Inheritance Tax (IHT) is a growing concern for many people in the UK, with increasing numbers of estates facing a rising tax liability.
Each year, the amount of IHT paid to HMRC is increasing. By 2030/31, the Office for Budget Responsibility (February 2026) forecasts that IHT receipts will reach £14.5 billion, up from £8.3 billion in 2024/25.
Frozen tax-efficient allowances are a key driver behind this trend. As your estate grows, a larger portion could exceed the threshold and become subject to IHT.
What’s more, once your estate reaches £2 million, your tax-efficient allowance can start to reduce, exposing more of your wealth to IHT.
Read on to learn how the value of your estate could affect the amount you can leave behind tax-efficiently.
Your IHT allowances are known as “nil-rate bands”.
As of 2026/27, the nil-rate band is £325,000. This is the amount you can leave behind when you die without the value being included in IHT calculations. The portion of your estate exceeding the nil-rate band is usually taxed at 40%.
You may also have a residence nil-rate band if you leave a primary residence to a direct descendant. This can be up to £175,000, as of 2026/27, bringing your potential tax-efficient allowance to £500,000.
If you’re married or in a civil partnership, the spousal exemption usually allows partners to leave assets to one another tax-free. Any unused nil-rate band typically transfers to the surviving spouse, potentially allowing couples to pass on up to £1 million tax-efficiently.
The nil-rate bands are expected to remain frozen until at least 2031, meaning a larger portion of your estate could be taxable than if the thresholds had risen with inflation.
Remember, the portion of your estate that may be subject to IHT will depend on your personal circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.
The residence nil-rate band usually begins tapering once the value of your total estate reaches £2 million.
For every £2 your estate exceeds the threshold, you lose £1 of your residence nil-rate band. So, if your estate were £100,000 over the threshold, your allowance would reduce by £50,000.
The taper continues until your estate reaches £2.35 million, at which point you lose your full residence nil-rate band. This can mean an additional £175,000 of your estate could be subject to 40% tax, potentially increasing your IHT bill by £70,000. For a couple losing the full allowance, the IHT bill could rise by £140,000.F
While married and civilly partnered couples can typically transfer unused nil-rate bands to potentially double their tax-efficient allowance, the taper threshold remains fixed at £2 million. In some cases, if assets are transferred to a surviving spouse, their total estate could exceed the threshold, and they could lose both partners’ residence nil-rate bands.
MoneyWeek (February 2026) reports that the number of estates valued at over £2 million could rise from 3,620 in 2023 to 16,000 by 2030/31.
The level at which the residence nil-rate band begins to taper is set to remain frozen at £2 million until at least 2031, having not changed since it was introduced in 2017.
According to the Bank of England’s (April 2026) inflation calculator, the threshold would have risen to over £2.7 million if it had grown with inflation since 2017.
As earnings rise and asset values increase with inflation, more estates could pass the £2 million threshold and start losing their tax-efficient allowance.
In particular, rising property prices are pushing up the total net value of many estates. With the threshold frozen, it’s important to consider how the value of your assets might grow over the long term when planning to pass them on tax-efficiently.
What’s more, from April 2027, your unused pension pots could be included in your estate for IHT purposes when you pass away. Depending on how much is left in your pension when you die, this could add a significant amount to your estate’s net value, potentially pushing your total over the £2 million threshold.
If you’re worried about your estate exceeding the taper threshold and losing your nil-rate band, you might consider taking proactive steps to mitigate your estate’s IHT liability.
1. Give gifts in your lifetime
Gifting wealth in your lifetime could be an effective way to reduce the value of your estate and the portion of it that’s subject to IHT.
However, gifts that do not qualify for an exemption may be included in your estate for up to seven years after they were given. If you die within seven years, the value of the gift could be subject to IHT at a tapering rate. As a result, your estate might be liable for more tax than anticipated.
It’s also important to ensure gifts are affordable and will not impact your current financial wellbeing or long-term financial goals. A financial planner can support you in incorporating tax-efficient gifting into your wider financial plan.
