In the November 2025 Budget, the chancellor revealed new Cash ISA rules that will affect under-65s. The change could affect your savings and wider financial plan.
ISAs provide a tax-efficient way to save and invest, making them an essential part of many financial plans. In 2025/26, you can add up to £20,000 to ISAs and split the money across savings and investments however you wish. This will change from April 2027.
The ISA annual allowance will remain at £20,000. However, for most savers, the amount you can place in a Cash ISA will fall to £12,000 in April 2027. So, if you want to use your full £20,000 allowance, you will need to place at least £8,000 in a Stocks and Shares ISA.
According to government figures (4 December 2024), there were around 12.4 million adult ISA subscriptions in 2022/23. Of these, 63.2% were Cash ISAs. As a result, some savers may wish to review their financial plan.
Over-65s will not be affected by the new Cash ISA rules, and will be able to add the full £20,000 allowance to a Cash ISA.
Despite speculation that the tax advantages of ISAs would be changed in the Budget, this didn’t materialise. The interest or other returns your money earns in an ISA will continue to be free from Income Tax or Capital Gains Tax.
Those who want to add more than £12,000 to their savings in a tax year might consider doing so outside of an ISA in light of the changes. This could lead to an unexpected tax bill.
The amount of interest on which tax might be due depends on the rate of Income Tax you pay. In 2025/26, the Personal Savings Allowance (PSA) is:
As a result, you may pay tax on the interest if your savings are not held in a tax-efficient wrapper, such as an ISA.
For example, if you’re a basic-rate taxpayer and receive £2,000 in interest on savings held outside a tax wrapper in 2025/26, you’d be liable to pay tax on the £1,000 that exceeds the PSA at 20%, resulting in a £200 bill.
During the Budget, it was also announced that the rate of tax you pay on savings income will rise by 2% from April 2027. So, if you exceed the PSA in 2027/28, the rate of tax you pay on the portion above the threshold will be 22%, 42% and 47% for basic-, higher-, and additional-rate taxpayers respectively.
There are times when holding money in cash makes sense – for instance, if the money will be used for a short-term goal or held in case of an emergency.
However, investing may be appropriate for long-term objectives, and the new ISA rules could be a useful reminder to check if a Stocks and Shares ISA is suitable for you.
You can invest in a range of assets through a Stocks and Shares ISA and choose a risk profile that suits you. Investment returns cannot be guaranteed, but they have the potential to outpace inflation to deliver growth in real terms.
Indeed, according to figures from Unbiased (4 February 2025), between 2015 and 2025, the average Cash ISA has delivered an average return of 1.21%. The average returns of a Stocks and Shares ISA were 9.64% over the same period.
If the new ISA rules mean you need to adjust your financial plan, you could benefit from moving some of your money into a Stocks and Shares ISA. You should be aware that investing carries risk, and it’s important to understand what level of risk is right for you.
If you have any questions about the new ISA rules or would like to talk about other announcements made in the 2025 Budget, please get in touch. We’re here to help you understand what the changes mean for you and your long-term plan.
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.
Biases affect how you act, and the personal goals you’re working towards could distort how you perceive risk, rewards, and information. Indeed, the more important the goal is to you, the more likely it is that bias occurs.
Being aware of when bias might occur – and what might trigger it – could help identify when it may be affecting your decisions. Read on to find out more about the relationship between bias and your goals.
Biases are mental shortcuts that help with quick decisions. You have to make hundreds of small decisions every day, from what time to set your morning alarm to which route to take to work. Biases can help you tackle these daily decisions effectively. However, they can be harmful when you’re making important decisions.
One factor that affects how biases influence you is emotion.
Your financial objectives are often very important to you. They might represent long-term security or the opportunity to realise long-held ambitions. As a result, emotions are often attached to them, which can trigger biases that are easy to overlook.
If you’re excited about a goal you're working towards or worried about what happens if you don’t reach your target, you may experience stronger biases.
Imagine you're investing for your child’s education. It’s an important nest egg that will affect your child’s future. In this case, fear of missing the goal could make you reckless and cause you to take more risk than is appropriate. Alternatively, if you’re worried about investment volatility, you may decide to hold the money in cash and miss out on possible investment returns altogether.
Similarly, if you’re starting a new pension to support your retirement, your other assets could shape your emotions and how bias affects your decisions.
If the new pension will be your only source of retirement income, it will be essential for your long-term financial security. As a result, the emotions attached to the pension are likely to be stronger, which could trigger bias.
