The amount of Capital Gains Tax (CGT) investors collectively pay is set to soar over the next six years.
According to a Telegraph article (11 December 2025), the Office for Budget Responsibility (OBR) has adjusted its estimate for how much will be raised through taxes, including CGT.
The OBR now predicts revenue from CGT will reach £114 billion between the 2025/26 tax year and 2029/30 – an increase of £6 billion on its previous forecast. Indeed, by 2030, the levy is expected to double in just six years, generating £30 billion annually for the government.
Investments that aren’t held in a tax-efficient wrapper may be liable for CGT when they are disposed of. However, you should note your personal circumstances may affect your tax liability and tax rules may be subject to change in the future.
Read on to find out the CGT essentials investors need to know.
CGT is a tax on the profits you make when you dispose of certain assets, including:
It’s important that investors and others disposing of assets are aware of the CGT rules to avoid an unexpected bill.
The rate of CGT you’ll pay will depend on your tax band and any other income you’ve received during the tax year.
In 2026/27, the CGT rates are:
As an investor, there are allowances and other ways to improve tax efficiency that could be useful when managing your CGT liability.
You should also note before investing, that returns cannot be guaranteed and you may not get back the full amount you invested.
Each tax year, you have a tax-free allowance known as the “Annual Exempt Amount”. In 2026/27, this is £3,000 for individuals. The portion of your gains that falls below this threshold will not be liable for CGT.
You cannot carry forward your unused Annual Exempt Amount to a new tax year.
As a result, you might want to consider spreading the disposal of your assets across several years to use the Annual Exempt Amount to reduce your tax bill.
In addition, you can pass assets to your spouse or civil partner without CGT being due. As the Annual Exempt Amount is an individual allowance, doing this and planning as a couple could mean you can make up to £6,000 in gains each tax year before tax is due.
As an investor, there are tax wrappers you could use to improve your tax efficiency and potentially reduce a CGT bill.
Investments held in a Stocks and Shares ISA aren’t subject to CGT. In 2026/27, you can place up to £20,000 into ISAs during the tax year.
Similarly, investments held in your pension aren’t subject to CGT, and you may also be able to claim tax relief on your contributions for a further boost.
However, pensions are a long-term investment, and you can’t usually access the money held in one until you’re 55 (rising to 57 in 2028). As a result, a pension may not be suitable if you plan to use the money before you retire or if you don’t have other assets you can draw on in an emergency.
We may be able to help make tax efficiency part of your financial plan by identifying allowances and strategies that suit your needs. If you have any questions about CGT or other taxes that affect your personal finances, please get in touch.
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
The Financial Conduct Authority does not regulate tax planning.
Financial shocks can have a devastating effect on your short- and long-term finances. While you can’t remove the unexpected from your life, it is possible to be prepared, and a cashflow model could help you identify how.
A cashflow model is a powerful tool that financial planners can use to show how your wealth might change over the long term in various scenarios.
To start, you’ll input essential information, such as the value of your assets, your income, and how you use your money each month. Then you can make certain assumptions, such as the rate of inflation, potential investment returns, or your expected retirement date, to see how your wealth might change over the years.
It’s important to note that the results of a cashflow model cannot be guaranteed, as they rely on the data added and assumptions that might prove inaccurate. However, they can provide a valuable way to visualise your long-term wealth and assess the effect of your decisions.
One of the reasons cashflow modelling is useful is that once it’s set up, you can adjust the assumptions to model different scenarios.
If you’re concerned about financial shocks, you can effectively use it to stress-test your finances and as an early warning system. Identifying potential gaps sooner could mean you’re in a position to close them.
As a result, cashflow modelling could help you manage worrisome “what if?” questions.
Imagine you’re the main income earner for your household and you’re worried that your family wouldn’t be able to cope if you were unable to work.
You can use a cashflow model to stress-test your finances and show how long they would last without an income. For example, you might assess how quickly your emergency fund would be depleted.
Armed with this information, you might be able to address potential weak spots in your finances.
In this case, if you found your emergency fund would only cover essential bills for two months, you might start by saving more to build it up. In addition, you may consider taking out appropriate financial protection that would provide an income if you couldn’t work due to an accident or illness, to further improve your financial resilience.
Please note that financial protection plans typically have no cash in value at any time, cover will cease at the end of the term, and you’ll need to pay premiums to maintain the cover. Cover is also subject to terms and conditions and may have exclusions.