2. Leave a charitable legacy
If you leave 10% or more of your net estate to charity when you die, your IHT rate could reduce from 40% to 36%. In addition, gifts left to charities when you pass away are not included in IHT calculations. Depending on your circumstances, it could be an effective strategy to reduce your IHT bill while supporting a cause close to your heart.
Additionally, giving to charity during your lifetime can help reduce the size of your estate to mitigate an IHT bill and prevent your residence nil-rate band from being reduced.
3. Place assets in trust
You may be able to mitigate an IHT bill by putting assets in a trust.
Assets held in a trust may still be liable for IHT, depending on the type of trust used and when you pass away. However, typically, the value will not be considered when calculating whether your estate exceeds the £2 million threshold for losing your residence nil-rate band.
The rules for placing assets in trust and the IHT implications can be complex and vary between different trust types. Usually, you will be unable to remove assets from a trust once you have transferred them in. So, it’s important to seek legal and financial advice before making any irreversible decisions.
If you’re worried about your estate’s IHT liability, get in touch to find out how we can support you to pass on wealth tax-efficiently.
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 estate planning, tax planning, Inheritance Tax planning, or trusts.
During April 2026, markets have continued to experience volatility as the conflict in the Middle East has developed. Find out what external factors may have affected the performance of your investments.
One effect of the conflict on global markets is the rising price of energy. Indeed, analysis from UBS suggests that March 2026 experienced the largest increase in global energy inflation for at least 25 years.
Remember, market volatility is a part of investing, and it’s important to take a long-term view when reviewing the performance of your portfolio. The value of investments may rise or fall, and you may not get back the full amount you invested.
April 2026 started with the hope that the conflict in the Middle East would be resolved, which led to rallies in European and US markets.
Among the indices that were up on 1 April were the UK’s FTSE 100 (1.85%), France’s CAC 40 (2.3%), Italy’s FTSE MIB (2.6%), Spain’s IBEX (2.7%), and the US’s Dow Jones Industrial Average (0.6%).
However, on the evening of 1 April, US President Donald Trump delivered a primetime address. His speech suggested the situation in the Middle East would escalate and dented hopes of an early end to the conflict.
As a result, when markets opened in Asia-Pacific, Europe, and the US on 2 April, they dipped.
Following news of a ceasefire agreement between Iran and the US on 8 April, the FTSE 100 was up 2.6%. Only three companies fell: oil companies BP and Shell, and British Gas owner Centrica. European stocks were also up – the pan-European Stoxx 600 index jumped 4%.
Yet, it didn’t take long for worries to emerge that a ceasefire would falter. On 9 April, concerns led to Asian and European markets falling again.
The soaring price of oil and the need to reroute some flights led to airline stocks being hit on 13 April when talks between Washington and Tehran broke down. IAG, the parent company of British Airways, was down 2%. Wizz Air (-6.5%) and easyJet (-3.8%) were also among those affected.
On 17 April, it was revealed that the UK government was considering ways to break the link between gas and electricity. The potential change would ease the burden on households and businesses, but could affect the profits of energy companies. When the FTSE 100 opened, it dropped 0.14%, with energy companies among the biggest losers, including SSE (-4%) and Centrica (-3.5%).
Later in the day, Iran announced that the Strait of Hormuz, an important waterway for trade, was now fully open. The news led to indices rising, including the Dow Jones (1.2%), the S&P 500 (0.7%), and the FTSE 100 (0.6%).
However, over the following days, there was uncertainty over a ceasefire and the accessibility of the Strait of Hormuz, which Iran declared closed. As a result, on 20 April, European markets fell when opening. Again, airlines were among the biggest fallers, while stocks in energy producers increased.
On 24 April, Trump threatened the UK with a “big tariff” if the UK did not drop its digital services tax on US social media firms. On opening, the FTSE 100 was 0.46% lower.
In contrast, Japan’s Nikkei closed on a record high thanks to earnings reports from the technology sector. In the week to 24 April, the index was up 2.1%.
The good news continued for the Nikkei when markets reoponed on 27 April. The index surpassed 60,000 points for the first time on the back of peace talks taking place between the US and Iran.