In contrast, if the pension will supplement your retirement income and you have other assets, such as additional pensions or investments, you might be better placed to make logical decisions.
While it’s impossible to eliminate financial biases, a financial plan can help you keep them in check.
First, a financial plan will identify your goals. Then, you can start to understand what you need to achieve them. For example, if you want to retire at 55, you might consider how much money you’ll need from a pension and other assets to live comfortably.
Once you have your financial goals set, it’s time to look at what steps you’ll need to take to reach your target.
In the retirement example, this might include increasing pension contributions, reviewing how your pension is invested, or maximising employer contributions.
By creating a clear pathway to securing your goal, a financial plan can help you feel more confident about your future.
Your financial strategy also focuses on the long-term. Rather than assessing how to use your money now, it’s about how you can use your wealth over decades to create the life you want.
As emotional responses are often short-term, this long-term focus can help you keep bias in check.
If you read a headline about markets “plummeting”, your immediate response may be to worry about what it will mean for your pension and retirement. Remembering that your retirement plan covers decades, rather than weeks, and considers potential market volatility could put your mind at ease. In turn, you may avoid rash decisions that harm your ability to reach your objectives.
What’s more, when working with your financial planner, they can point out where bias might be influencing you.
Working with a financial planner can help you establish why you’re investing and then create a strategy that reflects these goals. Please get in touch if you’d like to arrange a meeting.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
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.
While phasing into retirement can offer you greater flexibility, it may make your finances more complex. Read on to find out more about five key considerations.
While you might still earn a salary as you phase into retirement, if you’ve chosen to reduce your working hours or switch roles, it might not be enough to maintain your lifestyle.
If this is the case, you may opt to supplement your salary with income from other sources. For example, you might start to take an income from your pension or deplete your cash savings.
A financial plan can help you assess what income you need and whether there’s a gap to close.
Remember, money taken from your pension will usually be added to your other income when calculating your Income Tax liability. As a result, it’s important to keep track of your different income sources so you don’t face an unexpected bill.
If you’re using assets to support your lifestyle as you phase into retirement, it’s also important to consider longevity and the effect of triggering the Money Purchase Annual Allowance (MPAA) if you access your pension. Both points are covered in greater detail below.
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.
Contributing to your pension as you phase into retirement could mean you’re able to afford a more comfortable lifestyle when you give up work. A financial planner can help you assess how your contributions will add up and whether contributing is advisable for you.
If you’ll be supplementing your income, you should be aware of the MPAA and how much you can add to your pension each tax year.
In 2025/26, the maximum amount that can be paid into your pension before paying an extra tax charge is £60,000 or your relevant earnings, whichever is lower. This is known as the Annual Allowance. However, if you withdraw a flexible income from your pension, you may trigger the MPAA, which would reduce the amount to £10,000.
According to a Wealthify survey (17.09.2025), just 3% of pension holders understood what “MPAA” meant. Yet, this little-known allowance could limit your future pension contributions and affect the income you receive later in life.
The current State Pension age is 66, and it will rise gradually to 68 by 2046. Your personal pension cannot normally be accessed until age 55, which will increase to 57 from 2028.
When you reach State Pension Age, you won’t automatically start receiving payments. You must claim it. This means, if you choose to, you can defer claiming your State Pension until you stop working completely.
The money you receive from the State Pension is added to your other sources of income when calculating Income Tax liability. Deferring your State Pension might reduce your overall tax bill as a result.
In addition, for every nine weeks you defer the State Pension, the income you’ll receive from it when you do claim it will rise by 1%.
Your pension is typically invested, and you might have other investments that are earmarked for retirement. If your plans have changed to include a period of phasing into retirement, you may benefit from assessing how your money is invested.
Often, your pension will be moved to investments that are more stable as your retirement age approaches. If your money will now remain invested for longer, this may not be the most appropriate option for you.
It can be difficult to understand how the value of your pension and other assets will change during your retirement, particularly if your income needs will shift.
Setting out your income needs at each phase of your retirement and using a cashflow model could help you visualise how your pension and other assets could change. This can help you see if your assets will provide you with security for the rest of your life or if there’s a shortfall.
A cashflow model will make certain assumptions, such as the average annual return of your pension or the rate of inflation. The outcomes aren’t guaranteed, but they can provide a useful insight into your long-term finances and the effect of your decisions.
Alongside these five considerations, you might have other important questions to weigh up when you’re retiring, including whether to phase into the next chapter of your life. A tailored financial plan can help you understand your finances now and how they might change as you gradually give up work and eventually stop completely.
