High earners striving to build wealth, dubbed “Henrys” (high earner, not rich yet), may find their tax position changes drastically as their income grows. Being aware of your tax liability now and in the future could allow you to create a financial plan that helps you get more out of your money by potentially reducing your tax bill.
There isn’t a clear definition of how much you need to earn to be a Henry or what constitutes being “wealthy”. A huge range of factors could affect your financial position, from where you live in the UK to your long-term goals.
According to a February 2025 study from HSBC, people in the UK believe you need an average annual income of £213,000 to be wealthy. The figure is around six times the national average income and represents the top 4% of earners.
However, even people earning below this threshold could find they’re affected by high-earner tax rules. As a result, you may benefit from regular reviews.
If you’re a Henry, here are four tax rules that might affect your long-term finances.
A key tax implication of becoming a high earner is losing the Personal Allowance – the amount you can earn each tax year before Income Tax is due. This could mean you fall into the “60% tax trap”.
While there isn’t an official tax rate of 60% on earnings, tax rules may mean you end up paying more Income Tax than you expect.
For every £2 you earn above £100,000, you lose £1 of the Personal Allowance, which is £12,570 in 2025/26. So, once you’re earning £125,140 or more, you don’t have any Personal Allowance.
In real terms, this means for every £100 you earn between £100,000 and £125,140, you pay Income Tax of £40 and lose another £20 because of the tapering of the Personal Allowance. As a result, you’re effectively paying 60% tax on this portion of your income.
Depending on your circumstances, there are some steps you might take to beat the 60% tax trap, including:
It’s important to weigh up the pros and cons of these options, and there might be other ways to manage your Income Tax liability. Please get in touch if you have any questions.
The pension Annual Allowance is how much you can tax-efficiently contribute to your pension each tax year. For most people, the Annual Allowance is £60,000 in 2025/26 or 100% of annual earnings, whichever is lower.
However, the Annual Allowance is gradually reduced if you’re a high earner. If your threshold income is more than £200,000 or your adjusted income (your income plus the amount your employer pays into your pension) is above £260,000, you’ll normally be affected by the Tapered Annual Allowance. It reduces your Annual Allowance by £1 for every £2 your adjusted income exceeds the threshold.
The maximum reduction is £50,000. So, if your adjusted income is £360,000 or more, your Annual Allowance would be just £10,000.
As a result, it could significantly affect how you might effectively save for retirement.
Parents claiming Child Benefit may be subject to the High Income Child Benefit Tax Charge, if one of them earns more than £60,000 a year.
Importantly, the tax charge applies if one of the parent’s income exceeds the threshold, rather than the household income. So, if both parents worked and earned £55,000 each a year, the High Income Child Benefit Tax Charge would not be applied.
The Income Tax charge would be 1% of your Child Benefit for every £200 of income between £60,000 and £80,000. The charge will never exceed the amount of Child Benefit you receive and is usually paid through a self-assessment tax return.
While you wouldn’t receive any Child Benefit if you or your partner’s income exceeds £80,000, you may still claim it for National Insurance (NI) credit purposes. For example, if one partner is not employed because they’re caring for the child, claiming Child Benefit may mean they receive NI credits.
To receive the full State Pension, you usually need 35 years of NI credits on your record. As a result, claiming Child Benefit, even if you exceed the threshold, could be important for your or your partner’s future State Pension entitlement. While the State Pension often isn’t enough to retire on alone, it could still play a valuable role in your long-term financial security.
If you’re still building wealth, it might feel too early to think about how you’d like to pass it on to loved ones in the future. Yet, establishing an estate plan now can be valuable and evolve as your wealth changes.
In 2025/26, the nil-rate band is £325,000. If the total value of your estate is below the threshold, no Inheritance Tax (IHT) would be due when you pass away.
In addition, some estates may be able to use the residence nil-rate band if the main home is left to direct descendants, such as your children or grandchildren. In 2025/26, this is £175,000. However, the residence nil-rate band is reduced by £1 for every £2 that the estate exceeds £2 million.