Data from the Office for National Statistics (ONS) suggests the UK economy was on a better footing than expected at the start of the year. GDP in February 2026 increased by 0.5% when compared to January.
Additionally, unemployment unexpectedly dropped to 4.9% in the three months to February 2026. However, wage growth was at its lowest level since 2020. Excluding bonuses, wage growth was 3.6%.
It’s important to note that these indicators were recorded before the conflict in the Middle East, which the International Monetary Fund (IMF) expects to harm the economy. The organisation downgraded the UK’s growth expectations for this year to 0.8%, compared to 1.3% it projected in an earlier forecast.
The economic shocks from the conflict could lead to higher mortgage repayments for 1.3 million households, according to the Bank of England. Potential increases in borrowing costs may also affect businesses.
A construction index from Glenigan suggests that activity in the sector has tumbled due to pressure from the conflict and a persistently weak economy. In the three months to March 2026, work starting on site declined by 17% when compared to the final quarter of 2025.
Similarly, S&P Global Purchasing Managers’ Index (PMI) data shows business activity weakening in the service sector. The PMI was 50.5 in March against a reading of 53.9 in February – a reading above 50 suggests growth.
The PMI for the manufacturing sector also highlighted the effect the conflict is having. UK factories were hit by the biggest month-on-month jump in costs since 1992.
Perhaps unsurprisingly due to ongoing uncertainty, a survey by YouGov and Cebr found that UK consumers are feeling gloomier about their household finances and job security. The survey recorded a reading of 105.8 in March, the lowest figure recorded since December 2023.
Inflation in the eurozone increased faster than expected. In the 12 months to March 2026, the rate of inflation across the bloc was 2.6%. There were significant differences between countries. Denmark reported the lowest rate of inflation of 1%, compared to 9% posted in Romania.
PMI data also indicates that while business activity is growing, it is weakening. According to S&P Global, the PMI reading in March was 50.7, which could suggest the economy is grappling with stagflation.
The ifo Institute reported that German business morale fell to its lowest level since the start of the Covid-19 pandemic in May 2020. Businesses are concerned that rising energy costs due to the ongoing conflict could derail the country’s economic prospects.
The IMF warned that Trump’s trade war would slow the US economy. The organisation said that imposed tariffs would offset the benefits of falling inflation. However, the IMF does expect the US economy to grow by 2.4% in 2026, compared to 2% in 2025.
The energy shock caused by the conflict has led to US inflation rising 0.9% in March 2026 when compared to the previous month. The rate of inflation in the 12 months to March 2026 was 3.3%, putting it above the Federal Reserve’s 2% target.
Figures suggest that the energy shock is already hampering businesses. Indeed, production at US factories, mines, and utility companies fell by 0.5% in March.
A survey from the National Federation of Independent Businesses also suggests that business sentiment fell to an 11-month low due to concerns about oil prices increasing.
To ease concerns over an energy shortage caused by conflict in the Middle East and the potential economic effects, Japanese Prime Minister Sanae Takaichi announced the release of additional oil reserves. It was hoped the move would head off a spike in energy prices.
China beat growth expectations in the first quarter of 2026. Data from the National Bureau of Statistics shows the country’s economy grew by 5% between January and March 2026, 0.5% higher than the previous quarter.
Following this news, credit reference agency Moody’s lifted its outlook for China’s government debt from negative to stable. The organisation said the changes reflect its assessment that the economy will be resilient to ongoing domestic, trade, and geopolitical challenges.
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 2026/27 tax year started on 6 April 2026. While you have until 5 April 2027 to use tax-efficient allowances and exemptions, making a plan now could be valuable.
Here are four powerful reasons to consider your tax strategy for the current tax year.
Using tax year allowances and exemptions is often associated with the end of a tax year.
However, leaving decisions until the last minute could mean it’s more stressful than it needs to be, and you might make a rushed decision that isn’t right for you. In addition, delays could occur, which means you miss the 5 April 2027 deadline.
Instead, using the start of the year to review decisions means you have plenty of time to assess what’s right for you.
If you have a lump sum to save or invest, using allowances early in the tax year means you could potentially benefit from additional months of interest or returns. When you consider the effect of compounding, you could be better off using some of your allowances now.
