Taking out a new mortgage deal could represent a shift in your financial commitments. So, reviewing whether your financial protection is still appropriate could ensure you have a vital safety net should you face a shock.
Read on to learn how financial protection can provide security in unexpected situations, and what to consider when taking out new cover.
Financial protection could provide a much-needed cash injection when you or your loved one experiences a financial shock.
Indeed, in 2024, insurers paid out a record £8 billion in financial protection claims, according to data released in July 2025 by the Association of British Insurers (ABI).
There are several types of financial protection that you might want to weigh up as a homeowner. The three main options are:
1. Income protection
If you’re unable to work due to an illness or accident, income protection would pay you a regular income until you return to work, retire, or the term ends. This income is usually a portion of your salary, such as 60%.
Income protection could help you cover financial commitments, including mortgage repayments, if your regular income stops. The ABI figures show the average amount paid through income protection was £25,133.
2. Critical illness cover
If you’re diagnosed with a covered critical illness, this form of financial protection would pay you a lump sum. According to the ABI statistics, the average amount claimed was £68,735.
You can use the lump sum however you wish. So, you might use it to cover your regular outgoings while you take time off work, adapt your home if necessary, or pay off your mortgage.
3. Life insurance
Life insurance would pay out a lump sum to your beneficiaries if you passed away during the term. It could provide your loved ones with financial security while they are grieving.
You can choose the level of cover to suit you and your family. For example, you might opt for an amount that would pay off your mortgage to reduce your family’s financial commitments.
The ABI figures show 96.5% of life insurance claims were upheld in 2024, and the average claim was for £79,703.
If you’ve taken out a new mortgage, review your current financial commitments and consider when and how financial protection could benefit you.
For example, if you’re a homeowner with limited savings, income protection could be a valuable option.
According to a May 2025 article in Cover Magazine, 14% of mortgage holders would immediately struggle to pay their mortgage after income loss. As a result, they could be at risk of losing their home if they haven’t taken other steps to create an income stream.
Alternatively, if you have a family that relies on your income, life insurance may be a priority to protect your loved ones.
In July 2025, a Which? article noted that more than half of people in the UK don’t have life insurance in place, potentially leaving households at risk of financial hardship if they were to die unexpectedly.
Depending on your needs, you might find that you’d benefit from taking out more than one type of financial protection.
Before you take out new financial protection, check these three areas. They could affect the type and level of cover that’s right for you.
1. Review existing cover
Take some time to review what cover you already have in place.
Even if you haven’t taken out financial protection directly, you could still have some cover. For instance, if your employer provides a death in service benefit, you might not need to take out life insurance as well.
2. Check your employer’s sick pay policy
In 2025/26, Statutory Sick Pay is just £118.75 a week and is paid for up to 28 weeks. As a result, most families would struggle if they relied on this alone, making income protection an attractive option.
However, many workplaces offer an enhanced sick pay policy, so it’s worth reading your contract or employee handbook. Check what portion of your salary you’d receive if you were unable to work and how long it would be paid for.
You could select income protection to complement your sick pay. For instance, if you’d receive a salary for six months, you could select income protection with a six-month deferment to reduce premiums.
3. Assess your other assets
Look at your wider finances when assessing financial protection – what assets could you use if you faced a financial shock?
If you have a substantial emergency fund, you may reduce the level of cover. However, if your assets are earmarked for other purposes, like retirement, you might want to consider the effect depleting them now could have on your future financial security.
As part of your long-term plan, we can work with you to create a safety net you and your loved ones can rely on, including taking out appropriate financial protection. Please contact us 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.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
Note that life insurance and financial protection plans typically have no cash in value at any time, and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.
Your midlife can be an exciting time; you may have ticked off some goals or bucket list items and are looking forward to what the future holds. Yet, it might also present some new challenges. Arranging a financial midlife MOT could help you overcome obstacles and feel confident as you prepare for the next chapter.
While you might have a better understanding of what you want to get out of life than when you were younger, finances can often become more complex, making it difficult to understand what’s possible. A financial midlife MOT gives you a chance to examine your finances now and calculate if you’re on track to reach your aspirations.
Here are five common challenges a financial MOT could help you navigate.
As you start to consider retirement and your future, you may opt to merge finances with your partner if you don’t already.