Please get in touch if you’d like to talk to us about your retirement plan.
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.
After months of speculation and rumour, chancellor Rachel Reeves has delivered the Autumn Budget for 2025. In this update, we’ll explain the key changes and what they mean for you.
Last year, in her maiden Budget, the chancellor sought to balance the public finances with tax rises to cover a reported £22 billion black hole.
This year, Reeves arguably faced an even more difficult landscape. In turn, she has announced an estimated £26 billion of tax rises by 2029/30.
The chancellor had to start her speech, however, by acknowledging the “deeply disappointing” and “serious error” of the Budget announcements being released early by the Office for Budget Responsibility (OBR).
It’s also notable how many predictions ultimately proved to be wide of the mark.
Now that we know exactly what’s included, it’s important to understand the changes and how they could affect you.
The chancellor says the government’s plans will reduce borrowing more over the rest of this parliament than any country in the G7.
GDP is expected to grow by 1.5% in 2025, higher than the OBR’s 1% forecast from earlier this year. In subsequent years, the estimations are as follows:
Due to weaker underlying productivity growth, the OBR estimates that tax receipts will be £16 billion lower in 2029/30 than initially forecast in March 2025.
Average inflation is expected to fall over the next three years.
National debt will stand at £2.6 trillion this year. £1 in every £10 the government spends is on debt interest.
The Labour manifestopromised not to increase Income Tax or National Insurance (NI), and despite pre-Budget speculation, the government has kept to that promise in this Budget.
However, the chancellor did announce that the Income Tax thresholds will remain frozen for a further three years beyond the previous 2028 freeze, staying where they are until April 2031. This move will raise £8 billion for the government. Similarly, the Inheritance Tax (IHT) threshold freeze is extended from 2030 to 2031.
While this will not increase your Income Tax or IHT bills directly, this fiscal drag means more of your income and wealth may be exposed to tax over time.
The government is also upholding its commitment to bringing pension pots into the scope of IHT from April 2027, and reforms to relief for business and agricultural assets from April 2026.
Tax rates are set to rise for dividends, savings, and property income.
The government confirmed that, even after these reforms, 90% of taxpayers will still pay no tax on their savings. However, these changes are set to impact business owners and landlords.
The chancellor says these increases will raise £2.2 billion in 2029/30.
The chancellor announced that from April 2027, the Individual Savings Account (ISA) allowance will change for under-65s.
As it stands, adults can contribute £20,000 across their ISAs, including Cash ISAs and Stocks and Shares ISAs, each tax year.
From April 2027, £8,000 of this allowance will be reserved exclusively for investments, leaving an available £12,000 that savers can pay into their non-investment accounts, such as Cash ISAs.
Savers over the age of 65 will continue to be able to save up to £20,000 in a Cash ISA each year.
The allowances for Junior ISAs and Lifetime ISAs are frozen until April 2031 at £9,000 and £4,000 a year, respectively.
The chancellor put a cap on NI-efficient pension contributions made under salary sacrifice.
Salary sacrifice schemes cost the government £2.8 billion in 2016/17, but this figure was set to triple to £8 billion by 2030/31.
The government will charge employer and employee National Insurance contributions (NICs) on pension contributions above £2,000 a year made via salary sacrifice. This will take effect from 6 April 2029.
The chancellor says that many of those on low and middle incomes will be able to continue using salary sacrifice as normal, while high earners can expect to pay increased NI.
The chancellor announced the much-speculated “mansion tax” that will affect the top 1% of properties.
The new property surcharge will be paid alongside Council Tax.
There will be four price bands starting with £2,500 for a property valued between £2 million and £2.5 million. For properties valued more than £5 million, the levy will be £7,500.
The measure is estimated to raise £400 million by 2031.
The BBC reported that changes to the government’s previously announced winter fuel payments and health-related benefits will cost £7 billion in 2029/30.
In addition, Reeves revealed she would remove the two-child benefit cap. This will cost £3 billion by 2029/30.
As a result of a loophole in the Class 2 voluntary NICs regime, overseas individuals with a limited connection to the UK can build a State Pension entitlement through cheaper rates.
The government is looking to end this by removing access to the cheapest Class 2 NICs for these individuals. Additionally, it will increase the initial residency or contribution requirements for those living outside the UK.
The chancellor also confirmed the government’s commitment to the triple lock. From April 2026, this will increase the basic and new State Pension by 4.8%, offering up to an additional £575 per year to pensioners, depending on their entitlement.