One option to consider is your ISA annual subscription limit. In 2026/27, you can place up to £20,000 into ISAs. You can choose to save or invest in an ISA to suit your goals.
Adding a lump sum to ISAs at the start of the tax year or drip-feeding contributions over the months could yield better results than waiting until April 2027, particularly when you factor in compounding.
Similarly, the pension Annual Allowance is £60,000 or 100% of your annual income, whichever is lower, in 2026/27. This is the amount you can add to your pension this tax year while retaining tax relief.
Your pension is usually invested. Depositing a sum now could mean your additional contribution has a longer period to potentially deliver returns and boost your retirement savings.
Remember that all investments carry some risk, and it’s important to understand what level is appropriate for you. Investment returns are not guaranteed, and you could lose money.
If you plan to dispose of assets, you might need to pay Capital Gains Tax (CGT) if you make a profit.
The Annual Exempt Amount means you can make up to £3,000 in gains in 2026/27 before tax may be due. Reviewing your options now could allow you to create an effective strategy for disposing of assets.
For example, if you have several assets to dispose of, you might spread the sale of them across the current and next tax years to use the Annual Exempt Amount for both years. Alternatively, you can pass on assets to your spouse or civil partner tax-free, which may allow you to use both your allowances.
Setting a plan early in the tax year means you have time to consider your tax position and goals, and adjust your plan if necessary.
Your personal circumstances will affect which tax allowances you may be able to use and your overall tax liability, which a financial planner could help you assess.
Over the course of the year, you might want to gift assets to loved ones. This could support beneficiaries and also make sense from an Inheritance Tax (IHT) perspective.
In 2026/27, the nil-rate band is £325,000. This is the amount you can pass on when you die before your estate might become liable for IHT. Fortunately, there are ways to mitigate a potential IHT bill, including passing on your assets during your lifetime.
Not all gifts are immediately outside of your estate when calculating IHT. Some gifts may be included in your estate for up to seven years, so making use of these allowances might be an important IHT strategy.
In 2026/27, gifting allowances include:
Reviewing your plans now means you can make them part of your budget and overall plan. It could also allow you to identify effective ways to support your family and friends.
Your financial circumstances and goals will affect which allowances and exemptions are appropriate for you. If you’d like to discuss how you might improve your tax efficiency in 2026/27 and work with us to create a tailored plan, 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, Inheritance Tax planning or estate planning.
Building wealth without a financial plan may be like searching for a destination without a map. You might miss the most efficient route, take an unnecessary detour, or miss your intended target altogether. A clear plan could be essential for helping you reach your goals.
If you’re simply accumulating wealth, your assets don’t have a clear structure. Seeing the balance in your bank account rise can be comforting, but you’re taking a passive approach.
In contrast, with a financial plan, your assets have an intentional structure designed with your goals in mind. As a result, the decisions you make are deliberate.
If the value of your assets is rising, you might assume you’re on the right track, but creating a financial plan is often still valuable.
1. Looking beyond the value of assets could paint a clearer picture
An increase in the value of an asset can feel like you’re on the right track to reaching your financial goals, but the number is only one part of the information you need to build a full picture.
Imagine you’re reviewing your pension and whether you’re on track for retirement. Seeing that you have £300,000 in your pension might feel good. However, that figure alone doesn’t tell you what income you might receive when you retire or when you’ll be able to step back from work.
A financial plan can help you understand what your assets could mean for your lifestyle now and in the future. It could also help you identify potential gaps and provide an opportunity to close them.
2. A financial plan may bring together multiple assets
One of the challenges of simply focusing on wealth is that you might view each asset in isolation. Often, you’ll need to bring together multiple assets to gain a clear idea of your financial health and what your options are.
Returning to the retirement planning example, you may use your pension alongside savings and investments to create an income. In addition, whether you may have debts, such as a mortgage, in retirement will affect the income you’ll need. So, if you only consider your pension, you may be missing essential details.
3. You could identify tax allowances and exemptions
Working with a financial planner could help you identify appropriate tax allowances and exemptions that might allow you to get more out of your finances.
