Money that isn't yours yet

For most of the profession's history, a barrister's fee was an honorarium. Not a debt but a gift, offered in recognition of services rendered, and famously unenforceable at law. Counsel could not sue for fees. The convention held for centuries and produced a professional culture in which asking to be paid was faintly indecorous.

The legal position was fixed some time ago. The cultural residue took rather longer to clear, and the Bar's relationship with aged debt still bears the marks.

The practical consequence is that a barrister's finances run on receipts rather than earnings, and the two can diverge dramatically for eighteen months at a stretch. A superb year of work can arrive as a mediocre year of cash. A quiet year can be flush because last year finally paid. Planning against the wrong one of those numbers is the most common error in the whole field.

Sitting on top of that is a second problem, which is that a large part of the balance in a barrister's account has already been spent. Income tax, payments on account, National Insurance and VAT are known future liabilities with known dates attached. They are not a cushion, a buffer or a good year. They belong to HMRC and are merely being held.

Which raises the question of where money that isn't yours should actually sit while you're holding it. A current account is the default and pays nothing for the privilege. Beyond it, the options behave quite differently from one another: money market funds, notice accounts, National Savings, and, for additional-rate taxpayers in particular, direct gilts, where low-coupon issues held to maturity are free of capital gains tax on the redemption gain. That last point is a genuine structural quirk of the UK tax system rather than a clever product, and it suits people holding large known sums for known periods rather well.

Cash has its own risks, chiefly inflation and the FSCS limit per institution. Neither is a reason to keep it in a current account.