In addition to the Dividend Tax increase, the chancellor announced a range of changes that could affect business owners, including:
More broadly, the chancellor made no mention of other key thresholds that will remain the same. These include:
All information is from the Budget documents on this page.
The content of this Autumn Budget summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.
While we believe this interpretation to be correct, it cannot be guaranteed, and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.
For some investors, particularly higher-rate taxpayers, Venture Capital Trusts (VCTs) could offer an attractive and tax-efficient investment prospect. Read on to discover the basics you need to know if you’re thinking about making VCTs part of your financial plan.
VCTs are listed companies that invest in UK businesses. These are typically smaller and younger firms than those you might access through other funds. They could include a range of businesses from technology start-ups to consumer goods companies.
When you invest in a VCT, you become a shareholder in the trust, rather than in individual companies. Your investment would be spread across the VCT’s investment portfolio.
As of 2025, VCTs have been operating for 30 years. According to figures released in November 2024 by the Association of Investment Companies, during that time, VCTs have raised £12.5 billion to invest in thousands of small companies. Some of the firms benefiting from VCT investment have become household names. Among the success stories are Zoopla, Unbiased, Virgin Wines, and Secret Escapes.
However, alongside the successes, some companies have failed to deliver a return on investment. Read on to find out why you might consider investing in a VCT and the risks you need to weigh up.
To encourage investors, VCTs offer a tax-efficient way to invest. This could be useful for higher-rate Income Tax payers or those who have used tax allowances, such as their ISA allowance or pension Annual Allowance, for the current tax year.
Here are three types of tax relief you could benefit from when investing in VCTs.
1. Income Tax
In 2025/26, when you invest in VCT shares, you can claim back up to 30% (up to a maximum of £200,000) each tax year to reduce your Income Tax bill when buying new shares directly from a VCT. So, if you invest £20,000, you could receive up to £6,000 in Income Tax relief.
To qualify for this relief, you must hold the shares for at least five years. If you sell the shares within this period, the relief will be withdrawn.
2. Dividend Tax
If the VCT invests in dividend-paying shares, you could boost your income without increasing your tax liability. Unlike other investments, dividends you receive from VCT shares are free from Income Tax and Dividend Tax.
3. Capital Gains Tax
When you sell shares that aren’t held in a tax-efficient wrapper, the gains may be liable for Capital Gains Tax (CGT). However, you can sell your VCT shares without paying CGT on the profit due to “disposal relief”.
Aside from tax incentives, there are other reasons for investing in a VCT.
One attractive feature may be the high-growth potential of the companies VCTs invest in. VCTs aim to invest in companies at an early stage as they prepare to grow and innovate. As such, they have the potential to deliver higher returns than other investments, although this comes with increased risk.
VCTs also offer a way to invest in unlisted companies, which could improve the diversity of your overall investment portfolio.
Some investors may also be drawn to VCTs as a way to support small companies and the wider economy.
The key drawback of VCTs is that you’ll be taking more investment risk than you would if you invested in established companies. Smaller businesses have a higher rate of failure, and that could mean you don’t get back the money you invested.
To qualify for VCT investment, businesses much usually have under 250 employees, with gross assets under £15 million, and be no older than seven years. If a company is classed as “knowledge-intensive”, it may have up to 500 employees and have been operating for 10 years to qualify for VCT status.
As a result, VCTs aren’t the right investment option for everyone, and it’s important to balance the potential gains with the risk. Your financial planner can work with you to determine whether VCTs are appropriate for you.
In addition, while the tax treatment of VCTs makes them attractive, you need to keep in mind that you must hold the shares for at least five years to qualify. So, if you need or choose to sell the shares sooner than you expect, you’ll lose this incentive.
Selling VCT shares can also be difficult, as there isn’t an active market. As a result, it’s unlikely you’d be able to access money held in a VCT quickly, and, even if you find a buyer, you might have to accept a lower price than you’d like.
If you’d like to explore whether VCTs could be right for you or have any questions about how they work, please contact us.
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.
As property prices have risen at a faster pace than wages over the last few years, first-time buyers are finding it increasingly difficult to save the required deposit to get on the property ladder. If you own your home, you might be able to use your property wealth to give loved ones a helping hand towards homeownership.
Analysis by the Home Builders Federation from September 2024 suggests the average first-time buyer would have to save half of their earnings, after covering rent and bills, for almost a decade to afford a deposit. It could mean the goal of buying a home seems out of reach for many people.
Indeed, family support is essential for many first-time buyers.