You can pass unused allowances to your spouse or civil partner, so an estate may be worth up to £1 million before IHT is due. Yet, the threshold for paying IHT could be significantly lower if you’re not estate planning with a partner or the estate isn’t eligible for the residence nil-rate band.
With a standard tax rate of 40% applied to the portion of the estate that exceeds the threshold, your loved ones could face a hefty bill.
Additionally, pensions are set to be included in estates for IHT purposes from April 2027. So, as your pension could be one of your largest assets, you may be closer to exceeding the nil-rate band and leaving your beneficiaries with a larger bill than you think.
The good news is that there are often steps you can take to reduce a potential IHT bill if you’re proactive. So, if you’re a Henry, making estate planning part of your tax considerations now could be useful in the long run and enable you to pass on more to your loved ones.
Reducing your tax liability now could mean you have more opportunities to invest or build long-term wealth, as well as potentially pass more on to your loved ones. If you’d like to create a tailored financial plan that considers your tax position, please get in touch.
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.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.
Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
The Financial Conduct Authority does not regulate estate planning or tax planning.
It’s been a decade since Pension Freedoms legislation gave retirees more choice. Yet rather than relishing the freedom the changes have provided, research suggests workers are approaching retirement unsure about the decisions they need to make.
Data published by PensionsAge in June 2025 suggests that only 47% of UK savers are aware of their options in retirement. In addition, just 27% said they understood the reforms and the implications.
The decisions you make at the start of retirement could affect your financial security for the rest of your life. So, the research suggests a worrying number of retirees could pick an option that isn’t right for them because they don’t have all the information they need.
You can usually access defined contribution pensions (also known as personal pensions), from age 55 (57 from April 2028). Read on to find out more about the three main options.
If you’d prefer to receive a regular income that you know you can rely on, an annuity may be a valuable option.
You can purchase an annuity with the money held in your pension, and it would then provide an income for the rest of your life. You can choose if you want this income to remain the same or rise in line with inflation each year.
The annuity rate affects how much income you’d receive, and it’s influenced by a variety of factors, such as your age. Annuity rates can vary significantly between providers, so comparing options with your financial planner could help you achieve a higher income in retirement.
In addition, you can select a joint annuity, which would continue to pay your partner a portion of the regular income, such as 50%, if you pass away first. This could be a valuable option if you’re planning for retirement with a partner and they rely on your income.
It’s important to note that once purchased, changes to the contract cannot be made. You may get back less than you paid. Depending on how long you live and the options you choose, you may receive less in income payments than the amount of the pension pot you used to buy the annuity.
You can also take a flexible income from your pension, so you might increase or decrease the amount you withdraw depending on your needs.
While this flexibility is attractive to many retirees, it’s important to consider how sustainable your pension withdrawals are. You’ll be responsible for ensuring you don’t run out of money in the future. According to PensionAge, 45% of survey participants said they worry that the ability to take a flexible income would leave them without enough.
The money that you don’t withdraw will remain in your pension and is usually invested. This means it has the opportunity to deliver long-term returns, but that your money is exposed to investment risk.
So, while flexi-access drawdown gives you more freedom to use your pension savings how you wish when compared to an annuity, it comes with potential drawbacks too. A retirement plan could help you balance your short- and long-term income needs when using flexi-access drawdown.
Finally, you can withdraw lump sums from your pension when you choose.
This could be a useful option when you want to boost your income for a one-off cost. In 2025/26, you can withdraw up to 25% of your pension tax-free, and you may choose to do that as a lump sum.
A June 2025 article in IFA Magazine found that more people are withdrawing lump sums from their pension as soon as they can. 120,000 people in the 12 months to the end of March 2024 did so, collectively accessing £2.2 billion.
While taking a lump sum can certainly be tempting, especially if it’s tax-free, you need to weigh up the pros and cons of doing so.
Taking a large amount out of your pension could mean you risk running out of money in your later years. Not only would the value of your pension be lower immediately, but it could also affect the long-term investment returns, which might mean you have less in your pension in the future than you anticipate.
You don’t have to choose just one of the above options when deciding how to create a pension income. You can mix and match – you might even decide to use all three.
