Common Tax Planning Mistakes For High Earners

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If you’re pulling in serious money, you’ve got a target on your back.
Not from thieves.
Not from scammers.
From the taxman.

Here’s the hard truth:
High earners don’t lose money because of bad investments.
They lose it because of bad tax planning.

And when you’re making £250K+, every misstep stings harder.
That’s why understanding Common Tax Planning Mistakes For High Earners is a must, not a “nice to know.”

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Why High Earners Need To Care

I’ll be blunt.

Making money is exciting.
Saving money isn’t.
But let’s be real—if you’re in the 35% bracket, every £1 saved is worth way more than chasing risky returns.

Think about it:

• Saving 1% on £100K is £1,000.

• Saving 1% on £800K is £8,000.

That’s the difference between a quick weekend getaway and a full luxury holiday in the Maldives.

Most high earners ignore this.
They chase the next “AI stock” or property deal.
Meanwhile, their biggest bill—taxes—just keeps climbing.

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📌 [Insert Image Here – a stressed high earner reviewing tax forms]

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The Core Mistake – Waiting Too Long

Here’s the first big error: waiting until filing season.

By April, it’s game over.
Most strategies have expired.
You can’t go back and:

• Rebalance your portfolio.

• Do tax-loss harvesting.

• Max out retirement contributions.

• Plan charitable bunching.

The deadline for most of these?
31 December.

So if you’re filing 2025 taxes in April 2026, congratulations—you’ve already missed the boat.

That’s why Common Tax Planning Mistakes For High Earners often aren’t about what they do.
It’s about what they don’t do on time.

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The “Invisible” Mistakes High Earners Make

Here’s a list of mistakes I’ve seen firsthand:

• Health insurance premiums missed. Many business owners don’t deduct them correctly.

• Charity donations wasted. Not bunched together, so they don’t cross the standard deduction line.

• Stock options done wrong. ESPPs and RSUs reported incorrectly.

• Ignoring home office deductions. Even when legitimately working from home.

• Not tracking cost basis. Switching CPAs or software = forgotten losses.

• Foreign tax credits skipped. Investing overseas? You’re probably paying more tax than needed.

The wild part?
These aren’t exotic loopholes.
They’re simple, boring things that anyone could fix.

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Stories From The Real World

Let me share a few that will make you shake your head.

• S-Corp owner: Had health insurance added to W-2 (correctly) but never deducted above the line. Three amended returns later? £6K saved.

• Sole proprietor: Deducted health insurance as an itemised expense. Problem? They didn’t even itemise. Refund after correction: £7.5K.

• Retiree on Medicare: Didn’t know premiums could be treated as self-employed health insurance. Missed £1K every year.

These are people who thought they were “playing it safe.”
Turns out, safe cost them more.

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The SALT Deduction Confusion

Let’s talk about the State and Local Tax (SALT) deduction.

Most high earners don’t get it.

Right now, the cap is £40K (up from £10K).
It’s good until 2029.
Then it drops back.

Who wins?

• Households with AGI under £500K in high-tax states.

Who loses?

• Anyone making over £600K—your cap phases out completely.

But wait, there’s more.
If you run a pass-through business (LLC, S-Corp, partnership), the PTET workaround can save you.
Your business pays the tax.
You deduct it federally.
Then you get a credit back at the state level.

For some high earners, this means £20K–£30K back in their pockets every year.

Miss it, and you’ve just tipped that cash into the IRS jar.

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What You Should Do Instead

Here’s the cheat sheet to avoid these pitfalls:

• Bunch donations. Give two or three years’ worth in one shot. Use a donor-advised fund.

• Tax-loss harvest yearly. Even small losses offset gains.

• Roth conversions. Pay now, save later when you’re in a higher bracket.

• Solo 401(k). Self-employed? This is your weapon.

• Keep receipts for everything. From home office to business travel.

And remember:
Do it before 31 December.
Not when you’re sipping coffee in April and filing late.

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The Cost Of Doing Nothing

Let’s say you earn £500K a year.
You skip tax planning.
Over 20 years, you’ve probably given up:

• £20K/year in missed strategies.

• That’s £400K total.

• Invested? Easily £1M+ lost in compounding.

That’s not just money gone.
That’s freedom gone.
That’s retiring five years later.
That’s telling your kid “sorry, no” to uni abroad.

All because you couldn’t be bothered to plan taxes in December.

FAQs

Q: Are CPAs enough for high earners?
A: Not always. Many just file returns. You need someone doing proactive planning.

Q: How many times a year should I review tax strategy?
A: Quarterly at minimum. Monthly if your situation is complex.

Q: Is tax-loss harvesting legal?
A: 100%. It’s standard strategy, just avoid wash-sale rules.

Q: Should high earners bother with ISAs or SIPPs (UK)?
A: Absolutely. Even if your allowance feels small, it compounds.

Q: When’s the best time to do a Roth conversion?
A: Years when your income is temporarily lower.

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The Bottom Line

Here’s what I want you to take away.

Common Tax Planning Mistakes For High Earners are rarely dramatic.
They’re small.
Boring.
Easy-to-miss details.

But stack them up, and you’re giving away six or seven figures over a lifetime.

So don’t wait until April.
Don’t assume your CPA caught everything.
And don’t think tax planning is optional.

Because the truth is simple:
Taxes are your biggest expense.
And the compounding power of proactive planning beats almost any investment return you can find.

Play the long game.
Do it right.
And keep more of what you earn.