Let’s say you’ve decided to invest £250 a month to support your long-term goals. Using a Stocks and Shares ISA could mean your potential investment returns are not liable for tax. As well as considering tax liability, keep in mind that all investments carry risk and you may not get back the full amount you invested.
Tailored advice might help you recognise how changes to the way you manage your finances could make them more efficient depending on your circumstances.
4. A strategy might help you measure the impact of your decisions
If you’ve not set clear goals and planned for them, it can be difficult to assess the impact of your decisions.
Working with a financial planner to create a cashflow model could provide a way to visualise your finances and how they might change over time. You can use this model to test different scenarios, so you might see the impact of adding money to your pension compared to overpaying your mortgage.
It’s important to note that the outcomes of a cashflow model are not guaranteed, but it can provide useful insights when you’re making decisions.
5. A clear plan could reduce impulsive decisions
Another benefit of understanding the effect of your decisions is that it could reduce impulsive or emotional decision-making, as you’re able to see the bigger picture.
If you’d like support in creating a long-term financial plan, we’re here to help.
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 or tax planning.
Once you have made an investment strategy, often doing nothing is the best course of action. Yet, it’s an approach that might be more difficult to stick to than you expect.
Investment markets often experience volatility, which could tempt investors to make decisions based on short-term emotions. These actions might not align with their strategy and could harm long-term growth.
Instead, trusting your strategy may yield higher returns over the long term. Indeed, a common financial adage is “the best investors are dead”. Rather than responding to news or short-term movements, inactive investors buy and hold assets.
On the surface, doing nothing seems like a simple investment strategy, but common financial biases can make it difficult to follow.
1. Action bias
A key bias that makes doing nothing challenging is action bias, which means investors favour taking fast, decisive steps over extensive planning.
As a result, doing nothing can feel negligent, rather than disciplined. Some investors might also experience a sense of lack of control if they’re not actively managing their investments. Consequently, you might feel as though you must do something, even if it could potentially harm long-term returns.
2. Loss aversion
Loss aversion theory suggests that investors feel the pain of a loss twice as intensely as the joy of gains. So, when markets fall, it can cause emotional discomfort that could push you to act. Doing nothing might compound your worries and make you feel as though you’re ignoring risks.
3. Recency bias
In many situations, people focus on the most recent events, including when considering investment performance. This is known as recency bias.
When markets fall, investors might expect them to continue doing so. This anticipation of further dips could lead investors to take action in an attempt to prevent further losses. While this might seem rational, if it’s not aligned with a strategy, it could turn paper losses into actual ones.
Similarly, recency bias could take hold when markets are performing well. When markets are up, investors might make financial decisions in the belief that the rally will continue, which could lead to some taking more risk than is appropriate for them.
4. Social pressure
Investors are exposed to constant social pressure, which could come from the news, social media, or friends. All these different opinions about what’s happening in investment markets and how you should respond could amplify the sense of urgency.
If you don’t react to social pressure, you might feel like you’re ignoring important information or missing out on a potentially lucrative opportunity. Again, it’s a form of bias that could prompt financial decisions that don’t align with your overall investment strategy or risk profile.
5. Present focus bias
Finally, present focus bias refers to the cognitive tendency to prioritise immediate rewards and the gratification that comes with them over long-term benefits. For investors, this can manifest as making adjustments to their portfolio in a bid to secure returns quickly.
Quickly turning your initial investment into a larger sum to help you reach your goals is an attractive prospect. However, for the average investor, investing should be approached with a long-term outlook that helps balance your goals with investment risk. As a result, the present focus bias could skew your perception of what you should be doing.
An outside perspective could help you identify when bias might be influencing your decisions. As a financial planner, we could offer this and work with you to create an investment strategy that’s tailored to your circumstances and goals. Please get in touch if you’d like to arrange a meeting.
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 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.
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.
Ask small business owners when they plan to sell their business, and you invariably get the same answer: in five years.
Go back a year later, ask the question again, and the answer has typically not changed: in five years.
Five years is a time scale which is close enough to sound real, but far enough away to not have to do anything about it.