Bringing together your finances can be challenging at any time, but particularly when you’re older, as you may both already hold assets, such as pensions or property. Working with a financial planner could help you take stock of your assets and start to understand how they might form part of your financial plan as a couple.
As well as juggling two sets of assets, you might have different views on financial priorities and long-term goals.
As your financial plan places your aspirations at the centre, a midlife MOT could help you clarify your priorities and balance them with your partner’s.
66% of people aged between 45 and 49 feel unprepared for retirement, according to research from LV published in June 2025.
Retirement might feel years away, but it’s a milestone that benefits from early preparation. The decisions you make now could affect your income in your later years, so weighing up your options is essential.
A financial midlife MOT can include reviewing your pensions and other assets you intend to use in retirement to calculate if you have “enough” to live the retirement lifestyle you’re looking forward to.
You could find you’re already on track and enjoy peace of mind as a result. If you discover there’s a potential shortfall, knowing this sooner puts you in a stronger position to bridge the gap, and a financial plan highlight the steps you might take.
While you might no longer have young children to care for, you could find that you still have care responsibilities during your midlife.
In fact, according to December 2024 research from Legal & General, 1 in 6 middle-aged people support other adults financially, such as grown-up children or elderly parents.
If this isn’t something you’ve considered as part of your financial plan, it could make it harder to budget now and may affect your financial security in the future.
It’s not just your finances that care duties may affect. 1 in 7 midlifers said they provide unpaid care, with hours equivalent to a part-time job. Around half said they feel overwhelmed by their weekly commitments. This can take a toll on your overall wellbeing.
A financial plan that’s focused on what’s important to you could help you balance new responsibilities with your personal goals. For example, you might pay for a carer a few times a week so you’re still able to attend social clubs that you enjoy.
While you might have ticked off some financial commitments, such as paying your mortgage or children’s school fees, it’s still important to ensure you could withstand a financial shock. Your income stopping or facing an unexpected bill often has the potential to derail your plans.
A midlife review gives you the opportunity to evaluate your financial security and assess how you’d cope with an unexpected event.
You might check if you hold enough cash in your emergency fund or review your financial protection to see if you have an adequate safety net. While you hope never to need it, a financial safety net can provide reassurance and protection if the unexpected happens.
It’s easy to think that you don’t need to consider how you’ll pass on assets to your loved ones yet. However, it’s impossible to know what’s around the corner, and there may be benefits to passing on wealth during your lifetime rather than waiting to leave an inheritance.
Putting together an estate plan can be difficult. Not only are you bringing together all your assets and considering how circumstances may change in the coming decades, it’s also an emotional topic. So, if it’s something you’ve been putting off, you’re not alone.
It may be daunting at first, but your estate plan allows you to take control of your legacy. As your financial planner, we can help you create an estate plan that gives you long-term security while supporting the people who are important to you.
Get the most out of your life by feeling confident about your finances. Please contact us to talk to one of our team members and arrange a financial review.
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.
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 tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Note that life insurance and financial protection plans typically have no cash in value at any time, and cover will cease at the end of the term. If premiums stop, then cover will lapse.
Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.
The Financial Conduct Authority does not regulate estate planning.
From April 2027, pensions are expected to fall within your estate and could be liable for Inheritance Tax (IHT). That date might seem far away, but the policy change has the potential to significantly affect your estate plan, so thinking about it now could be useful.
While the policy change is still in the initial stage, the government has signalled that it intends to move forward with the plans.
Under current rules, your pension usually falls outside of your estate when calculating a potential IHT bill. As a result, pensions are often used in tax-efficient strategies to pass on wealth to loved ones.
The inclusion of pensions may mean some estates might need to consider IHT for the first time, or that estate plans need to be updated.
In 2025/26, the nil-rate band is £325,000. If the total value of all your assets, including your pension from April 2027, exceeds this threshold, your estate may be liable for IHT.
The good news is that there are often steps you can take to reduce an IHT bill, which an estate plan could help you identify.
The current proposals suggest most pensions are set to fall within the IHT net from April 2027, including defined contribution pensions, defined benefit pots, workplace pensions, personal pensions, and self-invested personal pensions.
However, there are some exceptions, including pensions that provide an income during your retirement years and certain types of annuities.