There are many other types of financial shocks where a cashflow model could be useful too, from a period of downturn leading to falling investment values to a large, unexpected household bill, such as needing to replace your home’s roof.
If you experience a financial shock that you hadn’t previously considered, a cashflow model could still be useful.
It can be difficult to assess the long-term effect of a shock. By adding it to your cashflow model, you may be able to understand whether your goals remain on track and whether any adjustments are necessary.
Imagine you’d previously planned to retire at 65 and calculated that you’d have enough to take a sustainable income that would afford you the lifestyle you’ve been looking forward to.
However, ill health means you now need to bring forward your retirement by three years. This might not be something you’ve considered before. You’re now unsure whether you’ll be financially secure later in life or if you need to reduce your outgoings in retirement.
Updating your cashflow model following this life event could enable you to assess the long-term effects. It could give you the confidence to make decisions, even when life is unpredictable.
If you’d like to understand if you’re vulnerable to financial shocks and how you might improve your resilience to them, please get in touch.
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
The Financial Conduct Authority does not regulate cashflow modelling.
When you’re establishing a business, it can be easy to neglect your personal finances. You might feel that you don’t have the time, or you simply plan to use your business to support long-term goals. Yet being proactive and working with a financial planner could be beneficial.
Here are five reasons to work with a financial planner as a business owner.
Some of your goals are likely to be related to your business and its success. Yet you likely have many others that aren’t related to your company, which you could be neglecting if you don’t review your personal finances.
If you have children, you might want to create a nest egg to support them when they study at university or to act as a deposit when they buy a home. Or perhaps you’d like to travel extensively when you retire and will need a pot to draw from.
A financial plan will focus on your personal goals, so you might take steps towards them alongside running your business.
You might already work with an accountant to manage your business’s finances and identify tax breaks. A financial planner could do the same for your personal finances.
For example, if you’re investing for a long-term goal, have you used your ISA Annual Allowance to reduce your Capital Gains Tax bill? Are you claiming back all the tax relief you’re entitled to when contributing to a pension?
A tailored financial plan could help you make use of appropriate tax allowances so your money goes further.
Please note that tax rules and allowances are subject to change, and your personal circumstances may affect your liability.
Life is full of unexpected events, and business can be unpredictable too.
A financial plan will usually include identifying potential weaknesses in your finances, so you’re able to take steps to protect yourself from financial shocks. For instance, you might consider how you’d cope if you faced a large, unexpected expense or serious illness.
By preparing for these financial shocks, you can feel more confident in your overall finances, which could be beneficial for your business as well. You might want to provide a cash injection to your firm, and understanding your personal finances could mean you’re able to weigh up the options with confidence.
Even if you hope to remain in your business for many more years, it’s worth thinking about how and when you’d like to exit. Your exit plan isn’t set in stone, but as your decision could affect tax liability, timelines, and profit, reviewing your options could be useful.
Your personal finances might influence your decision. Indeed, a survey reported in IFA Magazine (12 January 2026) found that 19% of business owners plan to pass their companies on to family members due to Inheritance Tax.
Right now, your focus might be on the success of your business, but eventually, you might want to step away from it. If you do, having a clear financial plan that reflects your aspirations could make the transition easier.
A long-term financial plan could also be useful when you’re negotiating a sale price for your firm, as you’ll understand how much you need to live the lifestyle you want.
Arrange a meeting with one of our team to discuss how we could work together to review your personal finances and create a plan that could support your goals.
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
The Financial Conduct Authority does not regulate tax planning or estate planning.
In February 2026, ongoing uncertainty around trade tariffs and concerns about the impact of AI adoption on business profits affected the markets.
Remember, you should invest with a long-term view, and short-term market movements are normal. However, all investments carry some risk, and the value of your assets may fall as well as rise.
Read on to discover some of the factors that may have affected your investment portfolio.
The FTSE 100, an index of the largest companies listed on the London Stock Exchange, was off to a great start in February – it closed at a record high of 10,341 points on 2 February, with a range of sectors performing well, including retailers, banks, airlines, and hospitality.
Similarly, Asian markets reported a welcome uptick on 3 February. Japan’s Nikkei index reached a record high after closing almost 4% higher than its opening level. In addition, India’s Sensex index was up 2.8% after the country struck a trade deal with the US.
