High-net-worth individuals often find themselves faced with significant tax obligations. However, through proactive planning and expert guidance, it’s possible to minimise these liabilities effectively. At Nicholas Peters, we specialise in tax planning, offering practical advice tailored precisely to your financial situation. This blog outlines key tax planning strategies for high-net-worth individuals to help you manage your wealth efficiently throughout the 2025/26 UK tax year.
Utilise annual tax allowances fully
A straightforward starting point in effective tax planning is to fully utilise your annual allowances. These allowances exist specifically to help you reduce your tax bill legally, while maximising the returns on your wealth.
For the 2025/26 tax year, the personal allowance is set at £12,570, beyond which income tax is payable. If your income exceeds £100,000, your personal allowance reduces by £1 for every £2 earned over this threshold – so careful planning is essential.
The capital gains tax (CGT) annual exemption is £3,000 for individuals. Considering this allowance strategically when disposing of assets can significantly reduce your overall tax liabilities.
Maximise pension contributions
Pensions remain one of the most effective tax planning strategies for high-net-worth individuals. Pension contributions provide relief at your highest rate of income tax, making them a powerful tool in wealth management.
In the 2025/26 tax year, the annual allowance for pension contributions stands at £60,000. By contributing the maximum allowable amount, you directly reduce your taxable income, which can save thousands in taxes.
In addition, pensions offer the advantage of tax-free growth, compounding the benefits over the long term. However, high earners must be mindful of the tapered annual allowance – for those earning over £260,000, this allowance gradually reduces down to a minimum of £10,000.
More details on pensions can be found directly in HMRC’s pension tax relief guidelines.
Effective inheritance tax planning
Inheritance tax (IHT) is a key concern for many of our clients. The standard nil-rate band for inheritance tax is currently frozen at £325,000 until April 2028, and with a 40% tax rate applied above this threshold, inheritance planning is essential.
The residence nil-rate band, an additional allowance specifically related to your main residence, remains at £175,000 per individual – meaning married couples and civil partners have a combined £1m allowance available, provided certain conditions are met.
Strategies such as gifting assets, establishing trusts and taking out appropriate insurance policies are effective ways to reduce your inheritance tax liabilities. Our tailored advice ensures that these strategies align with your long-term financial objectives.
Tax-efficient investments
Tax-efficient investment opportunities such as individual savings accounts (ISAs) and enterprise investment schemes (EIS) offer considerable benefits for high earners.
- ISAs: You can save or invest up to £20,000 per tax year within ISAs, with returns exempt from income and capital gains taxes. Utilising your full ISA allowance annually can significantly enhance your long-term wealth accumulation.
- EIS: Investing in qualifying companies via EIS provides generous tax reliefs, including 30% income tax relief, CGT deferrals and inheritance tax exemption after holding investments for two years. However, these are higher-risk investments and specialist advice is essential.
Making charitable contributions
Charitable giving not only benefits worthy causes but also serves as an effective tax planning tool. Donations made under Gift Aid provide relief at your highest marginal tax rate. For example, a donation of £100 allows the charity to reclaim basic rate tax (20%), increasing the value of your donation to £125. Higher-rate and additional-rate taxpayers can claim the difference between their marginal rate and basic rate, further reducing their tax bills.
According to the Office for National Statistics (ONS), charitable donations claimed through Gift Aid totalled approximately £1.5bn in 2024. Clearly, it’s a popular and beneficial strategy.
Structure your assets effectively
Effective structuring of your personal and business assets can deliver significant tax advantages. For instance, holding assets jointly with your spouse or civil partner allows you to take advantage of doubled allowances and reduced tax rates in certain scenarios.
Additionally, structuring business activities through limited companies can reduce income tax exposure, leveraging lower corporation tax rates – currently 25% on profits over £250,000 and tapered down for profits between £50,000 and £250,000.
Regular reviews and expert guidance
Tax legislation frequently changes, making regular reviews essential to maintain efficiency. As experts in tax planning for high-net-worth individuals, we understand the importance of staying up to date with the latest tax rules and strategies.
Our team proactively reviews your financial situation throughout the tax year, ensuring you are positioned optimally and remain compliant with HMRC regulations. Staying ahead means not just saving money, but protecting your assets for generations to come.
Conclusion on tax planning strategies for high-net-worth individuals
Effective tax planning for high-net-worth individuals involves much more than simply reducing this year’s bill. It’s about protecting your wealth, securing your family’s future and ensuring peace of mind.
At Nicholas Peters, our expert team offers personalised tax planning strategies tailored specifically to your needs. Whether it’s pensions, inheritance tax or investments, our comprehensive approach ensures you achieve the maximum benefit with minimum hassle.
Ready to safeguard your wealth with tailored tax planning strategies for high-net-worth individuals? Contact our expert team today to arrange your personalised consultation.