January 2025 figures from Legal & General suggest almost half of under-35s who recently bought a home received financial help. Throughout 2024, families collectively gifted £9.2 billion to first-time buyers.
Here are five ways you might use your property wealth to support loved ones.
If you’re planning to downsize and purchase a cheaper property, you may opt to gift some of the equity you release. This could provide your loved ones with a lump sum they can put towards a house deposit.
Before you proceed, you might want to assess your long-term finances to understand the implications of gifting a lump sum.
As a homeowner, you might be able to borrow more through your mortgage, with the additional borrowing secured against your home, to gift to your loved ones.
Borrowing more through your mortgage is likely to increase your monthly repayments and mean you pay more interest over the full term. So, it’s important to be aware of how this option could affect your personal finances and explore alternatives so you can weigh up the pros and cons.
Having a guarantor could allow some first-time buyers to purchase a home with a lower deposit or borrow more to get on the property ladder sooner.
While the main borrowers would own the property, you’d be legally responsible for the debt if the borrower missed their mortgage repayments. Usually, your property or other assets will be used as security if you act as a guarantor.
While you are not immediately gifting assets in this scenario, it’s important to be mindful of the potential costs if your loved one defaults on the debt.
A family offset mortgage allows you to use your savings instead of a deposit to offset the mortgage.
You’d usually need to place your savings in a savings account with the lender. You may receive interest on the savings and, assuming the borrower meets all their repayments, you’ll receive your deposit back after a defined period.
This could be a good option if you have a lump sum that’s earmarked for a long-term goal. However, you should weigh up the risk of your loved ones not meeting their mortgage repayments, you would lose some or all of your savings in this scenario.
Finally, if you are aged 55 or over, you could use equity release to access your property wealth and gift it to loved ones.
Equity release is a type of loan that’s secured against your home. Unlike traditional loans, you don’t need to make repayments. Instead, the interest is rolled up, and the total debt is repaid when you pass away or move into long-term care.
As you're not making repayments, the amount owed through equity release when the loan is repaid can be far higher than the initial amount you borrowed. As a result, it will affect the inheritance you leave. If you’re thinking about using equity release to help your family get on the property ladder, it could be useful to talk about how it will affect their inheritance.
In addition, equity release could affect your eligibility for means-tested benefits and make it more difficult to move home. So, it’s essential you understand how using equity release might affect both your short- and long-term finances, and explore alternative options to decide what’s right for you.
If you want help securing a mortgage or would like to discuss equity release, please contact us.
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.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
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.
The importance of saving is drummed into us from a very early age. As a child, for example, you may have had a moneybox and been encouraged to save your spare coins.
As you get older, this extends into saving for university, saving up for a house, saving for retirement, and so on.
But what about spending? While looking after your financial future is indisputably important, so is taking care of your financial present.
Saving can become an ingrained habit that’s tough to break. Equally, spending can be a specific skill, and, like any other, it takes practice and support.
Read on to find out how having a strong financial plan in place can help you strike the right balance between spending for today and saving for tomorrow.
There have probably been occasions throughout your life where you’ve had to cut back a little, or your budget has prevented you from buying something.
But if this becomes a persistent pattern of unjustified frugality, it can affect your everyday life.
This fear of spending can be deep-rooted, and for some, it becomes so severe that it develops into a phobia known as “chrometophobia”.
While this is relatively rare, anxiety over spending is fairly common.
According to an August 2025 article in Money Marketing, in 2025, UK adults report negative emotions associated with spending retirement savings, including:
If this is you, it could mean that you’re missing out on opportunities and experiences that you could well afford.
This is where a strong financial strategy can help. It would be easy to assume that financial planning deals only with saving, investing, and maximising wealth.
While these are key elements, the essence of financial planning is to help you live a rewarding life – during work, retirement, and beyond.
To start spending your wealth with confidence, it can help to first define your life goals. These form the cornerstone of your financial plan, shaping your saving and spending to help you live the life of your dreams.
For example, they could include:
Life goals are different for everyone, which is why bespoke financial advice is so important.
Once you’ve identified what your goals are, you can map out your financial future, perhaps with the support of a financial planner.
Using a process called “cashflow modelling”, a financial planner can help to ascertain what income you are likely to need during retirement to live your dream lifestyle. Then, they can assess how well your wealth is organised to support those goals.
Using sophisticated software, your planner inputs details of your current income, spending, savings, investments, and pensions, along with your expected income and expenditure in later life. The software then factors in assumptions about inflation, tax, and investment growth to project how your finances might evolve over time, helping you visualise the impact of different life events and scenarios.