However, on 4 February, AI fears affected investors.
Worries that the adoption of AI would harm software and data companies led to a sell-off in European and Asia-Pacific markets. However, the CEO of Nvidia, a leading AI company, Jensen Huang, dismissed the concerns, stating they were “illogical”.
Worries around AI intensified on 11 February when California-based firm Altruist Corp launched an AI service that it said could help advisers create personalised tax strategies. The announcement led to shares dipping for wealth managers, insurance firms, and price comparison sites.
On 12 February, the FTSE 100 reached another record high as it surpassed 10,500 points for the first time. This time it was lifted by shares in Schroders soaring by almost 30% in the first hours of trading after the asset management firm accepted a takeover offer from US investor Nuveen.
On 16 February, the BBC reported that the UK government was weighing up increasing defence spending at a faster pace than expected. The government previously set a target of spending 2.5% of economic output on defence by 2027, rising to 3% by the next parliament. The news led to defence stocks rising, including Babcock (2.5%), Melrose (2.2%), and BAE Systems (1.3%).
US trade tariffs have affected businesses and markets globally throughout 2025 and into 2026. On 20 February, the US Supreme Court ruled against the president’s economic policy of global tariffs, stating that Donald Trump had exceeded his authority by invoking emergency powers to impose them.
Following the announcement, the US Customs and Border Protection agency said it would stop collecting tariffs imposed under the International Emergency Economic Powers Act from Tuesday, 24 February.
This led to market volatility as investors and businesses assessed what the announcement would mean for them.
Further uncertainty followed on 24 February when Trump’s new global tariff was introduced. The new tariff is being applied under the 1974 Trade Act, which allows the president to impose a charge for 150 days without congressional approval. The changing situation places pressure on businesses exporting to the US.
On 28 February, US-Israeli strikes on Iran triggered fresh geopolitical uncertainty, which is likely to affect stock markets in March 2026 and potentially beyond.
Inflation in the UK fell to 3% in the 12 months to January 2026, according to the Office for National Statistics (ONS). Prime Minister Keir Starmer said the fall would “ease the burden on people”.
Despite the inflation dip, the Bank of England chose to hold its base interest rate. However, it’s expected that a rate cut will happen in the coming months as inflation stabilises to support the economy.
Official GDP data suggests the UK economy grew by 0.1% in December 2025, and real annual GDP per capita grew following a period of no growth in the previous year. Chancellor Rachel Reeves commented that she expects stronger economic growth in 2026.
The UK posted its largest budget surplus since monthly records began in 1993. According to the ONS, the January surplus was £30.4 billion, compared to an expected £24 billion, which provided a boost to the chancellor ahead of the Spring Statement set to be delivered in March.
Readings from various S&P Global Purchasing Managers’ Indices (PMI) – which measure economic health based on surveys of purchasing managers – were positive.
Overall, the PMI data could support the chancellor’s assertions that economic growth will improve in 2026.
Figures from Eurostat show inflation across the eurozone fell to 1.7% in the 12 months to January 2026, taking it below the European Central Bank’s (ECB) 2% target.
The ECB opted to hold interest rates as inflation stabilised.
Economic data suggest the eurozone continues to face challenges. S&P Global’s manufacturing PMI recorded a reading of 49.5 in January, just below the 50 mark that indicates growth.
In addition, figures released by Eurostat show industrial production was down by 1.4% in December when compared to the previous month in the eurozone, and by 0.8% across the EU. The largest monthly decreases were recorded in Slovakia (-4.9%), Germany (-2.9%), and Spain (-2.6%).
However, the Sentix index, which measures investor morale, increased for the third consecutive month in the eurozone, which could suggest investors feel optimistic.
Inflation in the US fell by more than expected to 2.4% in the 12 months to January 2026. The news could mean the Federal Reserve is more likely to consider a cut to its interest rates in the coming months.
The Bureau of Economic Analysis reported economic growth of around 0.35% in the final three months of 2025, and an annualised rate of 1.4%, below the estimated 2.5%.
Figures from the Bureau of Labour Statistics indicate that US employers are feeling confident. In January, businesses hired 130,000 more workers, which was stronger than expected after the White House warned the number could fall because of its deportation program.
While positive, the Guardian noted that these figures may be revised downwards. Indeed, in 2025, the total new jobs for the year were revised significantly downwards to 181,000 from the initially reported 584,000.