Unfortunately, this often means that when the time does come to sell the business, neither the business nor the owner themselves are ready for the sale. As a result, not only does the business not achieve the value they hoped for, but the owner very often struggles personally with the transition.
There are many business advisers out there who can help prepare a business for sale. But what about preparing yourself?
Here are a few tips on how to prepare yourself to sell your business.
I’ve asked this question of many business owners over the years, and the answer typically has two characteristics.
Firstly, it will be a figure such as £1 million. Now, I have a principle in life to never trust a round figure. Somebody who says their business is worth an amount like £1 million probably has not really looked into what the business is worth; they are guessing, often based on what they heard other businesses have been sold for.
Secondly, the question doesn’t ask the value of the business; the question asks what you need to sell it for.
This is where financial planning comes in. Most people think they have an idea of what they need for life after work. However, without a financial plan, this can only be a guess. When selling a business, this can be crucial.
If you think you need £1 million, but the business is only worth £500,000, then you might not be able to sell the business yet. If the business is worth £2 million, however, then you have options.
Key to this financial plan is understanding what life will look like after the business is sold. This is very often where things get especially difficult.
I once worked with a shareholder, founder and chair of a business, Davey Consulting Ltd (name changed). He was aged in his late 60s. He had no particular role in the business, but liked to pop into meetings and offer his opinion. Privately, the employees and executives shared with me that this was a real problem, but nobody wanted to tell him.
I asked: Why didn’t he just retire?
One answer was especially enlightening: “Because today he’s Bob Davey of Davey Consulting Limited. When he retires, he’ll just be Bob Davey.”
Business owners, and founders in particular, often feel defined by their business. They can find it extremely difficult to envisage what life might look like after the business is sold. Consequently, they do not take the first step in preparing themselves for the sale.
One objective of every business owner should be to make themselves the least important person in their business. After all, if you’re the most important person, then that business will be very hard to sell. Understanding what life looks like post-sale and finding a new role in life is a key part of this process.
Someone coming to the end of their career is likely to experience three characteristics in their working life:
Once the business is sold, these three things will go with the business. That financial plan, therefore, needs to start with consideration of how these aspects of their life will be replaced.
This process can take many years. An owner has often spent so much time building the business, investing so much of themselves, that seeing beyond the business to a different life can be very difficult.
Two tips, therefore, are to start early (about five years should do it!), and to get help. Preparing that financial plan should start with what life might look like post-sale, then work out how much is needed to achieve that life.
Once this financial plan has been formed, and the owner feels ready for the sale of their business, the preparation of the business for sale can really begin.
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 number of people celebrating their 100th birthday in the UK is on the rise. As life expectancy continues to increase, it is more important than ever to plan financially for a 100-year life.
According to the Office for National Statistics (ONS), there were 16,600 centenarians in 2024 – double the number in 2004 (21 October 2025).
Among those marking the milestone this year is the renowned natural historian Sir David Attenborough. The broadcaster turned 100 on 8 May, and he continues to share his passion for nature with the world.
Attenborough shows that entering later life doesn’t have to mean taking a step back. You could still embrace new experiences and create a life you love.
However, planning for a 100-year life often raises important questions about how to arrange your finances to secure the life you want, including how to ensure you have “enough” and what strategies are appropriate for you.
This guide explores some of the steps you might take to plan for a 100-year life.
Download your copy here: How to plan for a 100-year life
If you have any questions about planning for your later years, please get in touch.
Please note: This guide 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 (April 2026) and is subject to change in the future.
Getting the most out of your retirement and reaching your goals requires careful planning.
But as we all know, life doesn’t always go to plan.
If you decide you want to retire sooner than originally planned – whether due to circumstances beyond your control, a health crisis, or a simple change of heart – a pension shortfall may require a rethink.
This guide shares five steps you can take to help you plan for a pension shortfall, build a strong financial foundation, and start enjoying your retirement sooner.
Download your copy here: 5 essential steps to plan for a pension shortfall if you want to retire early
If you want to retire early and would benefit from experienced advice and support to ensure you can generate a sustainable income for the duration of your retirement, please get in touch.