In addition, if your pension has a death in service benefit, which may provide your spouse, civil partner, or dependent children with a lump sum or regular income if you pass away, this is expected to be outside of your estate for IHT purposes.
Under current rules, beneficiaries don’t usually pay IHT on inherited pensions, but they may pay Income Tax in some circumstances. Assuming this doesn’t change, it could mean inherited pensions are subject to double taxation as they’ll be liable for both IHT and Income Tax.
The changes could significantly reduce how much you leave behind for loved ones, and could mean that passing on wealth through a pension no longer makes sense from a tax perspective.
If you’d previously planned to use other assets to fund your retirement so you could pass on your pension tax-efficiently, your wider financial plan may need to change as a result of the incoming policy.
For example, you might choose to deplete your pension during your lifetime and pass on different assets to loved ones now or in the future. Here are three alternative options you might want to consider.
1. Gift assets to loved ones during your lifetime
One option is to pass on assets now. This could provide support for your loved ones when they need it most, such as when they’re buying their first home or are paying a child’s school fees.
However, there are two key things to be aware of before you start gifting assets.
First, review your financial plan to ensure you’ll still be financially secure in the long term after gifting assets.
Second, not all gifts are immediately outside of your estate for IHT purposes. Some may be considered part of your estate for up to seven years after they were gifted; these are known as “potentially exempt transfers”.
Gifts that are immediately considered outside of your estate include:
So, you might want to make gifting part of your financial plan to make the most of gifts that are immediately exempt from IHT.
2. Place assets in a trust
A trust is a legal arrangement where assets are held on behalf of beneficiaries. For IHT purposes, you may use a trust to remove some assets from your estate. In some cases, you might still retain control or benefit from the assets.
There are several different types of trust, and it’s important to ensure yours is set up correctly, as it may not be possible to retrieve assets once they have been placed in a trust. Seeking professional legal and financial advice could help you assess if a trust is the right option for you before you proceed.
3. Take out life insurance to cover an Inheritance Tax bill
A life insurance policy won’t reduce the amount of IHT your estate is liable for, but it can provide your loved ones with a way to pay the bill.
You’ll need to pay regular premiums to maintain the cover. When you pass away, your nominated beneficiary will receive a lump sum, which they can then use to pay the IHT due. It could reduce stress for your loved one at a difficult time and help ensure your estate is passed on intact.
It’s important that the life insurance is written in trust. Otherwise, the payout could be considered part of your estate and lead to a larger IHT bill.
Whether you’re starting from scratch or have an existing estate plan that you’d like to review, we can help you assess what the upcoming changes mean for you and the legacy you want to leave behind. We can work with you on an ongoing basis to ensure your estate and wider financial plan continues to reflect current policy and your needs. Please get in touch to talk to 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.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate Inheritance Tax planning or trusts.
Almost half of Brits doubt the State Pension will exist by the time they retire, according to a PensionsAge report published in July 2025. While scrapping the State Pension may not be on the cards yet, there are suggestions that significant changes, which may affect your retirement, could be introduced.
In 2025/26, the full new State Pension is £230.25 a week and can be claimed from age 66. Even though the State Pension may not be enough to cover all your retirement expenses, it often provides a reliable base income. So, changes could affect your long-term financial security.
The State Pension is the second-largest item on the government budget after health, and the cost of maintaining it has soared.
According to a July 2025 report from the Office for Budget Responsibility (OBR), spending on the State Pension has increased from 2% of GDP in the mid-20th century to around 5% today, the equivalent of £138 billion. By the early 2070s, the OBR estimates the cost of the State Pension will reach 7.7% of GDP.
Two main reasons are driving the cost of the State Pension, and the solution to them could present challenges when planning your retirement.
1. Shifting demographics could lead to the State Pension Age rising
The number of adults below the State Pension Age compared to those claiming the State Pension has fallen. In the early 1970s, there were around 3.4 adults of working age for every pensioner, which fell to 3.2 in the 2010s. Due to rising life expectancy, the OBR expects the ratio to fall even further to 2.7.
As a result, there’s speculation that the Labour government could increase the State Pension Age to reduce the cost. In August 2025, the Independent reported that the State Pension Age could rise as high as 80 over the long term unless major changes are made.