Japan just avoided a technical recession – defined as two consecutive quarters of economic contraction. After the economy contracted by 0.7% in the third quarter of 2025, GDP figures showed weak growth of 0.1% in the following quarter. The news led to Japanese investment markets dipping, including the Nikkei 225 index (-0.24%) and the broader Topix index (-0.8%).
While China’s GDP was significantly higher at 4.5% in the final quarter of 2025, it was weaker than in previous years, partly due to trade frictions with the US. However, the country did hit its official 5% annual target.
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Just over three months after her lengthy Autumn Budget, chancellor Rachel Reeves has addressed the House of Commons and delivered the government’s 2026 Spring Statement.
Ahead of the Statement, Reeves reinforced the government’s commitment to “one fiscal event, one Budget, a year”. So, it will come as a relief to many, including business owners, that the Spring Statement included no additional tax-raising measures. Furthermore, no changes to pensions or Individual Savings Accounts (ISAs) were announced.
Reeves also said that household disposable income is set to grow at twice the rate that was forecast in the Autumn Budget – leaving the average person £1,000 better off each year by the next election.
That being said, previous announcements, including changes to the tax regime, remain in place, and may affect personal finances and business owners in 2026/27 and beyond.
Reeves gave an overview of the Office for Budget Responsibility’s (OBR) economic forecast for the years to come. Notably, the OBR’s forecasts and the Statement as a whole made no mention of the potential economic impact of the unfolding situation in the Middle East, which may contribute to increased oil and gas prices that could prove inflationary and cause stock market volatility.
In an effort to reduce speculation and prevent a chop-and-change approach, the chancellor confirmed that key tax measures, announced in the Autumn Budgets of 2024 and 2025, will remain in place.
Among the key changes that have been reconfirmed and will affect personal finances are:
The lack of any tax-raising measures in the Spring Statement will be welcome news for many people. However, the previously announced changes could mean a review would still be beneficial.
The OBR has updated its real-terms GDP forecast every year between 2026 and 2029 when compared to the estimates it made in the 2025 Autumn Budget. The organisation now expects the economy to grow by:
The OBR expects inflation to be at or around the Bank of England’s (BoE) 2% target over the next five years. Inflation easing would improve household spending power, which, in turn, could provide a boost for the economy and businesses. Indeed, real household disposable income is expected to grow by between 0.6% and 0.9% each year until 2030.
The BoE has already cut its base interest rate several times since the current government formed in July 2024, as inflationary pressures eased. If the OBR’s forecast is accurate, the BoE is likely to make additional cuts, which would reduce the cost of borrowing for households and businesses.
The OBR expects unemployment to rise from 4.75% in 2025 to a peak of 5.33% in 2026, driven by weaker demand for labour. After peaking in 2026, unemployment is expected to fall to 4.1% in 2030.
It also forecasts that house prices will rise by between 2.4% and 2.9% each year between 2026 and 2030.
In her speech, the chancellor confirmed the two fiscal rules set out in the Budget:
Addressing the stability rule first, although the cost of borrowing has risen during this period of heightened uncertainty, the chancellor vowed that the steps taken in the Statement will restore its headroom.
Turning next to the investment rule, Reeves also stated that this commitment will be met two years early, with net financial debt predicted to be 82.9% of GDP in 2025/26.
1. Boosting defence spending
At a time of growing worldwide tension, the chancellor announced increases to defence spending, aimed at making the UK a “defence industrial superpower”. Defence spending is set to reach 3.5% of GDP by 2035.
Defence innovation will include harnessing AI and drones, creating employment opportunities for engineers in the devolved nations, while a previously announced Defence Growth Board is also being created to support £400 million for defence innovation.
2. Tackling youth unemployment
The chancellor reconfirmed her commitment to getting those in Britain who can work into work. She stated that 1 in 8 young people is currently not in employment, education, or training.
The chancellor confirmed that reforms to the welfare system will produce welfare savings of £4.8 billion between 2026 and the end of the forecast period (2029/30).
3. Increasing property revenue
Previously announced property planning reforms will go ahead.
The reforms are expected to increase real levels of GDP by 0.2%, the equivalent of £6.8 billion for the economy, by 2029/30. Over 10 years, this is expected to increase to 0.4% of GDP (£15 billion). Reeves said this represents the biggest growth forecast for a policy with no fiscal cost.
