Optimising your plan: every lever, which ones apply to you, and how they fit together

The UK tax system has three bands where your next pound of income costs far more than your tax rate suggests:

• £60,000 to £80,000, if you or your partner claim Child Benefit: the High Income Child Benefit Charge takes back 1% of the benefit for every £200 above £60,000.
• £100,000 to £125,140: your £12,570 personal allowance is withdrawn at £1 for every £2, so each pound earned in this band costs 60% in tax. At £100,000 you also lose Tax-Free Childcare and funded childcare hours, in one step.
• Above £260,000 of adjusted income: your pension annual allowance tapers down, to as little as £10,000.

The lever that acts on all three is pension contributions, made yourself or by salary sacrifice, because they reduce the income these tests measure. Gift Aid donations reduce it as well. Go deeper: the 60% trap, the £100k childcare cliff, the annual allowance taper, salary sacrifice, bonus tax. In the app: Tax tab and What If → salary sacrifice, extra pension contributions.

Where your spare money goes is a lever in its own right, and the options have very different tax treatment:

• A pension: tax relief on the way in, taxed on the way out (apart from the tax-free quarter), and locked until 55 (57 from 6 April 2028).
• An ISA: no relief on the way in, tax-free on the way out, and yours whenever you need it. £20,000 a year, and an unused year is lost.
• A Lifetime ISA: a 25% bonus on up to £4,000 a year, but it has to be opened before 40, you can only pay in until 50, and money taken out before 60 (except for a first home) loses more than the bonus.
• Overpaying the mortgage: a guaranteed return equal to your mortgage rate, but the money is hard to get back.

Go deeper: ISA or pension, overpay or invest, cash, Premium Bonds and tax, inflation. In the app: Savings tab → “Use my ISA allowance first”; What If → overpay the mortgage, extra pension contributions.

Everything that goes into your pensions in a year counts against the £60,000 annual allowance: your contributions, your employer's and any salary you sacrifice. Anything above it loses its tax relief. Contributions set as a percentage of your salary are easy to miss here. They rise every year with your pay, while the allowance stays fixed.

If you have unused allowance from the previous three tax years, you can carry it forward to cover the excess. The projection can't see your contributions from before the plan started, so it assumes you have none to carry forward, which is the cautious assumption. The carry-forward calculator works out your real figure. Once you have taken taxable income from a pension flexibly, the money purchase annual allowance cuts your limit to £10,000 for good.

Go deeper: the annual allowance taper, the MPAA trap, salary sacrifice (including the £2,000 cap on its National Insurance saving from April 2029). In the app: the Tax tab shows any contributions above the allowance each year.

Money held outside a wrapper can be taxed three ways: on interest above your personal savings allowance, on dividends above £500, and on gains above £3,000 when you sell (at 18% or 24%). On a plan that saves hard, the biggest unwrapped pot is often cash, built up as each year's spare money lands in your current account.

The lever here is moving existing savings into your ISA allowance, year by year. Moving cash costs nothing. Moving investments means selling them first (a “Bed & ISA”), which can create a capital gains tax bill now in exchange for no dividend or interest tax later. That trade isn't always worth it: it can lose money where the investments would otherwise have been passed on at death, when capital gains are wiped. Premium Bonds and investment bonds offer other ways to shelter money, each with its own limits.

Go deeper: cash, Premium Bonds and tax, investment bonds and top-slicing. In the app: Savings tab → “Move existing savings into the ISA allowance”, whose card shows your net worth at the end of the plan with it on and off.

Two people means two sets of allowances, and several levers work only across a couple:

• Marriage allowance: a non-taxpayer can transfer £1,260 of personal allowance to a basic-rate partner, worth up to £252 a year.
• Coordinated drawdown: in retirement, drawing from both partners' pots so that both personal allowances and both basic-rate bands are used, instead of one partner paying higher rate while the other's allowance goes to waste.
• Moving assets between you: transfers between spouses are free of capital gains tax, so a couple can use two £3,000 exemptions and two dividend allowances, and hold the income-producing investments in the lower-rate partner's name. The projection does not yet model moving assets between partners.
• On death: anything left to a spouse is free of inheritance tax, and their unused nil-rate bands pass to you. The tax is deferred to the second death, not avoided.