2. High inflation could lead to the triple lock being reviewed
The triple lock was introduced in 2010 and commits to the State Pension rising by the highest of three measures – the increase in average earnings, inflation as measured by the Consumer Prices Index, or 2.5% – each year.
This annual rise may be important for pensioners as it helps to preserve the spending power of their State Pension. However, the triple lock could be reviewed or even scrapped as the OBR report suggests high inflation and volatility have led to it costing around three times more than initial expectations.
It’s important to note that the Labour government hasn’t announced any changes to the State Pension yet. However, the speculation highlights why a robust retirement plan is essential.
By taking other steps to secure your retirement, you could continue to work towards your later-life goals and be confident about your long-term financial security, even if the State Pension Age or triple lock are reviewed.
Your financial planner could help you assess your options if you’re concerned about the potential changes.
You may find that you’re already in a position to mitigate the potential effects of State Pension changes, which could ease your mind. Alternatively, you might discover a possible gap in your finances. The good news is that by identifying the gap now, you could take changes to bridge it, such as increasing your pension contributions, delaying your retirement date, or reducing your expected retirement income.
Changes to the State Pension are likely to happen over the medium or long term. In the past, when the State Pension Age increased, it was over a period of several years.
So, the potential changes may not affect you, but they could significantly affect the long-term financial security of younger generations.
Speaking to your children and grandchildren about the importance of saving for their retirement could lead to them engaging with their long-term plan and potentially mean they’re more comfortable later in life.
You might also want to offer financial support to secure their retirement, such as making contributions to their pension now or leaving them an inheritance, which we could work with you to make part of your financial or estate plan.
Regular reviews with your financial planner could help ensure your long-term plans continue to reflect government changes, including those relating to the State Pension. If you have questions about your retirement or would like to update your plan, 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.
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 estate planning.
When you make investment decisions, you know they should be based on data, logic, and careful analysis. Yet, the choices you make are often influenced by behavioural biases, and these psychological tendencies could even cloud how you view and manage existing investments.
Financial bias refers to the mental shortcuts or emotional tendencies that influence your decisions. In some circumstances, bias is positive and can help you make decisions quickly.
However, bias can also mean you overlook essential information or let emotions lead the way. When you’re investing, this could lead to you making decisions that aren’t right for you and may affect your long-term finances.
So, how do behavioural biases affect how you approach your existing investments? Here are five common types of bias you might recognise.
Status quo bias is a tendency to stick to what you know. It’s easy to see why this happens; it can feel comforting to keep things as they are, including your investments.
Taking a long-term approach to your investments is a good thing. Indeed, making knee-jerk investment decisions based on the news or your emotions can be harmful. Yet, status quo bias could also negatively affect your investment performance.
For example, you might keep money in an underperforming investment fund simply because you’ve done so for the last 10 years. It’s a mindset that could mean you miss out on opportunities.
If you value an investment more highly than the market price, you might be affected by the endowment effect. This is where owning something increases its value in your eyes.
Imagine if you purchased shares in a company five years ago. As you’ve watched the price of the shares rise and fall in response to market fluctuations, you’ve created a sense of connection to them. So, even if the company data suggests the long-term value of the shares has weakened, you might avoid selling them, because you believe they’ll rise despite the lack of evidence supporting this view.
The theory of loss aversion suggests people feel the pain of losses more strongly than the pleasure of equivalent gains.
When you’re investing, this can mean you're reluctant to sell assets at a loss, even if it makes sense as part of your strategy. As a result, you could hold on to assets when the money could be invested elsewhere in a way that aligns with your goals.
Loss aversion can also have the opposite effect. You might sell investments before you intended because they will deliver a gain that you’re eager to claim. While the value of your assets would still grow if you did this, you’d potentially miss out on long-term returns.
Anchoring is when you tie the value of an asset to a particular reference point, such as a past share price. It could mean you have a skewed view of the investment because you’re not considering the latest information.
For example, if you purchase shares for £100, you may continue to view this as their value even though market conditions and company performance have changed since then. Again, this bias could lead you to hold on to underperforming assets for longer.
When you’re seeking information about a company’s performance, do you seek data that supports your already established view? If you do, you’re not alone. Many people are affected by confirmation bias and will ignore evidence that contradicts their opinion.
This can make it difficult to assess your investments objectively, as you’re only paying attention to some of the information available.
