Client Story
How we saved a St Albans finance professional £17,600 on a bonus year
Client B is a St Albans resident working in finance in the City, whose total income with a large bonus reached around £220,000 in one year, deep into the additional-rate band and through the personal allowance taper. The income had stacked in one tax year with no planning by the previous accountant.
We modelled the mitigations. A substantial pension contribution (using carry-forward of unused annual allowance from previous years) reduced adjusted net income, recovering part of the tapered personal allowance and getting relief at the marginal rate. We grossed up the family's Gift Aid donations correctly to extend the basic-rate band, and reviewed whether any share vesting could be deferred to spread income across tax years.
Total outcome: tax saving of £17,600 through pension contribution with carry-forward, personal allowance recovery, correct Gift Aid treatment and income timing, with a forward plan for managing future bonus years proactively.