Plus, it will incorporate your tolerance to, and capacity for, losses, as well as how much you need to reach your goals. You can adjust these to see how outcomes might change.
Cashflow modelling can give you increased confidence that your savings will support your goals, as well as give you an idea of how different levels of spending could impact this.
While this process doesn’t offer any guarantees, it can offer educated guidance into your potential financial future.
Effective estate planning is also a key part of financial confidence. If you’re thinking about how to provide for your loved ones after you’re gone, you may feel guilty spending money on yourself, and building up your wealth could seem like the logical move.
However, Inheritance Tax (IHT) rules can be complex, and simply leaving a large estate to your loved ones could mean you inadvertently land them with a large tax bill.
In some cases, spending some of your wealth to keep within the IHT threshold, which in 2025/26 is £325,000, could actually prove to be a more cost-effective option.
If you struggle with the concept of spending, it can often help to reframe it. Think of spending as investing in enriching your life, in the same way as saving is investing in your future.
If you’d like to talk to us about any aspect of financial planning, please get in touch, and we’ll be happy to help.
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 Financial Conduct Authority does not regulate estate planning, cashflow planning, or tax planning.
The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Last month, you read about how retirement is changing, with almost half of workers aged over 50 exploring phasing into retirement. There are plenty of reasons why more people are considering a gradual retirement, including the emotional and financial benefits this option could offer.
When thinking about retirement challenges, most people focus on having enough to live on for the rest of their lives. The emotional challenges may be overlooked.
Retirement is a significant milestone and can change your lifestyle completely. If you retire on a set date, you may go from a fixed routine to the freedom to spend your time however you wish within a single day. While that might sound like bliss and something you’ve been looking forward to, it’s not uncommon to struggle with it initially.
An October 2017 survey by the Centre for Ageing Better and the Calouste Gulbenkian Foundation found that 20% of UK adults who had retired within five years said they found the change difficult.
Those planning to retire within five years of the survey also reported concerns, including:
Age UK research from December 2024 further demonstrates the challenges some retirees face. It found that 7% of people aged over 65 – the equivalent of around 940,000 people – often feel lonely.
Phasing into retirement could help you retain your sense of purpose and social circle while benefiting from more free time to pursue your passions or simply enjoy a slower pace of life.
There are two key reasons why taking a gradual approach to retirement could be beneficial from a financial perspective.
First, if you’re still earning an income, you might not need to draw money from your pension or deplete other assets. As a result, you’ll have more to fund your lifestyle once you give up work completely.
In some cases, your salary will be lower when you’re phasing into retirement, so you might take an income from your pension to supplement it. While you’d be reducing the value of your pension, it’s likely to be at a slower rate than if you weren’t working at all.
Second, you may opt to continue contributing to your pension while you’re transitioning. Again, this could mean your pension is larger when you need to cover more of your expenses in the future.
It’s important to note that if you take a flexible income from your pension, the amount you can contribute tax-efficiently could fall to just £10,000 in the 2025/26 tax year under the Money Purchase Annual Allowance. If you plan to contribute to your pension as you phase into retirement, we can help you assess how to do so tax-efficiently.
Managing your finances if you’re gradually retiring can be complex. You might be juggling multiple incomes, and you’ll also need to consider how your decisions could affect your long-term security.
Working with your financial planner to create a cashflow model can provide clarity. It’s a useful tool that could help you assess the effect of your decisions, so you can feel confident about your finances.
For example, you might use a cashflow model to see if you have enough in your pension to halt contributions earlier than planned so you can phase into retirement. Or you could see how the value of your pension will change if you withdraw £20,000 annually for five years to supplement your salary before taking an annual income of £40,000 when you stop working.
While the results of a cashflow model cannot be guaranteed, it does provide useful insight to help you make informed decisions about retirement or other financial matters.
We can help you create a retirement plan that reflects your lifestyle goals, including phasing into retirement. Please get in touch to discuss the next chapter of your life.
Next month, read about some important financial considerations if you’re planning to phase into retirement, such as when to access your State Pension and how to manage tax liability.
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. Past performance is not a reliable indicator of future performance.
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.
The Financial Conduct Authority does not regulate cashflow modelling.
What’s the most important factor affecting the performance of your investments?
Your mind might jump to the ups and downs of the market, and they do have an effect. When share prices rise, so too will the value of your portfolio. However, the markets aren’t the starting point of a successful investment: your mindset is.
Your approach to investing could influence your success.