4. Making government more efficient
The abolition of NHS England was announced back in March 2025 as part of wider efforts to increase NHS efficiency and productivity, and to cut spending. These measures will also include reducing costly agency outsourcing.
More widely, Reeves confirmed the £3.25 billion of investment in a new “transformation fund” that will drive modernisation across the public sector through digital reform and the adoption of AI. It’s hoped that these changes will result in a “leaner” and more efficient public sector.
After announcing a raft of changes in the Autumn Budget, the Spring Statement acts as a fiscal pitstop, upholding the government’s commitment to one significant fiscal event a year.
All information is from the chancellor’s speech, the gov.uk website, the Spring Statement press release and the Autumn Budget documents published by HM Treasury.
The content of this Spring Statement summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.
While we believe this interpretation to be correct, it cannot be guaranteed, and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.
The Financial Conduct Authority does not regulate tax planning.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
Brits could face a worrying shortfall if they need care later in life. A report from the Just Group (8 December 2025) suggests that 6 in 10 over-45s are underestimating the cost of a care home by thousands of pounds.
Industry figures suggest average residential care home fees are almost £66,500 a year. However, 60% of over-45s believe the annual cost would be less than £60,000, with 28% underestimating the true cost by more than half.
Of those surveyed who had previously helped find care for a loved one, 85% said they were shocked by the cost.
With the report estimating that 4 in 5 people aged over 65 will require some level of care before they die, thousands of families could be surprised by the care bill they receive.
Read on to find out whether you’re likely to need to self-fund care, and how to make it part of your financial plan.
According to the report, 67% of people surveyed said they were surprised by how little financial support the state provides, and how much they’d have to contribute.
Indeed, taxpayer support is means-tested, and as a result, many people are required to cover all or a portion of their care costs.
Your individual circumstances may affect the government support you’re entitled to if you require care, and the rules could be subject to change in the future.
In England and Northern Ireland, anyone with assets valued at more than £23,250 is expected to pay their own residential care costs in full. You will have to contribute some of your income to cover fees if the value of your assets is between £14,250 and £23,250. Whether your home is included when calculating the value of your assets will depend on your circumstances.
In Scotland, personal and nursing care is free, but you might still need to pay for other costs, such as accommodation. If your assets total more than £35,000, your local council will not cover the additional fees associated with a care home.
In Wales, you might need to cover all your care home fees if you have assets that exceed £50,000. If your capital is below this threshold, your local council will contribute towards your fees.
While you may hope that you don’t need to move into a care home in the future, making the potential costs part of your financial plan now could offer peace of mind.
The report from Just Group found that 73% of people said the process of finding care was very stressful. Being unsure whether you can afford the costs and how it might affect your goals could further add to this stress for both you and your loved ones.
Yet, the survey shows only 7% of over-75s have made a specific provision to cover the cost of care themselves.
There are several ways you might fund care yourself. According to the report, among those paying for their own costs, the top three ways were:
A care plan might involve reviewing your assets and setting a portion of them aside to cover care if it’s required.
Being proactive about planning for care could mean you have greater choice in the future.
For example, 71% of people said a care home close to family would be important to them. If you have a care fund to draw on, you might be able to select a care home that would otherwise be out of reach.
Similarly, you might prefer a care home that has certain amenities, which would make the next chapter of your life more enjoyable. Again, making care part of your financial plan could mean you have the option to choose a care home that suits your needs.
A care plan can help you set money aside in case you need support later in life and offer you peace of mind. Please get in touch to talk about making care part of your wider financial plan.
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
On 5 April 2026, the current tax year will end, and the new one will start the following day. Making a note of the deadline in your calendar could help you make the most of tax breaks as part of your financial plan.
Here’s why the start of a new tax year might matter to you.
When a tax year ends, many allowances reset. Consequently, the coming weeks might be your last chance to use some of them.
For example, you can add up to £20,000 into ISAs in 2025/26. ISAs provide a tax-efficient way to save or invest, which might reduce your overall tax liability. You cannot carry forward your unused ISA allowance, so 5 April 2026 might be your last opportunity to use the 2025/26 allowance.
When placing money into an ISA, it’s important to decide if a Cash ISA or a Stocks & Shares ISA is right for you. While a Stocks and Shares ISA allows you to invest, which has the potential to deliver higher returns than interest from savings, all investments carry some risk, and the value of your investments may fall.
