Summary
All income sources in Timeline Planning are assessed together to determine total income tax.
Tax is applied based on the combined income, using current income tax bands and thresholds.
Each income source appears in the cashflow chart as net of tax — but the distribution of tax shown per source depends on input order.
This can give the impression that certain income types (e.g. State Pension) are not taxed, when in fact they are.
Total income tax and net income remain accurate, regardless of source order.
Description
Timeline Planning calculates tax by first summing all taxable income sources for the year, and then applying the latest income tax bands. This ensures the total tax paid is always accurate, regardless of how many sources exist or what type they are.
However, when viewing the cashflow chart, users might notice that some income sources show no tax impact — while others seem heavily taxed. This isn’t because one income type is exempt. Instead, it’s due to how Timeline visually distributes the calculated tax across individual income streams.
The distribution depends on the order the income sources are entered. This affects only the presentation of the net income per source, not the underlying tax calculation.
Example
Let’s consider Sam, who has the following income in Year 1:
£10,000 State Pension
£90,000 Rental Income
Combined gross: £100,000
The income tax (using 2025/2026 tax rates and bands) for a combined gross income of £100,000 is £27,432.
Scenario A: State Pension entered first, then Rental Income
Timeline calculates tax on the full £100,000.
In the cashflow chart:
State Pension shows £10,000 net (appears untaxed).
Rental Income shows a lower net value (appears heavily taxed), equal to £62,568.
But this is only a visual allocation. Both incomes were included in the tax calculation and total income tax is still £27,432.
Scenario B: Rental Income entered first, then State Pension
Same total income: £100,000.
Timeline applies tax the same way as in Scenario A.
In the cashflow chart:
Rental Income shows a net value equal to £66,568.
State Pension shows ~£6,000 net.
Again, tax is correctly applied at the total level; only the per-source net display has changed, and the total income tax is still £27,432.
Conclusion
Timeline Planning taxes all income sources collectively, ensuring accurate total tax calculation. What changes is how the resulting tax is visually distributed across income types in the cashflow chart — and that’s determined by the order of inputs. Advisers should be reassured that, even if some income sources appear untaxed or disproportionately taxed, the overall net outcome is consistent and correct