Tracking the markets can be enticing. They are constantly moving, with numerous factors influencing them. Headlines can make even slight adjustments seem dramatic.
It can seem logical to focus on these movements, but doing so overlooks the long-term perspective that benefits most investors. When you look at the market returns over decades, you’ll see that the ups and downs smooth out.
Instead, you're left with a general upward trend. Even when markets have fallen sharply, such as during the Covid-19 pandemic, they have, historically, recovered these losses over a long-term time frame.
Investors who focus on short-term market movements can find it more tempting to make adjustments to their portfolio as they try to time the market (buy low, sell high). As movements are impossible to consistently predict, they’re likely to make mistakes and could miss out on long-term gains as a result.
So, if you shouldn’t be keeping an eagle eye on market movements, how should you approach investing?
An important first step to take is to define why you’re investing. Your reason might affect your investment time frame and the level of risk that’s appropriate for you.
Then, you can create an investment portfolio that reflects your goals, risk profile, and financial circumstances. Your financial planner can help assess what’s right for you.
Next, far from keeping an eye on the markets section of the newspaper, it’s time to be patient. Trusting your investment strategy and taking a long-term approach could lead to better outcomes and stronger returns.
It sounds simple, but embracing this mindset can be more difficult than you expect – it’s so easy to reach for your phone and check your portfolio’s performance or the news. While that might seem harmless, it can trigger an emotional response, from fear to excitement. These emotions mean you’re more tempted to change your investments and potentially miss out on long-term gains.
If you struggle to focus on the bigger picture when investing, you might benefit from:
These simple steps could help you develop some of the most important skills for successful investing: patience, discipline, and emotional control. Adopting a mindset that embraces these attributes could have a greater impact on your returns than short-term market movements.
Taking a long-term approach doesn’t mean you never look at your investment portfolio. Regular reviews are still important. However, look at the performance over years, rather than days or weeks.
Similarly, there might be times when it’s appropriate to make adjustments to your portfolio due to changes in your circumstances or long-term trends, not because of the latest headline.
If you’d like to work with us to review your current investment strategy or you’re interested in investing for the first time, please get in touch. We can help you create a portfolio that reflects your aspirations and 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.
October 2025 proved to be a positive month for many investors, with markets reaching record highs. Read on to find out more about what factors may have affected your portfolio’s performance.
Remember to take a long-term view when assessing your investments and consider your risk profile when making decisions.
The month started strongly with the FTSE 100 closing at a record high on 1 October, according to the Guardian. AstraZeneca was the biggest riser, making the pharmaceutical firm the most valuable company listed in London.
In the year to 1 October, the FTSE 100 was up almost 15% and could be on track for its strongest year since 2009, when the market recovered from the financial crisis.
It was a similar picture in the wider European and US markets.
On 2 October the Guardian reported, European shares hit a record high. The pan-European Stoxx 600 index increased by 0.7%, driven by gains in German and French companies. Wall Street also reached new heights when it opened, with the S&P 500 index up 0.3%.
Despite the promising start to the month, French stocks fell on 6 October. AA Stocks reported the market fell when new prime minister Sébastien Lecornu resigned after less than a month in office. The French index CAC 40 tumbled 1.8% as a result.
Signalling that investors may feel nervous, a BBC article noted the price of gold surpassed $4,000 an ounce (£3,005) for the first time on 8 October. Gold is often viewed as a “safe” asset, and its price has increased by 50% in the first nine months of 2025.
The Guardian noted soaring price of gold is good news for mining companies. Antofagasta, which operates gold mines in Chile, was the biggest riser on the FTSE 100 after jumping 2.7%.
Trade tariff threats and actual tariff measures have caused market volatility throughout 2025, and October was no different. According to the Independent, on 13 October, the US and China threatened to impose tariffs, which led to Asian stocks falling.
On 17 October, according to the Guardian, anxiety around US regional banks and credit concerns spooked the market. The US S&P 500 index was down 1.2%, and the ripple effect was felt in many other markets.
In the UK, the concerns sparked a sell-off that knocked nearly £11 billion off bank valuations. The FTSE 100 closed 0.87% down, with Barclays (-5.66%), NatWest (-2.88%), and HSBC (-2.5%) among the biggest losers.
There was a similar sell-off in Europe. The Stoxx 600 index (which includes UK banks) was down 2.4%, and around €37 billion was wiped off the value of the European banking sector.
The Asia-Pacific markets weren’t immune. China’s CSI 300 dropped 2.3% and Japan’s Nikkei fell 1%, although the dip in this region was partly attributed to investor caution over profits of AI shares.
