The Sunday Margin #1: What Should Your Next £1 Do?

One important money decision. A few numbers worth knowing. Something practical to do before the week gets busy. Welcome to the first edition of The Sunday Margin.

Rules checked: 26 September 2026. The Sunday Margin is general information and education, not personalised financial or tax advice.

This week’s decision: what should your next £1 do?

Higher income creates more choices, but not every extra pound should go to the same place.

One pound might need to strengthen your emergency reserve. Another might belong in a pension because you are paying a high marginal rate of tax today. Another might be more valuable inside an ISA because you want the option to use it before pension age. And some of it should simply make life better now.

The useful question is not “what is the most tax-efficient thing I can do?” It is:

What job does this money need to do?

• Resilience: money you may need at short notice belongs somewhere accessible.
• Long-term growth: money you genuinely will not need for years can take a longer-term view.
• Retirement: pensions can offer valuable tax treatment, but access is deliberately restricted.
• Optionality: ISAs can create a pool of tax-sheltered capital you can normally access before retirement.
• Life now: wealth is not improved by optimising every pound while forgetting why you earn it.

The number: £100,000

For 2026/27, the standard Personal Allowance is £12,570. Once adjusted net income exceeds £100,000, the allowance is reduced by £1 for every £2 above that threshold and is fully removed by £125,140.

For someone paying the 40% higher rate in England, Wales or Northern Ireland, that creates an effective 60% marginal Income Tax rate across the taper range before National Insurance or other deductions are considered.

The threshold can also matter for parents: Tax-Free Childcare and Free Childcare for Working Parents use a £100,000 expected adjusted-net-income limit for each parent.

Official references: Income Tax rates and Personal Allowances, Tax-Free Childcare eligibility and Free Childcare for Working Parents.

Worth knowing: the Cash ISA change is now getting closer

From 6 April 2027, the Cash ISA subscription limit for people under 65 will be £12,000. The overall ISA subscription limit remains £20,000. People aged 65 and over retain a £20,000 Cash ISA limit.

That distinction matters. It is a change to the amount of cash that can be subscribed within the ISA wrapper, not a cut in the total ISA allowance to £12,000.

It is also not a reason to invest money that should remain in cash. Emergency funds and near-term spending still need to be judged by their purpose, not by a tax-wrapper headline.

See HMRC’s Cash ISA limit reduction guidance.

Your 15-minute action

Before next week, estimate your adjusted net income for the current tax year.

1. Start with the taxable income you expect across the year, not just base salary.
2. Include things that are easy to forget, such as taxable benefits, savings interest, dividends and other taxable income where relevant.
3. Then consider the adjustments HMRC allows, including qualifying pension contributions and Gift Aid.
4. If you are anywhere near an important threshold, do not wait until March to understand the position.

HMRC explains the calculation in its adjusted net income guidance.

One thing worth thinking about

A lot of personal-finance advice assumes the objective is to maximise a number. Net worth. Pension size. Investment returns. Tax saved.

But the more useful objective may be to maximise choice.

A pension can make your future richer. Accessible investments can let you stop working earlier. Cash can prevent an unexpected bill becoming debt. Spending can create experiences you actually value.

The Wealth Margin is the space that lets you choose between them.

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Coming next: a closer look at why the £100,000 threshold is so expensive, what the 2027 Cash ISA change really means, and how to think about pension versus ISA without reducing the decision to a tax calculation.

For the boundaries of our content, read the Financial Disclaimer.