If your estate could be liable for Inheritance Tax, you might be considering gifting some of your assets now. The annual exemption allows you to pass on up to £3,000, which will be considered immediately outside of your estate when calculating IHT.
You can carry forward any unused allowance for one tax year. As a result, this may be your last chance to use your 2024/25 allowance if you haven’t already done so.
Keep in mind that your individual circumstances may affect your allowances and exemptions. Seeking professional, tailored advice could help you assess your tax position.
Arranging a meeting with your financial planner can help you understand how you’ve used allowances and exemptions so far this year. It could also identify other opportunities that may make sense as part of your wider financial plan.
Planning how you’ll use allowances and exemptions throughout the year, rather than waiting until the deadline approaches, might be useful.
The pension Annual Allowance is the maximum amount you can contribute to your pension during the tax year while still receiving tax relief without incurring an additional charge. It covers contributions made by you, your employer, and any third parties. You can only claim tax relief up to 100% of your annual earnings.
For the 2026/27 tax year, the pension Annual Allowance is £60,000 for most people.
If you’ve already taken an income from your pension, you may be affected by the Money Purchase Annual Allowance, which would reduce the amount you can tax-efficiently contribute to a pension to £10,000. Similarly, if you’re a high earner, the Tapered Annual Allowance could see the amount you can tax-efficiently contribute to your pension fall by £1 for every £2 of adjusted income you have above £260,000.
Deciding how much you want to contribute in 2026/27, and making monthly contributions, could be easier to manage than discovering a shortfall at the end of the tax year and needing to contribute an additional lump sum.
Before contributing to your pension, you should note that you cannot usually access the money until you’re 55, rising to 57 in 2028.
It’s also important to note that some allowances and tax rates will change in the new tax year.
For instance, from 6 April 2026, the basic and higher rates of Dividend Tax will both increase by two percentage points, which may affect business owners and investors. Being aware of these changes could influence the financial decisions you make now.
The Financial Conduct Authority does not regulate tax planning. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
It can be difficult to keep up with tax changes and understand what they mean for you. If you have any questions about your tax strategy for the current tax year and beyond, please get in touch. We can help you make the most of allowances and exemptions to improve your tax efficiency.
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
If you’re saving for retirement, you will want to get the most out of what you’re putting into your workplace or private pension.
Please note, workplace pensions are not regulated by The Pensions Regulator.
Fortunately, there are plenty of tax efficiencies when you save your wealth in a pension.
Indeed, any investment returns generated within your fund are typically free from Income Tax and Capital Gains Tax.
Better yet, you can also receive tax relief on your contributions, significantly bolstering the value of your pot over time.
Despite these advantages, many people overlook one of the most valuable benefits pensions offer.
Research from PensionsAge (8 December 2025) found that 44% of UK adults don’t know what pension tax relief is, while just 31% could identify its purpose.
Over time, missing out on pension tax relief could be costly.
If you’re deciding whether to contribute to your pension, keep in mind it is a long-term investment. You will not normally be able to access your pension until you turn 55 (rising to 57 in 2028). Usually, your money will be invested, and it’s impossible to guarantee investment returns. As a result, your capital will be at risk, and the value of your investment (and any income from it) can go down as well as up – you may not get back the full amount you invested.
When you pay into a pension, the government essentially “tops up” these contributions based on your marginal rate of Income Tax. Looking at it another way, tax relief acts as a “refund” of the Income Tax you have already paid on the money you put in your pot.
As a result, in England, Wales, and Northern Ireland, a £100 payment into your pension would typically cost:
Please note that Income Tax bands and rates are different in Scotland, which affects pension tax relief.
For most personal pensions, basic-rate tax relief is applied automatically using a system known as “relief at source”. Some schemes use net pay arrangements, where tax relief is applied differently (this article talks about relief at source only).
If you pay higher- or additional-rate tax, you’re usually entitled to relief at your marginal rate. However, this portion isn’t added automatically. Instead, you usually need to claim it through your self-assessment tax return or by directly contacting HMRC.
Many people forget to do this. Standard Life (24 February 2025) estimates that up to £1.3 billion of extra relief went unclaimed between the 2016/17 and 2020/21 tax years.