For example, you might withdraw a lump sum at the start of retirement to kick off the next chapter of your life. You could use it to travel, renovate your home, or tick off some of the bucket list items you’ve been looking forward to.
Next, you might use a portion of your pension wealth to purchase an annuity that would create a reliable base income. Finally, you may access the money that remains in your pension flexibly and adjust the amount to suit your needs.
Even after understanding what your options are, it can be difficult to know which one is right for your retirement plans. However, according to the PensionAge report, just 29% of retirees said they would turn to a professional.
Working with your financial planner to create a bespoke retirement plan could mean you feel more confident accessing your pension and understand the effect your decisions might have. Please contact us if you have any questions about your retirement and accessing your pension.
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.
A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Understanding where your wealth is coming from and how you’re using it could help you make more informed decisions. However, as so many assets are intangible, having a clear picture of your wealth can be difficult. Finding ways to visualise all your assets is often useful, and something people have been doing for centuries.
When you hear the term “Exchequer”, you might think of the government’s economic and finance ministry or the position of chancellor of the Exchequer, which in 2025 is held by Rachel Reeves. However, the term is much older than the position.
The government explains that it is derived from a chequered cloth that was used by accountants in the 11th century to aid auditing by providing a way to visually record where money was being spent and received at a national level. These Exchequer meetings were said to be confrontational, with powerful Barons often interrogating the accountants about the state of their affairs.
Indeed, in the first Exchequer Budget recorded in 1284, the method highlighted that the Crown was spending far more than it was bringing in, which led to the introduction of taxation.
The Exchequer’s function as a financial department of state formally ended in 1833, but the value of visualising wealth remains, including when managing your personal finances.
Today, understanding your wealth can be even more difficult as so many transactions and assets are digital. According to a December 2024 report from the BBC, only a fifth of transactions in 2023 involved physical money.
Being able to see a visual representation of your wealth could help you better understand your assets, get to grips with your budget, and support your long-term goals. In addition, it can be reassuring to see all your assets, including those that are intangible.
The good news is you don’t need to unroll an Exchequer cloth and gather counters when you want to visualise your wealth. Today, cashflow modelling could help you assess your financial position now and in the future. Read on to find out how cashflow modelling works.
1. Set out your goals and priorities
A cashflow model is used as part of your wider financial plan. You can begin creating one by talking with your financial planner about what you want to achieve in the short and long term, whether that’s travelling the world more in the next five years or being able to retire at age 60.
2. Gather your financial information
To calculate if you’re on track for the future, you need to understand your current financial position.
So, you’ll need to gather information that can be added to your cashflow model. This might include how much you’ve saved in your pension, the value of your home, or the amount in your emergency fund.
Your financial planner will then make realistic assumptions about factors that could affect your wealth, such as investment returns or the rate of inflation.
3. Project how your wealth might change
You can then see how your wealth will change over the long term. One of the reasons cashflow modelling is powerful is that it allows you to see multiple possibilities to explore your options and stress test your financial plan.
So, you might see if increasing your pension contributions by 1% now could mean you’re able to retire earlier. Or if you could gift assets to loved ones and still have enough to reach your other long-term goals.
You might also want to model scenarios that you’re worried about, so you’re able to take steps to protect yourself should they happen. For instance, you might want to see how taking an extended period off work due to ill health could affect your long-term security. Understanding the potential effect might highlight how you’d benefit from increasing your emergency fund or taking out appropriate financial protection.
4. Regular reviews are important for reflecting changes
Life doesn’t always turn out how you expect. Sometimes unexpected events or simply changing your mind might mean your goals and financial circumstances are different. So, to get the most out of your cashflow model, it’s important to update it regularly.
As well as personal changes, other factors outside of your control could also affect your wealth and the decisions you make. For example, a period of high inflation might mean you need to take a greater income in retirement, or market volatility could mean investment returns are lower than expected. Working with your financial planner to incorporate these events into your cashflow model could help you understand what they mean for you.
If you’d like to understand your assets and how they might change in the future, please get in touch. We could work with you to create a cashflow model and use the information to build a long-term financial plan that focuses on your aspirations.