If bias affects how you approach investments, whether existing holdings or new opportunities, working with a professional could help you view your finances more objectively. Removing bias and emotions could lead to better decisions and outcomes that reflect your goals. Please contact us 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.
Financial planning can add real value to your life, helping you achieve your goals and enjoy the lifestyle you want.
When you think about financial planning, you might initially focus on the financial element.
Perhaps you’re interested in how planning can help you reduce your tax bill, invest to get the most out of your savings, or make sure you’re on track for retirement?
While financial planning can certainly help in these areas, it actually goes far beyond that. It’s all about helping you live the life you want, feel more confident about the future, and reach your goals.
When clients first approach a financial professional, it’s often because they need support with a specific question or concern, such as:
While a planner can help you answer questions like those above, the process of financial planning is even more all-encompassing, designed to deliver greater value.
In this guide, you can find out why.
Download your copy here: “Revealed: The value of financial planning” to discover how financial planning could help you achieve your long-term aspirations.
If you have any questions or would like to discuss how we could work together to build a financial plan, please contact us.
Please note: This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
The US struck trade deals with several countries in July 2025, leading to markets rising and putting an end to some of the uncertainty that had plagued investors for months. Read on to find out what else may have affected your investments recently.
While it might seem like 2025 has been a poor year for investors, due to geopolitical tensions and trade wars, the figures paint a different picture.
In the first half of 2025, the FTSE 100, an index of the 100 largest companies listed on the London Stock Exchange, gained 7.2%. It’s the best performance in the first six months of the year since 2021. The data shows how markets often bounce back following short-term market movements, as the index fell sharply in April due to US tariff announcements.
Remember, while markets typically deliver returns over a long-term time frame, they cannot be guaranteed, and it’s important to invest in a way that reflects your risk profile and goals.
While uncertainty affected markets in July 2025, there were also several record highs.
On 3 July, it was announced that the US and Vietnam had struck a trade deal. In addition, US data showed 147,000 new jobs were created in June. The good news led to global stocks reaching a record high, according to MSCI.
US President Donald Trump previously set a deadline for trade deals. As this date approached on 7 July and countries without a deal faced high tariffs, shares on key US indices dipped slightly. The Dow Jones Industrial Average fell 0.16% and the S&P 500 was 0.3% lower.
With the trade deal deadline looming, Trump announced a pause on the levies for 14 trading partners to give countries time to negotiate with the US. It led to Asia-Pacific indices rising, including Japan’s Nikkei 225 (0.3%), South Korea’s KOSPI (1.9%), and China’s CSI 300 (0.8%).
The good news continued the following day. The FTSE 100 climbed 1.23% to close at a record high. Mining stocks led the way with Glencore, Rio Tinto, and Anglo American all up more than 3.5%.
On 14 July, European markets opened lower after Trump threatened to impose a 30% tariff on EU imports in August. The pan-European Stoxx 600 index was down 0.6%. Falls were also recorded on the main indices for Germany, France, Italy, and Spain.
There was further positive news for investors of stocks on the FTSE 100 index on 15 July. It hit 9,000 points for the first time after a rise of 0.2%. The UK was one of the few countries to have a trade deal with the US, and UK stocks benefited from trade tensions as a result.
The US and Japan reached a trade deal on 23 July. Under the deal, Japanese goods will incur a 15% tariff at the US border compared to the 25% Trump had previously threatened.
On the back of the news, Japan’s Nikkei index jumped 3.75%. Carmakers in particular saw rises, including Toyota (14.5%), Honda (10.8%), Subaru (16.8%), and Mazda (17.75%).
There was yet more trade deal news on 28 July when an agreement between the US and EU was announced. Indices across the EU were up as a result, including Germany’s DAX (0.8%), France’s CAC 40 (1%), and Spain’s IBEX (0.8%).
With the Autumn Budget due in October, Reeves faces increasing pressure as key data released in July 2025 was negative.
Indeed, the Office for Budget Responsibility (OBR) said public finances are in a “relatively vulnerable position” with risks posed by tariffs, defence costs, and an ageing population. Based on current tax and spending policy, the organisation said public debt was on track to hit 270% of GDP by the 2070s. The projection would see public debt almost triple compared to the current level.