This can make a considerable difference:
Note that levels, bases of and reliefs from taxation may be subject to change, and their value depends on the individual circumstances of the investor.
Ensuring you claim everything you are entitled to could substantially increase the amount of money you can put towards retirement.
If you believe you have missed out in the past, it’s worth noting that it is possible to backdate your tax relief claims for up to four tax years.
While the incentives of tax relief are generous, there are limits on how much you can pay into your pension each year tax-efficiently.
You can receive tax relief on any pension contributions worth up to 100% of your earnings for that tax year. But if you surpass the Annual Allowance, your contributions could face a tax charge.
The Annual Allowance sets the maximum amount that can be contributed across all your pensions in a single tax year without incurring a tax charge.
As of 2025/26, this is £60,000. While the Annual Allowance does reset each year, you may be able to carry forward unused allowances from the previous three tax years, provided you were still a member of a pension at the time. You also need to use all of the current year’s allowance before you can carry forward.
It’s vital to note that if you have a high income, you may face the Tapered Annual Allowance.
In 2025/26, this means that when your income exceeds £200,000, and your adjusted income (which includes your pension contributions) is above £260,000, the Annual Allowance falls by £1 for every £2 earned above that level. Just remember that the minimum it can fall to is £10,000.
What’s more, if you’ve already started accessing your pension wealth, you may have triggered the Money Purchase Annual Allowance.
This typically reduces the amount you can tax-efficiently contribute to your pension to £10,000 each year.
One of the most practical aspects of tax relief is that it's added straight to your pension, where it is usually invested on your behalf by your provider.
Any growth is reinvested, allowing your savings to benefit from “compounding”. This is the “growth on growth” effect that further boosts your returns over a longer period of time.
Standard Life (21 August 2025) gives an example of how beneficial this can be.
If you contributed £200 to your pension each month from age 25 to 65, paid a management fee of 1% per year, and your investments grew at an average rate of 5% each year, your pot could be worth around:
While you might imagine that your pot would grow from £73,000 after 20 years to £146,000 after 40 years, it would actually increase in value significantly more. This is thanks to compounding returns and long-term growth.
As such, making regular payments, starting early, and making full use of tax relief can all improve your financial security later in life.
While investments have historically delivered returns over a long-term time frame, this cannot be guaranteed. When you invest, including through a pension, it’s possible that your investments will fall in value and you might receive back less than you contributed.
We can help ensure you’re claiming all the pension tax relief you’re entitled to, helping you secure peace of mind for your retirement. Please get in touch to arrange a meeting.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.
There’s more to being a successful investor than following the latest market trends and tips. Setting out a strategy that’s right for you could allow you to balance risk against your goals.
Last month, you read about the importance of defining what success means for you. With your goals outlined, you can start to think about an investment strategy. Here are some of the factors you may need to consider.
To be a successful investor, you may think you simply need to choose the “best” shares that will deliver the highest returns. However, it’s impossible to consistently pick the top performers, as numerous factors affect outcomes, and it’s important to note that past performance is not a reliable indicator of future performance.
Indeed, according to research from Schroders (29 August 2024), in 12 of the 18 years between 2006 and 2024, no US stock that was a top 10 performer in one year also made the top 10 the following year. Even staying in the top 100 was rare – an average of 15 companies each year managed to do so for two consecutive years.
Instead, creating a strategy that suits your needs could provide long-term investment success. The following steps could help.
Go back to your investment goal
In last month’s blog, you read about why it’s important to set an investment goal. As you start to think about your investment strategy, going back to your goal may be useful.
Your goal might affect factors such as your investment time frame or the level of risk that is right for you.
Decide how much you will invest
To create an investment strategy, you need to define your starting point.
Answering these two essential questions could help you compare the expected returns with the amount you need to reach your goals.
Understand your risk profile
All investments carry some risk. The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. However, risk can vary significantly between opportunities, and it’s important that you select investments that align with your risk profile.
As a general rule, the longer your money is invested, the more risk you can take. This is due to a longer time frame providing more opportunities for investments to recover if they experience a dip. Investments should be considered over the longer term, but keep in mind that returns still cannot be guaranteed.
However, time frame isn’t the only factor to consider when deciding how much risk is appropriate. You may also factor in the other assets that you hold, your reason for investing, and your ability to withstand financial losses. Your financial planner can work with you to help clarify your risk profile.