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.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). 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.
The Financial Conduct Authority does not regulate cashflow modelling.
The importance of remaining calm is often something that’s talked about when discussing investment market volatility. But there are other factors outside of your control that might lead to emotional decision-making, including uncertainty about the upcoming Autumn Budget.
Chancellor Rachel Reeves is expected to deliver an Autumn Budget at the end of October. Despite being weeks away, there’s already speculation about higher taxes and allowances being slashed.
With rumours featuring in the headlines, it can feel like you should be doing something to prepare for the potential changes. However, making knee-jerk decisions before changes are confirmed could harm your long-term financial plan.
For example, ahead of the 2024 Autumn Budget, there were attention-grabbing headlines suggesting the pension tax-free allowance would be scrapped. It led to some people taking a lump sum from their pension, even when it hadn’t been part of their financial plan. When the announcement didn’t materialise, some were unable to cancel the withdrawal or place the money back in their pension.
As pensions provide a tax-efficient way to invest, those who acted on speculation may pay more tax overall or find their pension now falls short when planning for retirement.
So, read on to discover some tips for remaining calm in the run up to the Autumn Budget.
It’s easier said than done, but try tuning out the noise in the lead-up to the Budget.
Reducing how much you’re exposed to speculation could reduce stress and mean you’re less likely to make decisions that could harm your long-term financial plan based on rumours.
That doesn’t mean you have to turn off the news completely. Simply being mindful of where the updates are coming from or only reading the headlines once a day could minimise the pressure you might feel.
Sometimes updates can make it seem as though a rumour is confirmed, particularly if you’re getting your news from social media.
So, before you respond to news or even worry, take some time to fact-check the source and understand if the reported change is speculation.
Headlines about changes may sound like they’ll affect everyone, or use average figures to highlight the potential implications. However, as financial circumstances and goals vary significantly, taking some time to understand what it means for you could be important; you might find an announcement won’t affect your long-term financial plan at all.
For instance, there are suggestions that the amount you could place into a Cash ISA may be reduced. That might seem like something you should worry about, but if you use your ISA to invest, it may have little effect.
Similarly, headlines might read that changes to Inheritance Tax (IHT) mean the average bill will increase by 10%. Yet, your estate might not be liable for IHT, or your existing estate plan could mitigate the effects.
Your financial planner is here to help you understand what speculation and confirmed changes could mean for you.
Often, an Autumn Budget announcement isn’t implemented immediately.
For example, in the 2022 Autumn Budget, it was announced that the Capital Gains Tax annual exempt amount would be reduced from £12,300 to £3,000. It fell to £6,000 in April 2023, and then to £3,000 in April 2024.
As a result, you usually have time to understand what the changes mean for you and carefully consider how you’ll respond before they come into force.
This isn’t always the case, and sometimes changes, including tax hikes, may be implemented right away. When this happens, it can feel like you need to act immediately. However, taking a step back to weigh up your options and speak to your financial planner, rather than making a snap decision, is often still valuable.
If you're tempted to make changes to your financial plan because of speculation, your financial planner could help you assess if it’s the right decision for you.
Remember, we’ll be here to help you navigate Autumn Budget announcements that might affect your financial plan. If changes happen, we can work with you to review and update your long-term plan to ensure it continues to reflect current legislation and your circumstances. Please get in touch if you’d like to talk to one of our team.
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 and estate planning.
While many people don’t rely on care later in life, planning for the potential cost of it could help you feel confident about the future and mean you have more options should you need support.
Needing residential or nursing care in old age is not a certainty. But, life expectancies in the UK are rising, with the Office for National Statistics life expectancy calculator showing that a 55-year-old man today has an average life expectancy of 84, with a 1 in 4 chance of living to 92.
For a 55-year-old woman, average life expectancy rises to 87, with a 1 in 4 chance of living to 95.
With an ageing population comes the increasing chance that you will need care in some respect, whether that’s moving to a facility or having carers come to your home.
So, while needing care might not be a foregone conclusion, it’s important to plan for it. Last month, you read about some of the reasons why you might consider care now. Read on to discover how you may make it part of your wider financial plan.