The BBC reported Japanese markets quickly recovered on 21 October when Sanae Takaichi won a parliamentary vote to become the country’s first female prime minister. She is expected to push for looser fiscal policy.
The US announced new sanctions on Russia on 23 October, which pushed up the price of crude oil. This led to both BP and Shell shares rising by around 3.5% and the FTSE 100 reaching another record high, according to a Share Talk article.
The Guardian reported the positive news continued on 24 October. The FTSE 100 broke the record set the previous day and exceeded 9,600 points for the first time. On the back of an inflation report, the US indices – the S&P 500 and the Nasdaq – also broke records.
In addition, Shanghai’s SSE Composite Index increased by 0.7% and reached its highest level in more than a decade. The boost was linked to Beijing stating it would focus on chips and AI to achieve technological self-reliance, which led to stocks in this sector rising.
In October 025, the Office for National Statistics (ONS) reported in the 12 months to September 2025, inflation was 3.8% – stubbornly remaining above the Bank of England’s 2% target.
The International Monetary Fund increased its 2025 UK inflation forecast to 3.4% (up from 3.1% in April), saying the UK was set to have the highest in the G7.
Official figures estimate UK GDP increased by just 0.1% in August. The report suggested there was no service growth, which may reflect business caution ahead of the upcoming Budget.
Data from the ONS shows the government borrowed £99.8 billion between April and September 2025. This is the largest sum borrowed since 2020 and is £7.2 billion more than the Office of Budget Responsibility forecast in March 2025. The news will add further pressure to the chancellor ahead of the Budget, which will take place on 26 November 2025.
Trade data released in October 2025 was also poor. According to the Guardian, the trade deficit widened with exports to the US and EU falling by around £700 million and £800 million respectively in August 2025.
Readings from a Purchasing Managers’ Index (PMI) suggest that businesses may be taking a cautious approach in the lead-up to the Budget.
The S&P Global PMI found that sluggish demand led to a reading of 50.8 in September in the service sector. While the figure remains above the 50 mark that indicates growth, it’s a marked drop from the 54.2 recorded in August.
Reuters reported the manufacturing sector shrank at the fastest pace in five months as factories were affected by subdued domestic demand and falling export orders. The reading of 46.2, which indicates contraction, was also linked to a cyberattack on Jaguar Land Rover that halted production and disrupted supply chains.
In August, the euro area hit the European Central Bank’s inflation target of 2%. However, the Financial Times reported it increased to 2.2% in September.
S&P Global’s PMI, which tracks business activity, was positive. According to the Guardian, the eurozone private sector delivered a reading of 52.2 after rising at the fastest pace in 17 months. Businesses also recorded the strongest increase in new orders in two and a half years.
The EU’s two largest economies, Germany and France, reported sharply contrasting performances. Germany’s output growth reached a 29-month high. In contrast, France posted 14 consecutive months of decline amid political uncertainty.
While the PMI data suggests businesses are confident, unemployment figures released by Eurostat indicate many firms are being cautious. Across the eurozone, unemployment increased by 0.1% to 6.3% in August, according to Eurostat.
Highlighting the far-reaching impact of US trade tariffs, Switzerland cut its 2026 economic growth forecast to 0.9% against the 1.2% predicted in June 2025. The Swiss government noted that exports have been affected by tariffs, creating a ripple effect across the broader economy.
According to the BBC, inflation in the US in the 12 months to September 2025 was 3%. The figure is slightly lower than expected and could add to the pressure the Federal Reserve is already facing from the US president to cut interest rates.
S&P Global’s PMI data for the US service sector fell to 54.2 in September but remained in growth territory.
However, a survey conducted by recruitment firm Challenger, Gray & Christmas and reported by Bloomberg suggests that business uncertainty may be causing firms to halt hiring plans. In the nine months to the end of September 2025, 205,000 fewer jobs were created when compared to the same period in 2024.
According to Reuters, Takaichi, Japan’s new prime minister, could be welcome news for investors. She is expected to embrace government spending, lower interest rates, and adopt a looser approach to monetary policy than her predecessor. It’s hoped that this will encourage businesses to invest and support economic growth.
According to the Guardian, while China’s GDP growth of 4.8% year-on-year between July and September 2025 might seem high compared to other economies, it’s the slowest pace recorded in a year. In addition, hopes that the economy could reduce the impact of tariffs by moving away from exports to domestic consumption were tempered when retail figures remained weak.
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.
