add up. 

As a result, making inflation part of your retirement plan is often an important part of ensuring you’re depleting assets at a sustainable rate. Again, a cashflow model could be useful for understanding the effect of inflation on your income. 

A retirement plan could help you manage decumulation effectively 

There isn’t a one-size-fits-all solution when managing your retirement finances. Instead, a long-term tailored financial plan could help you manage decumulation and other retirement challenges in a way that reflects your priorities and situation. 

Please get in touch if you’d like to arrange a meeting to talk about your retirement. 

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance. 

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.  

The Financial Conduct Authority does not regulate cashflow modelling. 

The importance of remaining calm is often something that’s talked about when discussing investment market volatility. But there are other factors outside of your control that might lead to emotional decision-making, including uncertainty about the upcoming Autumn Budget. 

Chancellor Rachel Reeves is expected to deliver an Autumn Budget at the end of October. Despite being weeks away, there’s already speculation about higher taxes and allowances being slashed. 

With rumours featuring in the headlines, it can feel like you should be doing something to prepare for the potential changes. However, making knee-jerk decisions before changes are confirmed could harm your long-term financial plan.  

For example, ahead of the 2024 Autumn Budget, there were attention-grabbing headlines suggesting the pension tax-free allowance would be scrapped. It led to some people taking a lump sum from their pension, even when it hadn’t been part of their financial plan. When the announcement didn’t materialise, some were unable to cancel the withdrawal or place the money back in their pension.

As pensions provide a tax-efficient way to invest, those who acted on speculation may pay more tax overall or find their pension now falls short when planning for retirement. 

So, read on to discover some tips for remaining calm in the run up to the Autumn Budget.

1. Tune out the noise 

It’s easier said than done, but try tuning out the noise in the lead-up to the Budget.

Reducing how much you’re exposed to speculation could reduce stress and mean you’re less likely to make decisions that could harm your long-term financial plan based on rumours. 

That doesn’t mean you have to turn off the news completely. Simply being mindful of where the updates are coming from or only reading the headlines once a day could minimise the pressure you might feel. 

2. Check where your news is coming from 

Sometimes updates can make it seem as though a rumour is confirmed, particularly if you’re getting your news from social media.

So, before you respond to news or even worry, take some time to fact-check the source and understand if the reported change is speculation. 

3. Consider what changes could mean for your financial plan 

Headlines about changes may sound like they’ll affect everyone, or use average figures to highlight the potential implications. However, as financial circumstances and goals vary significantly, taking some time to understand what it means for you could be important; you might find an announcement won’t affect your long-term financial plan at all. 

For instance, there are suggestions that the amount you could place into a Cash ISA may be reduced. That might seem like something you should worry about, but if you use your ISA to invest, it may have little effect.

Similarly, headlines might read that changes to Inheritance Tax (IHT) mean the average bill will increase by 10%. Yet, your estate might not be liable for IHT, or your existing estate plan could mitigate the effects. 

Your financial planner is here to help you understand what speculation and confirmed changes could mean for you. 

4. Remember, changes often don’t come into effect immediately

Often, an Autumn Budget announcement isn’t implemented immediately. 

For example, in the 2022 Autumn Budget, it was announced that the Capital Gains Tax annual exempt amount would be reduced from £12,300 to £3,000. It fell to £6,000 in April 2023, and then to £3,000 in April 2024. 

As a result, you usually have time to understand what the changes mean for you and carefully consider how you’ll respond before they come into force. 

This isn’t always the case, and sometimes changes, including tax hikes, may be implemented right away. When this happens, it can feel like you need to act immediately. However, taking a step back to weigh up your options and speak to your financial planner, rather than making a snap decision, is often still valuable. 

5. Contact your financial planner 

If you're tempted to make changes to your financial plan because of speculation, your financial planner could help you assess if it’s the right decision for you.

Remember, we’ll be here to help you navigate Autumn Budget announcements that might affect your financial plan. If changes happen, we can work with you to review and update your long-term plan to ensure it continues to reflect current legislation and your circumstances. Please get in touch if you’d like to talk to one of our team. 

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning. 

2025 has already been eventful for investors. Many factors are influencing market volatility, and one cause you might have overlooked is the emotions of investors. Read on to find out why fear and anxiety might lead to the value of investments falling. 

US president Donald Trump entered the White House for a second term in January. Since then, his policies have caused global uncertainty, particularly the introduction of tariffs on goods imported into the US.

Indeed, Forbes reported in April 2025 that during the first 90 days of the new administration, the S&P 500 (an index of 500 leading companies) had tumbled 15% from its peak. The Nasdaq, a technology-focused index, had fallen 20%. 

It’s not just US markets that have been affected. Markets around the world have experienced volatility.  

While the overall trend has been a downward one, there have been points where the market has picked up. 

For example, on 10 April, Trump paused his tariffs against most nations except China. The Guardian reported markets surged following the news – the S&P 500 was up 5.6% and the Nasdaq jumped more than 8% – as investors hoped there would be a renewed focus on trade deals. 

So, over the last few months, investors have experienced larger swings in the value of their investments than they might usually. 

It’s easy to look at the news and think that volatility is something that happens to investors. Yet, how investors react to news drives volatility, too. 

Emotional investment decisions may result in market declines 

At times, investor emotions, like fear and anxiety, may play a major role in market volatility.

When investors are worried, they’re more likely to react based on emotions, even if they usually make logical decisions. Listening to the news about geopolitical tensions could spark large numbers of investors to sell their assets because they’re worried the value could fall.

If enough investors panic sell, it can lead to a downturn that creates yet more uncertainty, which, in turn, might lead to the value of assets falling even further. So, sometimes, short-term market swings are due to investor fear, rather than economic data.

It’s not just negative news that might lead to investors making knee-jerk decisions either.

If the government indicated it might make an investment in Artificial Intelligence (AI), you could see technology stocks benefit from a rise due to excitement about the potential boost, even if the investment doesn’t materialise. 

Data from interactive investor highlights how announcements might prompt investors to act.

On 7 April, Trump announced so-called reciprocal tariffs on many nations. This led to market volatility and a record number of people buying and selling assets through the investment platform. In fact, trading volumes were 36% higher than the former record, which was set just a week earlier during a similar period of volatility. 

While some of these investors may have made decisions based on worries about the future, others might have been excited at the prospect of being able to buy when the market is low. These decisions made by individual investors will have played a small role in the volatility the market experienced. 

3 quick tips for keeping your emotions in check during volatility 

While investment returns cannot be guaranteed, reviewing the historical data suggests markets deliver a return over a long-term time frame. Remembering this during periods of volatility could help ease your nerves.

Here are three quick tips that might enable you to keep your emotions in check when investing.

1. Turn off the noise. If hearing about what’s happening in the markets puts you on edge, simply turning off the noise and not checking the performance of your investments outside of regular reviews can be hugely helpful.
2. Recognise that news headlines aren’t your portfolio. Headlines shouting about markets “plummeting” can be scary, but they often don’t represent what’s happening in your portfolio. Diversified investments may mean that when one area experiences a dip, gains in another balance it out. For instance, you might read that technology stocks have lost 10%, but they are likely to represent only a small portion of your entire portfolio.  
3. Review the long-term performance of your investments. Nobody wants to look at their investment portfolio and find the value is lower today than it was yesterday. However, you should invest with a long-term goal. So, rather than comparing the value to last week, look at the performance over years or even decades. 

Get in touch to talk about your investment portfolio 

If you have any questions about what the current market volatility means for your investments and financial plan, please get in touch. We’re here to help you tune out emotions like fear and focus on how to achieve your long-term goals. 

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.