It can be difficult to calculate how much care services could cost. After all, it’s impossible to know what’s around the corner. Setting out your preferences and doing some research could be valuable.
To start, you might consider different scenarios to understand how you’d feel about the options. For example, you may answer questions like:
With your preferences set out, you can start to calculate how much the different options may cost. The cost of care varies significantly across the UK, so doing some research in your local area alongside reviewing average figures could be beneficial.
Don’t forget you’ll need to consider how the cost of care is likely to change over the long term due to the effects of inflation.
When planning for care, it’s also important to consider a range of scenarios. If you only expect to get by with minimal support that your family could provide, you could find yourself in a difficult situation if your needs are more complex.
Being thorough when creating a care plan may mean you have more options should you need care and, hopefully, reduce financial worries at a time that might already be difficult.
There are many ways you might cover the cost of care. Here are four of the main options you could incorporate into your long-term financial plan.
1. Ringfence a portion of your wealth
Perhaps the simplest option is to ringfence a portion of your wealth for care costs. For example, you might earmark a portion of your savings or investments for care should it be needed.
2. Create a regular income
Another option is to create a regular income that would be enough to cover care costs.
You might do this by purchasing an annuity with your pension, which would then pay an income for the rest of your life. Alternatively, you might adjust your investment portfolio to create an income stream.
Your financial planner could help you assess how to create an income that offers reassurance about the future if you need care.
3. Take out long-term care insurance
It’s also possible to take out insurance that will pay a regular income if you need long-term care. The income may be paid directly to your care provider.
If you’re considering this option, it’s important that you understand the terms and conditions before taking out insurance. For instance:
You may need to pay regular premiums to maintain the cover, which will vary depending on a range of factors, including your health and lifestyle. In some cases, you might make a one-off payment instead.
Please note, life assurance plans typically have no cash in value at any time and cover will cease at the end of term. If premiums stop, then cover will lapse.
4. Use your property
Your home might be one of the largest assets you own. According to the Halifax House Price Index in June 2025, the average home in the UK was worth almost £300,000. So, if you’re thinking about how to fund a potentially large care bill, don’t overlook property.
There are several ways you might use property wealth to fund care.
If you’re moving into a care home, you might choose to sell your property to cover the cost.
Alternatively, you may use equity release to access some of the money tied up in your property without selling it. This could be a useful option if you want to remain living in your home.
However, there are drawbacks to consider before choosing equity release. The most common type of equity release is known as a “lifetime mortgage” and involves taking out a loan against your home.
With a lifetime mortgage, you don’t have to make any repayments, and the interest is rolled up. Instead, the loan is repaid when you pass away or move into long-term care. As a result, the amount owed could be significantly higher than the amount you initially borrowed and could affect the inheritance you leave for loved ones.
Seeking tailored advice could help you understand whether equity release is right for you.
It’s important to note that equity release will reduce the value of your estate and can affect your eligibility for means-tested benefits. A lifetime mortgage is a loan secured against your home. To understand the features and risks, ask for a personalised illustration.
If you’d like to review your existing care plan or would like our support creating one, please get in touch.
Next month, read our blog to discover some of the steps you might take to ensure your wishes around care are followed.
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.
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.
Average life expectancies have increased significantly in recent years, both in the UK and the rest of the world. While people living longer is always good news, it also brings new challenges for your health and, crucially, your finances.
Maintaining your physical and mental wellbeing over a longer life requires more than just good luck. It involves making intentional choices about your diet, exercise, mental health, and lifestyle.
At the same time, increased longevity means your financial resources need to stretch further, and financial planning is an important part of ensuring you can enjoy later life without stress.
As well as practical wellbeing tips that could help you enjoy a longer retirement, this useful guide looks at how you might strengthen your financial security in the future. The guide explores some of the potential challenges that may arise, such as:
Download your copy here: “Planning for a longer life: Wellbeing tips and financial management strategies” to find out how a longer life could affect your long-term plans.
If you’d like to talk to us about planning for a longer life, please get in touch.
