Income Tax Compliance and Advice

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Income tax rarely comes from a single source once a personal financial position becomes established.

Employment income, dividends, savings interest, rental property, self-employment and pension income can all sit alongside each other in the same tax year, each taxed differently and each capable of pulling other allowances and reliefs out of reach.

The difference between an efficient position and an inefficient one is rarely about aggressive planning.

It is usually about seeing the whole picture early enough to use the allowances and reliefs that are already available, before decisions are taken that close them off.

Our income tax team works through that whole picture with you, so the position is optimised across every source of income rather than considered one element at a time.

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How we deliver income tax advice

We start by building a complete picture of your income sources for the year, including anything anticipated, such as a bonus, a dividend decision, a property disposal or a change in employment.

Modelling the position across the full range of income allows us to identify where reliefs and allowances are at risk of being lost and where timing or restructuring can protect them.

Where you run a business, we look at the interaction between salary, dividends and pension contributions as a single decision, not as separate questions answered in isolation. Planning conversations happen as circumstances arise across the year, not only when the return is being prepared.

Our expertise

Income tax rates, bands and the additional rate threshold
Personal allowance tapering above £100,000
Salary, dividend and pension extraction strategies for directors
The dividend allowance and personal savings allowance
Property and rental income, including mortgage interest restriction
Self-employment income and profit extraction
Pension contributions, tax relief and the annual allowance taper
The High Income Child Benefit Charge
Gift Aid and other reliefs affecting the effective rate of tax
Post-April 2025 changes to the residence-based regime and the four-year FIG window

Where your income tax position interacts with Capital Gains Tax, Inheritance Tax or a business interest, we co-ordinate with the relevant specialist within the firm so the advice reflects the whole position rather than one part of it.

What you can expect from our income tax team

Three things define our income tax work:

Modelled across every source of income

Employment income, dividends, savings, property and pension income are considered together, so the interaction between allowances, tapers and thresholds is understood before decisions are taken, not discovered afterwards.

Planning timed to when it can still help

Salary and dividend decisions, pension contributions and the timing of income are most effective when planned in advance. We raise the questions while there is still time to act on them.

Joined up with the wider picture

Where your income tax position affects or is affected by, a capital disposal, an estate planning question or a business decision, we hold that picture together rather than treating each element in isolation.

Individuals come to us on income tax because they want an adviser who looks at the whole of their income before making a recommendation, not one who applies the standard treatment to whichever source of income happens to be in front of them.

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Why choose Macalvins?

With our team, you get the close level of support you need to manage your liabilities and find new opportunities to grow your wealth.

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Insights

Frequently Asked Questions

My income is close to £100,000. What does that mean for my personal allowance?

The personal allowance reduces by £1 for every £2 of income above £100,000 and is lost entirely once income reaches £125,140. This creates an effective marginal rate of 60% on income within that band. Pension contributions, Gift Aid and other reliefs can be used to bring adjusted net income back below the threshold and restore some or all of the allowance. We will model this against your specific position.

Is it better to take income as salary or dividends?

It depends on your company’s profits, your other income, your pension planning and your longer-term objectives, so there is no single answer that applies to everyone. We model the position each year, taking into account National Insurance, dividend tax rates, corporation tax and the interaction with pension contributions, to identify the most efficient combination for your circumstances.

How do pension contributions reduce my income tax liability?

Pension contributions receive tax relief at your marginal rate and can also be used to bring your adjusted net income down, which can restore a tapered personal allowance or avoid the High Income Child Benefit Charge. Higher earners are subject to the tapered annual allowance, which reduces the amount of relief available as income rises, so the calculation needs to be checked carefully before contributions are made.

Income Tax