What do you think the top three New Year’s resolutions are for Brits for 2026?
A Statista survey recently revealed over half of the people asked wanted to ‘eat healthier’, ‘save more money’ and ‘exercise more’.
For ‘HENRYs’ — High Earners Not Rich Yet — saving more money can feel particularly tricky when you consider extended frozen tax thresholds, shrinking tax-free allowances and ballooning living costs, like mortgages and childcare.
Unfortunately I can’t help you eat healthier. However, the good news is I can help you keep more of your money, and even better, grow it.
Here are 5 things higher-rate taxpayers can do to pay less tax and grow your wealth at the same time.
1. Make the most of your workplace or Self-Invested Personal Pension
Making the most of your pension is one of the best ways to cut your tax bill while growing your wealth, especially if you’re a higher earner.
A good place to start is by checking how much you’re contributing into your workplace pension.
Lots of employers will contribute at auto-enrolment minimum levels, but others will be willing to pay in more. Some might even offer to match what you put in up to a certain amount, meaning a lot more ends up going into your pension.
If your workplace pension is set up through salary sacrifice, increasing how much you’re putting into your pension lowers your salary before you pay income tax, and can also reduce how much National Insurance (NI) you pay too.
However, from April 2029 the government will cap the amount of pension salary sacrifice that’s exempt from NI to £2,000 a year. So if you’re on a salary sacrifice scheme, it’s important to take advantage while you still can.
Even if your employer doesn’t offer salary sacrifice, paying more into your pension can still help reduce your taxable income and make the most of tax relief (more on that below).
So, if you’re close to, or just over, the £50,270 higher-rate income tax band or the £100,000 60% tax trap, bumping up how much you’re putting into your pension can help you drop below these thresholds.
How to avoid the £100,000 60% tax trap
But the benefits of a pension don’t stop there.
With more of us being dragged into higher tax brackets, the silver lining is being able to use this to your advantage by making the most of tax relief.
The government wants to help you save for retirement, so when you put money in your workplace or private pension, like in a Self-Invested Personal Pension, the government does too.
See how much tax relief you could get
For higher-rate taxpayers, a £20,000 pension contribution costs just £12,000. The government pays 20% (£4,000) and you can claim another 20% back in tax relief.
For additional-rate tax payers, the amount you can claim goes to 45%, so a £20,000 contribution costs you even less (£11,000).
An easy way to claim back tax relief
You normally have to fill in a self-assessment tax return each year to get your extra tax relief, which can feel like a headache.
That’s why we’ve partnered with PIE. Instead of wrestling with forms, you can:
Log in to PIE through your InvestEngine dashboard
Enter how much you’ve contributed (clearly shown in your transactions)
PIE reclaims your extra relief from HMRC on your behalf
No forms. No hassle. Just money back.
2. Taxes are rising: use your Stocks and Shares ISA in 2026
In Rachel Reeves’ recent Autumn Budget, the chancellor chose to raise savings tax by 2% from April 2027 and dividend tax by 2% from April 2026.
So for any investments outside of an ISA, it means you’ll be paying more tax if you go over your personal savings and dividend allowances.
While basic-rate taxpayers currently get a personal savings allowance of £1,000, higher-rate taxpayers only get £500, and additional-rate taxpayers don’t get any. So, if you earn over your allowance, you’ll be paying even more tax.
The current dividend allowance is £500, no matter how much you earn. That means if you’re a higher earner and go over your dividend allowance, you’ll start paying 35.75% from April.
With income tax thresholds being frozen by another three years to 2031, more workers are going to be dragged into higher tax bands, therefore losing valuable allowances and paying more tax.
Luckily, your Stocks and Shares ISA allowance has remained intact, at least for now.
This means you can still put up to £20,000, without having to worry about paying any income or capital gains tax on it. It’s why millions of savers and investors use them every year.
And with the end of the tax year around the corner, you could shelter even more from the taxman in the next few months.
Could you shelter £40,000 from tax in just a few months?
With the current tax year ending on 5 April, if you haven’t used any of this tax year’s ISA allowance, you can still put up to £20,000 in before then.
And with the new tax year starting on 6 April, you’ll get to put in another £20,000 just the day after.
That’s potentially £40,000 sheltered from tax in just a few months.
While using your ISA allowance and investing as early in the tax year as possible is best, not everyone will be in the position to do that. But don’t worry, you’ll have the whole tax year to use your 2026/27 ISA allowance, and then you’ll get another £20,000 ISA allowance from 6 April 2027.
3. Don’t forget about your capital gains tax allowance
After years of allowance slashes, it’s easy to forget just how useful your capital gains tax (CGT) allowance can be.
Each year you get a £3,000 capital gains tax allowance. This is how much profit you can make on an asset (like investments outside an ISA or SIPP) when you sell or dispose of it (for example gifting it to someone who isn’t a spouse, civil partner, or charity).
If you’re already making the most of your pension and have maxed out your ISA for the tax year, your CGT allowance can help you take any gains you might have made.
However, you can’t carry forward any unused CGT allowance. So if you’re sitting on gains outside of an ISA, then it could make sense to use your CGT allowance before this tax year ends on 5 April.
And if you have any Stocks and Shares ISA allowance left for the tax year, you could even think about moving this money into your ISA and then rebuying the same investment — this is called a Bed & ISA.
Just remember though, while you can sell an investment to use your CGT allowance for the tax year and then rebuy it back in an ISA, you can’t sell an asset, use your CGT allowance for the tax year, and then just rebuy it back. If it’s outside of an ISA, you’ll have to wait 30 days.
4. Use any spouse or civil partner allowances
If you have a spouse or civil partner, it also makes a lot of sense to plan your finances as a couple, especially if one of you pays less, or no tax at all.
Not only do you both get ISA and SIPP allowances, but you could be making more of other allowances as a couple — for example the personal allowance, personal savings allowance, capital gains and dividend allowances too.
Make sure you’re both using these as best as you can.
And if one of you isn’t using all of yours, then you could think about gifting investments (without worrying about capital gains tax from gifting), so you can shelter more from tax using any allowances you have left.
How to make the most of your tax allowances
5. Enter InvestEngine’s £50,000 prize draw
To help make saving and investing even more rewarding, we’re giving away £50,000 to one lucky investor.
If you’re new to InvestEngine, all you have to do is open an InvestEngine account with £100 or more between 14th January 2026 and 2nd March 2026 for your chance to win.
If you already invest with InvestEngine, then you just have to refer a friend during the competition period — each friend you refer will count as a competition entry.
T & Cs apply and entries close on 2nd March 2026.
Important information
Capital at risk. The value of your investments may go down as well as up, and you may get back less than you invest.
ETF costs apply. If in doubt, you may wish to consult a professional adviser for guidance.
Tax treatment depends on your personal circumstances and may change in future. This article is for general information only and does not constitute financial advice. Scottish tax rules are also different.