Please note: This article is for general information only and does not constitute advice. 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 estate planning, cashflow planning, tax planning, trusts, Lasting Powers of Attorney, or will writing.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
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.
Managing your tax liability could help reduce your overall tax bill and get more out of your money. If you’re unsure how and when you might pay Dividend Tax, read on to find out.
A dividend is one way a company can distribute profits to shareholders. You might receive dividends if you hold shares in dividend-paying companies or if you’re a business owner.
Changes over the last few years mean more people are paying Dividend Tax.
For example, the amount you can receive in dividends before tax is due, known as the “Dividend Allowance”, gradually fell from £5,000 in the 2017/18 tax year to £500 in 2024/25.
According to a September 2024 FTAdviser article, the number of people paying Dividend Tax for the 2024/25 tax year is expected to double when compared to 2021/22. It’s estimated that almost 3.6 million people will need to pay Dividend Tax for the 2024/25 tax year, leading to the Treasury collecting almost £18 billion.
So, it may be important to understand how current legislation might affect you and some of the ways you could reduce your liability.
If you receive dividends, understanding when Dividend Tax may be due and the rate you’ll pay is important.
As mentioned above, you won’t pay Dividend Tax if the total amount you’ve received is below the Dividend Allowance. For the 2025/26 tax year, the Dividend Allowance is £500.
Dividends above this threshold will usually be taxable, and the rate will depend on which Income Tax band(s) the dividends fall within once your other income is considered. As a result, when calculating your Dividend Tax liability, you may need to include the income you receive from your salary, savings, and other sources.
For the 2025/26 tax year, Dividend Tax rates are:
Depending on your circumstances, paying Dividend Tax on income could reduce your overall tax liability. For example, if you’re a business owner, choosing to reduce your salary and withdraw some money through dividends might result in you paying a lower rate of tax on a portion of your income.
Understanding tax rules and how they apply to you can be complex, and you might benefit from seeking tailored advice.
1. Use your Dividend Allowance
One of the simplest ways to reduce your Dividend Tax bill is to use your Dividend Allowance.
The allowance resets at the start of each tax year. If you can, spreading dividends across several tax years could reduce how much tax you’re paying.
The Dividend Allowance is also individual. So, if you’re married or in a civil partnership, managing tax liability together could be useful. You may pass some dividend-paying assets to your partner to use both of your Dividend Allowances.
2. Place dividend-paying shares in a tax-efficient wrapper
A Stocks and Shares ISA is a tax-efficient way to invest – you won’t pay tax on dividends from shares held in an ISA, and returns aren’t liable for Capital Gains Tax (CGT) either.
As a result, moving investments to an ISA could be an efficient way to reduce your tax bill.
You should note that the ISA subscription limit caps how much you can place into adult ISAs each tax year. For the 2025/26 tax year, it is £20,000.
In addition, pensions are a tax-efficient way to invest for retirement. Again, dividends you receive from investments held in a pension will not be liable for Dividend Tax, and investment returns won’t be liable for CGT.
The Annual Allowance (the amount you can save into a pension each tax year before tax charges may be applied) is £60,000 in 2025/26, or 100% of annual earnings whichever is lower. However, your Annual Allowance might be lower if you’re a high earner. If you’ve already taken an income from your pension, you might also be affected by the Money Purchase Annual Allowance (MPAA), which would reduce the amount you can tax-efficiently add to your pension to £10,000 in the 2025/26 tax year.
Keep in mind that you usually can’t access the money held in your pension until you are 55 (rising to 57 in 2028).
3. Reduce the number of dividend-paying shares you hold
Depending on your investment goals, you might choose to reduce dividend-paying shares if you’re focused on growth rather than income.
However, it’s important to note that this may not be appropriate for everyone and could increase your tax liability in other areas, such as CGT. Your financial planner could help you assess if adjusting your investment portfolio could be right for you.
If you’d like to discuss your tax liability and the steps you might take to reduce it, please get in touch. We’ll work with you to create a tailored plan that suits your circumstances and goals.
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.
Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
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.
The Financial Conduct Authority does not regulate tax planning.
