Avoid the 60% Tax Trap - Earn over £100k tax efficiently

Once upon a time, clients were wary of earning over £50k. Today? It’s the £100k threshold that raises alarm bells. Every time I sit down for a year-end tax planning session, I hear the same concern:

“I don’t want to go over £100k, I’ll get hammered on tax.”

But with the right strategy, you can earn more than £100k tax efficiently and even save thousands in the process?

Once your income creeps above £100,000, you start to lose your personal allowance, £1 for every £2 earned over the threshold. That means income between £100k and £125k is effectively taxed at 60%. Painful, right?

The result? Many founders try to stay just under £100k to avoid the hit, limiting their income, which is becoming harder and harder to do. 

Avoiding £100k+ income makes sense but when you need to take more there are ways to make it less painful. 

There’s a better way and it’s surprisingly simple

Here’s one we regularly use with clients:

🎯 Alternate your income — £100k one year, £150k the next.

Why it works:

• Income between £100k and £125k is taxed at an effective 60%
• But income from £125k to £150k is taxed at the standard 40%

So rather than consistently sitting in the punishing 60% band, you avoid it entirely every other year. 

💡 The result? Over two years, you would save more than £5,000 in tax compared to taking £125k each year.

Simple. Legal. And highly effective.

The best tax strategies aren’t loopholes, they’re intentional decisions made at the right time.

By staying just under £100k, you may be protecting your personal allowance, but you might also be delaying a big purchase.  With a little forward planning we can plan the most tax efficient route to put the funds you need at your disposal.

Every week, I offer 4 free consultancy sessions to business owners, no strings attached, and you don’t have to be a client.

If you'd like practical, personalised advice on how to structure your income tax efficiently book a free 30-minute consultation.