The concerns around public debt were further highlighted when UK borrowing increased to £20.7 billion in June 2025 due to interest payments rising. Worryingly, the figure was £3.5 billion more than the OBR’s forecast and could prompt the chancellor to raise taxes or cut spending.
In addition, data from the Office for National Statistics shows the UK economy shrank in May for the second month running. The 0.1% contraction was driven by a slump in industrial output.
The rate of inflation also unexpectedly increased to 3.6% in the 12 months to June 2025. It’s the third consecutive monthly increase and was the highest rate recorded since February 2024.
While the Bank of England’s Monetary Policy Committee didn’t meet to discuss interest rates in July, member Alan Taylor signalled a cut was likely in August. He said the “deteriorating” UK economy warranted a deeper interest rate cut than financial markets currently predict.
A Purchasing Managers’ Index (PMI) measures economic activity, and a reading above 50 indicates growth. In June, S&P Global’s PMI data for the UK found that the:
So, while there are setbacks for many UK businesses, the figures suggest there’s movement in the right direction.
The eurozone hit the European Central Bank’s (ECB) 2% inflation target in the 12 months to June 2025.
Over the last 12 months, the ECB has cut its base interest rate by a quarter percentage point eight times, taking the policy rate from 4% to 2%. Despite speculation that there would be a further cut when inflation hit its target, the central bank opted to leave the rate as it was.
S&P Global’s PMI suggests the manufacturing sector across the eurozone continues to contract. However, the data indicates it may have turned a corner as the reading in June 2025 was the highest in 34 months and only just below the 50 mark at 49.5.
As the bloc’s largest economy, Germany’s exports are essential and ongoing challenges could dampen growth this year, though the new US-EU trade deal may ease some of the pressure.
A Destatis report found that German exports fell by 1.4% in May when compared to a month earlier. Exports to the US played a significant role as they were down 7.7% month-on-month and 13.8% lower than the same period in 2024.
Germany’s central bank, the Bundesbank, said the country’s exporters were losing competitiveness and called for urgent reforms to improve the business climate, including reducing barriers for skilled migrants and enhancing tax breaks for private investment.
Official data from the Bureau of Statistics shows that inflation increased in the 12 months to June 2025 to 2.7%. The figure is above the Federal Reserve’s 2% target.
Tariffs and uncertainty continued to leave a mark on the US’s trade deficit.
In May, the trade deficit widened by 18.7% when compared to a month earlier, according to official data. The deficit now stands at $71.5 billion (£53.5 billion) as exports dropped by 4%.
The consumer sentiment index from the University of Michigan suggests people are feeling more optimistic. The reading in July was 61.8, up from 60.7 in the previous month. It was the highest score since the trade wars began five months ago.
American chipmaker Nvidia became the first listed company to reach a valuation of $4 trillion (£3 trillion). The company announced it would build high-powered systems to train its AI software, which led to shares soaring. As of the start of July, the company’s shares have gained 22% in 2025.
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.
High earners striving to build wealth, dubbed “Henrys” (high earner, not rich yet), may find their tax position changes drastically as their income grows. Being aware of your tax liability now and in the future could allow you to create a financial plan that helps you get more out of your money by potentially reducing your tax bill.
There isn’t a clear definition of how much you need to earn to be a Henry or what constitutes being “wealthy”. A huge range of factors could affect your financial position, from where you live in the UK to your long-term goals.
According to a February 2025 study from HSBC, people in the UK believe you need an average annual income of £213,000 to be wealthy. The figure is around six times the national average income and represents the top 4% of earners.
However, even people earning below this threshold could find they’re affected by high-earner tax rules. As a result, you may benefit from regular reviews.
If you’re a Henry, here are four tax rules that might affect your long-term finances.
A key tax implication of becoming a high earner is losing the Personal Allowance – the amount you can earn each tax year before Income Tax is due. This could mean you fall into the “60% tax trap”.
While there isn’t an official tax rate of 60% on earnings, tax rules may mean you end up paying more Income Tax than you expect.
For every £2 you earn above £100,000, you lose £1 of the Personal Allowance, which is £12,570 in 2025/26. So, once you’re earning £125,140 or more, you don’t have any Personal Allowance.
In real terms, this means for every £100 you earn between £100,000 and £125,140, you pay Income Tax of £40 and lose another £20 because of the tapering of the Personal Allowance. As a result, you’re effectively paying 60% tax on this portion of your income.
