Warning sounded on tax taper shock for high earners

Restrictions on ‘scheme pays’

clock • 2 min read

High earners may need to pay for any breaches of their tapered annual allowance out of their own pocket due to restrictions on providers' 'scheme pays' facilities, experts have warned.

According to a report in the FT, HM Revenue & Customs has not made it mandatory for schemes to offer 'scheme pays', leaving savers potentially stranded when it comes to settling their new tax bills.  Top-rate earners who breached their tapered annual allowance could face a maximum bill of £13,500, the report said. From April 2016, earners with incomes above £150,000 started to be subject to a reduced "tapered" annual allowance, which restricted their entitlement to tax relief gradually from the standard £40,000 to £10,000 for those with incomes of £210,000 or more. Currently savers...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Tax planning

Pensions and IHT - is gifting the best option?

Pensions and IHT - is gifting the best option?

‘Advice will be more valuable than ever’

Lisa Webster
clock 22 August 2025 • 3 min read
'Still time' to reconsider IHT/pensions as receipts continue climb

'Still time' to reconsider IHT/pensions as receipts continue climb

But government likely to ‘stubbornly stick’ with proposals, expert says

Jen Frost
clock 21 August 2025 • 3 min read
Financial 'complexities' deterring wealthy families from leaving charitable legacies

Financial 'complexities' deterring wealthy families from leaving charitable legacies

Advisers urged to guide clients as IHT benefits of giving remain underused

Sahar Nazir
clock 20 August 2025 • 2 min read