Go deeper: drawing income as a couple, pensions and inheritance tax from 2027. In the app: the Couples tab models coordinated drawdown; the Inheritance tab has the spouse exemption.

Much of a lifetime's tax bill is settled in these years, and the choices often can't be undone later. The levers:

• Which account you spend first: cash, ISA or pension. The order changes how much tax you pay each year, how long the money lasts, and what is left in your estate.
• Band-fill drawdown: in years when your other income is low, often before the State Pension starts, taking pension income up to the top of a cheap tax band so that less falls into higher bands later.
• Tax-free cash: a quarter of your pension, up to £268,275 over your lifetime (the Lump Sum Allowance). You can take it all at once, or in slices alongside taxable income.
• The first withdrawal: often taxed at an emergency rate, which you then have to reclaim.
• The MPAA: taking taxable pension income while you're still paying in cuts your annual allowance to £10,000.
• Sequence risk: a market fall in the first years of retirement does more damage than the same fall later, which is what a cash buffer is for.
• An annuity: buying guaranteed income with part of your pot, in exchange for giving up flexibility and anything left to pass on.

Go deeper: which account to spend first, UFPLS, drawdown or annuity, the 25% tax-free lump sum, emergency tax on the first withdrawal, the MPAA, sequence risk, the 4% rule, how much you need, what a DB pension is worth. In the app: the Pension Income tab, and What If → retirement age, drawdown sequencing, tax-free lump sum, share of the pot buying an annuity.

The full new State Pension needs 35 qualifying years. Filling missing years with voluntary contributions is usually one of the best-value purchases in UK personal finance, so it is worth checking your record long before State Pension age. Once you reach that age, deferring your State Pension raises it by 5.8% for each year you wait (1% for every 9 weeks). But the breakeven comes late, and in the meantime you draw more from your own savings instead.

Go deeper: buying National Insurance years, deferring your State Pension. In the app: Your Facts → National Insurance record; What If → defer the State Pension.

Each person has a £325,000 nil-rate band, plus a £175,000 residence nil-rate band if their home goes to children or grandchildren. The residence band shrinks by £1 for every £2 the estate exceeds £2 million. Above your bands, inheritance tax is 40%. From 6 April 2027, pension money you haven't used counts towards your estate. The levers:

• Lifetime gifts: free of inheritance tax if you live for seven more years, with taper relief from year three. On top of that, £3,000 a year (the annual exemption) and small gifts of up to £250 per person are exempt immediately.
• Regular gifts out of surplus income: exempt immediately and without limit, if they are regular, come from income rather than capital, and leave your standard of living intact. The projection does not yet model this exemption. It treats every gift as one that needs seven years, which overstates the tax for someone giving regularly from income.
• Spending pensions rather than keeping them: from 2027 an unspent pension can be taxed twice. It counts in your estate, and if you die at 75 or over, whoever inherits it also pays income tax on what they draw. The projection includes the inheritance tax but not yet the beneficiaries' income tax, so it understates the cost of keeping a pension to pass on.
• Leaving 10% to charity: cuts the rate on the rest of the estate from 40% to 36%.
• Business and agricultural relief: 100% relief on up to £2.5 million of qualifying business and farm assets (combined, from April 2026), and 50% relief above that.
• Life cover written in trust: doesn't reduce the bill, but pays out outside the estate, so your heirs have cash to settle it.

Go deeper: pensions and inheritance tax from 2027, the 7-year rule, what happens to your pension when you die, care home fees, which protection covers which risk. In the app: Inheritance tab → Estate Levers.