Depending on your circumstances, there are some steps you might take to beat the 60% tax trap, including:
It’s important to weigh up the pros and cons of these options, and there might be other ways to manage your Income Tax liability. Please get in touch if you have any questions.
The pension Annual Allowance is how much you can tax-efficiently contribute to your pension each tax year. For most people, the Annual Allowance is £60,000 in 2025/26 or 100% of annual earnings, whichever is lower.
However, the Annual Allowance is gradually reduced if you’re a high earner. If your threshold income is more than £200,000 or your adjusted income (your income plus the amount your employer pays into your pension) is above £260,000, you’ll normally be affected by the Tapered Annual Allowance. It reduces your Annual Allowance by £1 for every £2 your adjusted income exceeds the threshold.
The maximum reduction is £50,000. So, if your adjusted income is £360,000 or more, your Annual Allowance would be just £10,000.
As a result, it could significantly affect how you might effectively save for retirement.
Parents claiming Child Benefit may be subject to the High Income Child Benefit Tax Charge, if one of them earns more than £60,000 a year.
Importantly, the tax charge applies if one of the parent’s income exceeds the threshold, rather than the household income. So, if both parents worked and earned £55,000 each a year, the High Income Child Benefit Tax Charge would not be applied.
The Income Tax charge would be 1% of your Child Benefit for every £200 of income between £60,000 and £80,000. The charge will never exceed the amount of Child Benefit you receive and is usually paid through a self-assessment tax return.
While you wouldn’t receive any Child Benefit if you or your partner’s income exceeds £80,000, you may still claim it for National Insurance (NI) credit purposes. For example, if one partner is not employed because they’re caring for the child, claiming Child Benefit may mean they receive NI credits.
To receive the full State Pension, you usually need 35 years of NI credits on your record. As a result, claiming Child Benefit, even if you exceed the threshold, could be important for your or your partner’s future State Pension entitlement. While the State Pension often isn’t enough to retire on alone, it could still play a valuable role in your long-term financial security.
If you’re still building wealth, it might feel too early to think about how you’d like to pass it on to loved ones in the future. Yet, establishing an estate plan now can be valuable and evolve as your wealth changes.
In 2025/26, the nil-rate band is £325,000. If the total value of your estate is below the threshold, no Inheritance Tax (IHT) would be due when you pass away.
In addition, some estates may be able to use the residence nil-rate band if the main home is left to direct descendants, such as your children or grandchildren. In 2025/26, this is £175,000. However, the residence nil-rate band is reduced by £1 for every £2 that the estate exceeds £2 million.
You can pass unused allowances to your spouse or civil partner, so an estate may be worth up to £1 million before IHT is due. Yet, the threshold for paying IHT could be significantly lower if you’re not estate planning with a partner or the estate isn’t eligible for the residence nil-rate band.
With a standard tax rate of 40% applied to the portion of the estate that exceeds the threshold, your loved ones could face a hefty bill.
Additionally, pensions are set to be included in estates for IHT purposes from April 2027. So, as your pension could be one of your largest assets, you may be closer to exceeding the nil-rate band and leaving your beneficiaries with a larger bill than you think.
The good news is that there are often steps you can take to reduce a potential IHT bill if you’re proactive. So, if you’re a Henry, making estate planning part of your tax considerations now could be useful in the long run and enable you to pass on more to your loved ones.
Reducing your tax liability now could mean you have more opportunities to invest or build long-term wealth, as well as potentially pass more on to your loved ones. If you’d like to create a tailored financial plan that considers your tax position, please get in touch.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.
Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
The Financial Conduct Authority does not regulate estate planning or tax planning.
It’s been a decade since Pension Freedoms legislation gave retirees more choice. Yet rather than relishing the freedom the changes have provided, research suggests workers are approaching retirement unsure about the decisions they need to make.
Data published by PensionsAge in June 2025 suggests that only 47% of UK savers are aware of their options in retirement. In addition, just 27% said they understood the reforms and the implications.
The decisions you make at the start of retirement could affect your financial security for the rest of your life. So, the research suggests a worrying number of retirees could pick an option that isn’t right for them because they don’t have all the information they need.
You can usually access defined contribution pensions (also known as personal pensions), from age 55 (57 from April 2028). Read on to find out more about the three main options.