Opting for a “boring” investment strategy could be the route to returns that allow you to make exciting lifestyle decisions in the future. If you’re looking for excitement in your investments, read on to find out why that approach could lead to disappointments.
When you’re reading financial headlines, they might say things like “stock market soars in best day ever” or “the best companies to invest in right now”. In other media, investing is often dramatic too. For example, in The Wolf of Wall Street, the main character, Jordan Belfort, is shown making a huge fortune through investing and fraud.
Yet, despite the perceived excitement of investing, acting on emotions, even ones that feel positive, could harm your decisions. The excitement of finding a tip that declares a company will be the “next Apple” could lead to you skipping further research, like assessing the risk profile of the firm and whether it fits into your existing portfolio.
Investors might even feel excited about the risks they’re taking – the anticipation of waiting to see if they were “right” can be addictive. So, some investors may take more risk than is appropriate because it adds to the excitement.
As a result, viewing investing as something that should be exciting has the potential to affect the long-term performance and could mean you’re at greater risk of losing your money.
So, what’s the solution? For many, it’s taking a boring approach to investing.
First, what does a “boring” approach to investing mean?
Focusing on your long-term goals and building an investment strategy around this and other factors, such as what an appropriate level of risk is and other assets you might hold. You’d try to remove emotions from your investment decisions and, instead, use logic.
If you’ve heard the mantra “buy low, sell high”, this approach might seem like it wouldn’t work. Yet, historically, investing with a long-term outlook, rather than responding to short-term market movements, is a strategy that’s worked for many investors.
March 2023 data from Schroders highlights the challenges of trying to time the market.
If you’d invested £1,000 at the start of 1988 in an index of the largest 100 UK companies and left the investment alone, it would have been worth £15,104 in June 2022 – a return of 8.31% on average.
However, if you tried to time the market and missed just the 10 best days, your average return would fall 6.1% and you’d have £7,503 in June 2022, less than half of the outcome had you remained invested.
While trying to buy low and sell high might be exciting, even just a few mistakes could mean you miss out on long-term returns.
Of course, it’s important to note that investment returns cannot be guaranteed, and past performance isn’t a reliable indicator of future performance. Yet, it can provide a useful insight into why taking a long-term view when making investment decisions could be beneficial.
A boring approach to investing doesn’t have to mean the outcomes are dull. In fact, taking a long-term approach could mean you have more opportunities to create the lifestyle you want.
A long-term investment strategy might allow you to tick items off your bucket list like:
Rather than looking for excitement when investing, finding it in your long-term plans and what investment returns may allow you to do could be far more rewarding.
If you’d like to talk about your current investments, or you have a sum you’d like to invest, please get in touch. We’ll work with you to create a long-term investment strategy that’s aligned with your goals and financial circumstances.
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.
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.
Facing challenges later in life that might mean you need to rely on care can be difficult to think about. Yet, planning for care may be an important part of your overall financial plan and provide security should you need support in the future.
Read on to find out how care services could affect your finances.
Life expectancy in the UK has increased over the last few decades.
Indeed, in June 2025, data from the Office for National Statistics (ONS) show a 65-year-old man has an average life expectancy of 85, and a 1 in 10 chance of reaching 96. For a 65-year-old woman, the average life expectancy is 88, with a 1 in 10 chance of reaching 98.
Living for longer doesn’t automatically mean you’ll need to rely on care services. However, as health needs often become more complex later in life, it’s important to think about them.
According to ONS data, there were more than 372,000 care home residents in the UK at the end of February 2023. This was an increase of 3.1% when compared to a year earlier.
Notably, 37% of residents were funding their care themselves. So, making potential care costs part of your financial plan could be essential for your long-term financial security.
Other forms of care, such as carers coming to your home, may also need to be self-funded.
Whether you need to pay for care yourself depends on your financial circumstances and where you reside in the UK.
In England and Northern Ireland, you usually won’t be entitled to help from your local council if you have savings of more than £23,250, which is known as the “upper capital limit”. If you’ll be moving into a care home, you typically won’t be eligible for local council support if you own property.