Please note: This guide is for general information only and does not constitute advice. 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 fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.
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.
Estate planning isn’t always as straightforward as leaving everything to a spouse or direct descendant.
In fact, many people in the UK are opting to leave some or all of their wealth to their “chosen family”. Research cited by Today’s Wills and Probate (29 January 2026) found that, of those surveyed, 1 in 8 have named a non-blood beneficiary on a life insurance policy, such as:
Whether you’re leaving your entire estate to one person or dividing it among multiple, there are many ways you can pass on wealth to protect your chosen family. By carefully planning your estate, you could simultaneously help ensure your beneficiaries receive their intended inheritance and mitigate your estate’s Inheritance Tax (IHT) liability.
Read on to explore four ways you could choose to pass wealth on to your preferred beneficiaries and key things to consider.
Without a valid will, your estate will likely be divided according to the rules of intestacy, which generally sees blood relatives inherit in a rigid priority order – starting with spouses and civil partners, and ending with half-aunts and half-uncles. If no eligible relatives can be found, your estate passes to the Crown.
As such, you might wish to name your chosen family as beneficiaries in your will. This could allow you to leave them any assets you wish, such as cash, investments, your home, or valuable items.
It’s vital to ensure your will is accurate, clear, and up to date. Once you’re no longer able to speak for yourself, an ambiguous or out-of-date will could expose your estate to questions over its validity.
This is particularly important if you have relatives who might try to claim entitlement to your assets after you have passed away. According to MoneyWeek (23 October 2025), in the five years to 2024/25, attempts to have a will ruled as invalid surged by 61%.
Commonly, wills are contested on the grounds that the deceased lacked mental capacity or was pressured into signing over certain assets. In other cases, a will might be found as fraudulent or invalid due to errors such as missing signatures.
A financial planner can help you understand how to divide your assets and refer you to a legal professional if appropriate. Please note, the Financial Conduct Authority (FCA) does not regulate will writing.
To help ensure your chosen family receive a portion of your wealth, you might consider giving financial gifts in your lifetime rather than waiting to pass assets on after you die. This can simultaneously mitigate the risk of disputes and allow your loved ones to benefit from your wealth earlier in life.
Gifting could also help reduce your estate’s IHT liability, meaning a larger portion of your wealth can go to your chosen beneficiaries, rather than to HMRC.
Typically, gifts given more than seven years before your death are excluded from your estate for IHT purposes. Should you die within those seven years, your gifts may be subject to IHT at a tapered rate, depending on your personal circumstances and the total amount gifted.
However, some gifts may be immediately excluded from your estate for IHT purposes. For example, as of 2026/27, the Annual Exemption allows you to give up to £3,000 a year without the gifts counting towards your IHT bill – regardless of when you die.
Keep in mind that allowances, thresholds, and tax rates, including those relating to IHT, are subject to change.
Your personal circumstances will affect your tax position. A financial planner may help you define a plan to make gifts tax-efficiently, while assessing how much you might comfortably give away. Please note, the FCA does not regulate estate planning.
In addition to, or instead of, leaving assets to your chosen family via your will, you might opt to name them as the beneficiary of your pension.
You can nominate a person or charity by completing an expression of wishes form through your pension provider. This is typically completed when you first sign up to the pension scheme. However, it’s important to keep your expression of wishes documentation up to date as your relationships and choices change.
While an expression of wishes isn’t legally binding, and pension trustees will ultimately have the final say, documenting where you want any unused pension funds to go can help the trustees fulfil your wishes.
Generally, your beneficiary will pay Income Tax when receiving your pension funds if you die after age 75. What’s more, from April 2027, unused pension pots will be included in estates for IHT calculations. As such, it’s important to consider your pension’s tax liabilities when planning to pass your pot on. Otherwise, your beneficiaries may receive less than you had expected.
As mentioned, 1 in 8 UK adults have named their chosen family as the beneficiary of a life insurance policy, with 1 in 7 believing their non-blood loved ones would be more financially affected by their death than blood relatives.