As well as financial factors, you might also want to consider your investment mindset. If you’re worried about losing money and could respond emotionally if markets experience volatility, you might opt for a more risk-averse approach. Again, your financial planner can offer guidance about what’s right for you and give you confidence in your investment strategy.
Ensure your investments are diversified
Once you’ve created an investment profile, you may start to look at what investments align with it.
Rather than investing in a handful of assets, most investors can benefit from diversifying their investment portfolio. This means investing in a range of asset classes, regions, and sectors.
Diversifying allows you to spread investment risk. So, if one company performs poorly, this may be balanced out by stability or gains in other areas of your investment portfolio.
Investment funds might provide a simple way for investors to diversify their portfolios. A fund will pool your money with that of other investors to invest in a range of companies and assets in line with its objectives.
Working with a financial planner who understands your goals means they can advise you on which investments or funds could create a balanced portfolio that’s right for you.
If you’d like to work with us to create your investment strategy, or have us review your existing one, please get in touch to arrange a meeting.
Next month, read our blog to find out what comes after creating your investment strategy – for many investors, it involves patience and focusing on their end goal.
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
This guest blog was written by Chris Budd, who wrote the original Financial Wellbeing Book as well as The Four Cornerstones of Financial Wellbeing. He founded the Institute for Financial Wellbeing and has written more than 100 episodes of the Financial Wellbeing Podcast.
The new year is a time when we take a moment to take stock. To review what we want from life, and the year ahead in particular. Very often this involves setting goals, making resolutions; trying to change habits.
Actions become habits for a reason. When we reflect on resolutions made in the past, we could easily conclude that many of our habits are, in fact, unchangeable. Only 8% of people achieve their new year resolutions (2 January 2013).
How many of us have paid to join a gym in January? I know I have. Gyms are nearly 40% busier in January than in the previous two months (8 January 2024). 63% of people attend regularly when they first join the gym; six months later, only 33% still attend regularly (9 January 2024).
Habits are hard to change, and this is especially true when it comes to our financial habits.
There is a wide variety of behaviours and habits when it comes to money. It could be our spending habits, or perhaps how we often react emotionally to financial decisions rather than with a cool head.
These habits don’t necessarily serve us well. We might avoid spending money on certain things that are good for us, like putting money into savings or pensions. If we have to do something that doesn’t align with other beliefs, this will make us unhappy (psychologists call this cognitive dissonance).
The first part of setting resolutions and creating habits that will serve us well is to take some time to understand what it is that makes us happy. We can then be more conscious of this when our behaviours and habits are not aligned with what makes us happy.
The question of what brings joy into our lives has been mulled over by humanity for thousands of years. Philosophers, psychologists, writers, musicians, artists, theologians, and academics. Everybody wants to know the secret to a happy life.
There are many different types of joy. Feeling happy in the moment, for example. But what brings a longer source of wellbeing? One significant source is having a sense of self-worth.
What is the source of this self-worth? Perhaps it is derived from other people. Examples of these external sources of self-worth could be someone admiring what you are wearing or driving. Maybe you have pleased someone whose opinion you value. It could be that you have impressed someone you don’t know. Maybe you are meeting a deadline or somebody else’s target.
External self-worth is, by definition, short-lived. Once you have received that admiring glance or the applause has died down, then you need to find somebody else to provide that admiration.
Internal self-worth is something that you feel good about your irrespective of what other people think. It is something you do just for yourself that provides meaning and purpose. It could be helping others through volunteering, showing kindness, or perhaps being creative. It could be getting involved with a local community and connecting with others.
Internal self-worth is a much more nourishing form of wellbeing because it doesn’t need somebody else to provide it. It lives within you.
Money can play a big part in achieving external self-worth. Indeed, showing that we have money is often a source of external self-worth. This can create a cycle of habits where we continually chase this very fragile and temporary type of self-worth.
When it comes to internal self-worth, money plays a much more indirect role, in that it can provide time. If we start to apply this idea to our spending habits, then our actions, our beliefs, and intentions can become more aligned, and our behaviours might change.
The final part of this process, therefore, is to consider whether the habits you want to change are making you happy. Are they leading to internal self-worth? Understanding this might just give you that extra motivation to change those habits that are not serving you well.
Identifying what will bring you wellbeing, and identifying the behaviours that will help you get there, will allow you to create financial resolutions which you will be much more likely to keep.
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
