How do I structure my finances to avoid unnecessary tax?

September 7, 2026

At Talis IFA, we meet many clients in their late 50s who are starting to think more seriously about the shape of their financial future; not just preparing for a comfortable retirement, but also how to avoid paying more tax than they need to. For higher-rate taxpayers, the rules around income tax, capital gains, pensions and inheritance tax can be confusing, especially when your estate is growing, and you want to make sure your family is protected.

In this Q&A, we explore a real-world scenario: Robert is 58, married, employed, and keen to structure his finances to reduce unnecessary tax now while also preparing his estate for the next generation. His questions are ones we hear often, and the answers highlight how thoughtful planning, and the right advice at the right time, can make a meaningful difference to both lifetime tax efficiency and future inheritance tax exposure.

Robert is earning a strong salary and planning to retire around 63. He and his wife own their home, have grown-up children, and have accumulated several pension pots over the years. Recently, he has started thinking more seriously about two things:

1. How to reduce unnecessary tax while he’s still working, and
2. How to ensure his future estate isn’t hit by a large inheritance tax bill.

He’s financially literate, but he’s also aware that the tax system becomes more complicated as your income rises and your estate grows. 

I’m a higher-rate taxpayer. What are the biggest tax mistakes people in my position tend to make?

There are three common issues:

• Not using pension tax relief fully. Higher-rate taxpayers often miss out on valuable relief simply because they don’t structure contributions efficiently.
• Holding too much in taxable investment accounts. Without planning, dividends, interest, and capital gains can create avoidable tax bills.
• Ignoring inheritance tax until it’s too late. Many people assume their estate won’t be large enough to trigger IHT, but a continued freeze on the IHT threshold, plus rising property values and the inclusion of pensions from April 2027 mean many more estates are likely to be liable for IHT in the future. 

I want to reduce my income tax now. What’s the most effective way to do that?

For someone in your position, pension contributions are often the most powerful tool. As a higher-rate taxpayer, every £1,000 you contribute might cost you only £600 after tax relief.

But the key is structuring contributions correctly:

• Are you close to your annual allowance?
• Have you used carry forward from previous years?
• Will your income change before retirement?
• Do you need accessible savings for short-term needs?

We often help clients balance pension contributions with ISA investing so they reduce tax now without locking away too much money.

Should I be using ISAs as well as pensions?

Almost certainly, but the mix depends on your goals.

ISAs don’t give upfront tax relief, but they provide tax-free growth and tax-free withdrawals, which is extremely valuable later in life. For someone in their late 50s, ISAs can:

• Provide flexible income before pension access
• Reduce future taxable withdrawals
• Help manage your tax position in early retirement

The right balance between pensions and ISAs is personal, and it’s one of the areas where advice from an IFA adds real value.

I’m also thinking about inheritance tax. What should I be doing now?

Inheritance tax planning, or estate planning, usually works best when it’s done gradually. For someone like you, the key steps typically include:

• Understanding your estate value now, and its potential value over time, including property, pensions, investments, and life insurance.
• Using your annual gifting allowances (£3,000 per year, plus small gifts).
• Considering regular gifts from surplus income, which can be extremely tax-efficient if structured properly.
• Checking whether you qualify for the residence nil-rate band, which is tapered away for estates above £2 million.
• Ensuring your will and beneficiary nominations are up to date.

What you decide will be based on your goals. What kind of legacy do you want to leave? Who do you want to help, and when? The goal isn’t to give away money recklessly; it’s to make sure your estate is structured sensibly and tax-efficiently and ensure that your money also remains accessible to you when you need it.

How will an IFA help me to make a decision?

Let’s look at your situation. You told us you wanted to retire at 63, and that your estate (including your home, pensions, and investments) is likely to exceed £1 million. You were planning to increase your ISA contributions and leave your pension as it is.

After modelling your tax position and future estate, we recommended a different approach:

• Increase pension contributions while you’re still working to reduce higher-rate tax
• Use ISAs for flexibility in the medium term, but not as your primary retirement planning tool
• Make modest gifts from surplus income, which doesn’t reduce your lifestyle but stops your estate rising far beyond IHT thresholds
• Review beneficiary nominations (also known as expression of wishes) so your pensions and life assurance pass efficiently and as intended
• Ensure that life assurance policies are written in trust

This path reduced your current tax bill, strengthened your retirement plan, and lowered your future IHT exposure without compromising your financial security.

What unexpected tax problems can an IFA help me avoid?

It all depends on your specific circumstances, but the main tax pitfalls facing higher-rate taxpayers are:

• Exceeding pension allowances and facing unexpected tax charges.

• Paying unnecessary capital gains tax due to poor investment structuring.
• Leaving too much in your estate, creating an avoidable IHT bill.
• Not planning for the gap years between stopping work and accessing pensions.
• Misjudging how withdrawals will be taxed, which can reduce your retirement income.
• Failing to coordinate pensions, ISAs, and estate planning, leading to inefficiencies.

At Talis IFA, our role is to bring clarity to complex decisions and help you structure your finances with confidence, whether you’re planning for retirement, reducing tax, or protecting your family’s future. 

If you’d like to explore your own situation in more detail, we’re here to help you make informed, secure choices that help you prepare for future financial freedom.

Find a Talis IFA.