In some cases, life insurance may offer greater financial protection for your chosen family than the prospect of inheriting your wealth. Assets left in a will, and your pension pot, could reduce throughout the rest of your lifetime – particularly if you need care later in life.
By contrast, provided you continue to pay your premiums up until your death, life insurance can offer your loved ones a guaranteed lump sum payment when you pass away.
If your estate could be liable for IHT, by placing your policy in trust, you may be able to mitigate a potential bill. The options for insurance and trusts are complex, so it’s often worth speaking with your financial planner and a legal professional for help weighing your options before you make any irreversible decisions.
When planning to leave your assets to loved ones, having a comprehensive estate plan can offer invaluable protection to help your chosen beneficiaries receive their intended inheritance. For estate planning support, speak to our financial planners today.
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.
Thousands of people delay claiming their State Pension every year. There are some potential benefits, including managing their tax liability, but there are also drawbacks that are important to consider.
The State Pension is a regular government payment you may receive from when you reach State Pension Age until you die. The current State Pension Age is 66, though it is gradually rising and is expected to reach 68 in 2046.
The full rate of the new State Pension is £241.30 a week in 2026/27. However, your personal circumstances and National Insurance record will affect your entitlement.
You can use the government’s State Pension forecast to see when you could claim the State Pension and how much you can expect to receive.
If you choose, you can delay claiming your State Pension. According to data collected by Royal London (28 January 2026), almost 42,000 people deferred their State Pension in 2023/24, and 1 in 4 of these pensioners postponed taking their State Pension for five years or more.
Find out why some people might be delaying their State Pension and the potential drawbacks of doing so.
1. You’d receive a higher State Pension payment when you claim it
One of the benefits of delaying your State Pension is that you’ll receive higher payments when you do claim it.
For every nine weeks you defer, your State Pension will increase by 1%. This works out at just under 5.8% if you defer for a year. For example, in 2025/26, the full new State Pension was £230.25 a week. If you deferred for the full year, you’d receive an extra £13.35 a week.
In some cases, you may be able to receive the additional amount as a one-off payment.
If you reached the State Pension Age on or after 6 April 2016, you can usually claim a one-off arrears payment of up to 52 weeks. If you reached State Pension Age before this date and deferred for at least 12 months, you could receive a lump sum payment, which will include interest of 2% above the Bank of England base rate.
2. Delaying your State Pension could be tax-efficient
If you plan to work past the State Pension Age or receive an income from other sources, delaying your State Pension payments could make sense from a tax perspective.
Your State Pension counts as income, and you could be liable for Income Tax. As a result, receiving the State Pension could increase your tax liability and potentially push you into a higher Income Tax band. For some, this could make delaying payments an attractive option.
Your personal circumstances will affect your tax position. An accountant may help you assess what’s appropriate for you by providing tailored tax advice.
1. You might not break even
One aspect to consider before delaying your State Pension is how long it would take to break even.
According to the government (6 April 2025), it will take more than 15 years to get back 52 weeks of the deferred full new State Pension. This time increases by around a year for each additional 52 weeks you defer.
So, while you’d benefit from higher payments once you do claim the State Pension, you could receive less overall.
2. Higher State Pension payments could increase your tax liability in retirement
As mentioned above, the money you receive from the State Pension is classed as income for tax purposes. So, deferring your State Pension to receive a higher amount in the future could increase your tax liability in retirement.
If your total income is below the Personal Allowance, which is £12,570 in 2026/27, you don’t need to pay Income Tax. However, in 2026/27, the full new State Pension is only just below this threshold at £12,547.60, so deferring is likely to push your income above the Personal Allowance before you factor in other sources of income.
Receiving a higher income from the State Pension might also affect eligibility for means-tested benefits.
So, you could benefit from considering the long-term tax implications of deferring your State Pension before you make a decision.
You need to claim your State Pension when you’re ready to receive it. So, if you wish to delay the payments, you don’t need to do anything.
However, it may be a good idea to assess this decision as part of your overall financial plan. As financial planners, we could help you calculate whether the potential tax benefits of delaying your State Pension make sense for you and assess alternative options. Please get in touch if you have any questions.
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.