As a result, many people find they’re responsible for funding their care costs, and it could place pressure on your finances if it’s not something you’ve considered.
Please note, the threshold for paying for care is different in Scotland and Wales.
So, how much should you expect to pay if you need care later in life?
The cost of care can vary significantly depending on the level of support you need and where you live. According to the NHS, on average, you can expect to pay:
Even if you expect to rely on family, there might be some costs to consider. For example, if your child is regularly visiting your home to lend support, you may choose to cover travel expenses. Or your child might need to reduce their working hours, so you may help them financially.
Even over a single year, the cost of care can add up to a significant expense. If it’s not something you’ve thought about, you could be overlooking an outgoing that may have a huge effect on your long-term finances and the wealth you expect to leave for loved ones when you pass away.
As a result, making it part of your financial plan from the outset could offer you peace of mind and avoid potential delays should you need support. You might:
You might not need any support later in life, but being proactive could make potentially difficult decisions around care easier.
If you have any questions about your current care plan or would like to discuss how we could help you create one, please contact us.
Next month, read about how you might create a care fund that could give you confidence and financial security if you need support later in life.
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 estate planning or Lasting Powers of Attorney.
In April 2028, the age you can usually access your pension, known as the “normal minimum pension age” (NMPA), will rise from 55 to 57. So, if you hope to retire at 55, you might need to update your retirement plan.
Even if your planned retirement date seems far away, creating a plan now could help you bridge a potential shortfall so you’re still able to give up work when you’re ready to.
As well as the NMPA, the State Pension Age is set to rise. From 6 May 2026, the age you can claim the State Pension will gradually increase from 66 to 67 in 2028 for both men and women. So, you might also need to factor in creating a larger income from your pension or other assets for an additional year before you can claim the State Pension.
Understanding your potential later-life income could help keep your retirement on track, even when policy changes.
According to government figures published in October 2024, the median expected age to retire in the UK is 65. If you’re among those who expect to retire at this age, the change to the NMPA may not affect you.
However, with around 10% expecting to retire before the age of 60, thousands of workers could find they need to delay their retirement if they can’t access their pension when they expect.
So, if you hope to retire at 55 or even earlier, here are four important steps that might allow you to do so.
1. Check the details of your pension
While the NMPA applies to most pensions, there are some exceptions.
If you have an older workplace or personal pension, it may have a “protected pension age”, which might give you the right to access your savings earlier. So, it’s worth checking the details of your pensions before you make changes to your retirement plan.
2. Calculate your retirement income needs
The retirement lifestyle you want will affect how much income you need, and at what point you can afford to retire.
Thinking about your desired retirement lifestyle now could help you assess how you might retire at 55 if you cannot create an income from your pension straight away.
You might also want to consider how you’ll retire. More people are choosing to phase into retirement by gradually reducing working hours or moving to a role with greater flexibility.
According to a September 2024 article published by Global Recruiter, almost half of workers aged over 50 start to phase into retirement. Most of these workers plan to phase into retirement over a long period, such as 10 years.
A phased retirement might mean you’re able to move away from your current role sooner, so you have more time to focus on what’s important to you.
3. Consider all your assets when making a retirement plan
Often, when you think about creating a retirement income, your focus is on your pension. However, other assets, such as savings, investments held outside of a pension, and property, may be useful, especially if you want to retire before the NMPA.
As your financial planner, we could work with you to create a long-term financial plan that brings together different assets to support you in reaching your retirement goals.
4. Schedule regular reviews
There are two key reasons why regular retirement plan reviews are important.
First, your circumstances and goals might change. Second, further changes in government policy could affect your retirement plans in the future.
Regular reviews provide an opportunity to ensure your plan is still appropriate and reflects your wishes and pension policy.
Changes to the NMPA don’t automatically mean you need to update your retirement plan. However, being informed could offer peace of mind as you move towards the exciting milestone.
Working with a financial planner could help you assess how you’ll create an income once you step back from work and identify potential gaps. Please contact us to talk to one of our team about your retirement.
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 and is subject to change.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.
Workplace pensions are regulated by The Pensions Regulator.