If you’d prefer to receive a regular income that you know you can rely on, an annuity may be a valuable option.
You can purchase an annuity with the money held in your pension, and it would then provide an income for the rest of your life. You can choose if you want this income to remain the same or rise in line with inflation each year.
The annuity rate affects how much income you’d receive, and it’s influenced by a variety of factors, such as your age. Annuity rates can vary significantly between providers, so comparing options with your financial planner could help you achieve a higher income in retirement.
In addition, you can select a joint annuity, which would continue to pay your partner a portion of the regular income, such as 50%, if you pass away first. This could be a valuable option if you’re planning for retirement with a partner and they rely on your income.
It’s important to note that once purchased, changes to the contract cannot be made. You may get back less than you paid. Depending on how long you live and the options you choose, you may receive less in income payments than the amount of the pension pot you used to buy the annuity.
You can also take a flexible income from your pension, so you might increase or decrease the amount you withdraw depending on your needs.
While this flexibility is attractive to many retirees, it’s important to consider how sustainable your pension withdrawals are. You’ll be responsible for ensuring you don’t run out of money in the future. According to PensionAge, 45% of survey participants said they worry that the ability to take a flexible income would leave them without enough.
The money that you don’t withdraw will remain in your pension and is usually invested. This means it has the opportunity to deliver long-term returns, but that your money is exposed to investment risk.
So, while flexi-access drawdown gives you more freedom to use your pension savings how you wish when compared to an annuity, it comes with potential drawbacks too. A retirement plan could help you balance your short- and long-term income needs when using flexi-access drawdown.
Finally, you can withdraw lump sums from your pension when you choose.
This could be a useful option when you want to boost your income for a one-off cost. In 2025/26, you can withdraw up to 25% of your pension tax-free, and you may choose to do that as a lump sum.
A June 2025 article in IFA Magazine found that more people are withdrawing lump sums from their pension as soon as they can. 120,000 people in the 12 months to the end of March 2024 did so, collectively accessing £2.2 billion.
While taking a lump sum can certainly be tempting, especially if it’s tax-free, you need to weigh up the pros and cons of doing so.
Taking a large amount out of your pension could mean you risk running out of money in your later years. Not only would the value of your pension be lower immediately, but it could also affect the long-term investment returns, which might mean you have less in your pension in the future than you anticipate.
You don’t have to choose just one of the above options when deciding how to create a pension income. You can mix and match – you might even decide to use all three.
For example, you might withdraw a lump sum at the start of retirement to kick off the next chapter of your life. You could use it to travel, renovate your home, or tick off some of the bucket list items you’ve been looking forward to.
Next, you might use a portion of your pension wealth to purchase an annuity that would create a reliable base income. Finally, you may access the money that remains in your pension flexibly and adjust the amount to suit your needs.
Even after understanding what your options are, it can be difficult to know which one is right for your retirement plans. However, according to the PensionAge report, just 29% of retirees said they would turn to a professional.
Working with your financial planner to create a bespoke retirement plan could mean you feel more confident accessing your pension and understand the effect your decisions might have. Please contact us if you have any questions about your retirement and accessing your pension.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Understanding where your wealth is coming from and how you’re using it could help you make more informed decisions. However, as so many assets are intangible, having a clear picture of your wealth can be difficult. Finding ways to visualise all your assets is often useful, and something people have been doing for centuries.
When you hear the term “Exchequer”, you might think of the government’s economic and finance ministry or the position of chancellor of the Exchequer, which in 2025 is held by Rachel Reeves. However, the term is much older than the position.
The government explains that it is derived from a chequered cloth that was used by accountants in the 11th century to aid auditing by providing a way to visually record where money was being spent and received at a national level. These Exchequer meetings were said to be confrontational, with powerful Barons often interrogating the accountants about the state of their affairs.
Indeed, in the first Exchequer Budget recorded in 1284, the method highlighted that the Crown was spending far more than it was bringing in, which led to the introduction of taxation.
The Exchequer’s function as a financial department of state formally ended in 1833, but the value of visualising wealth remains, including when managing your personal finances.
Today, understanding your wealth can be even more difficult as so many transactions and assets are digital. According to a December 2024 report from the BBC, only a fifth of transactions in 2023 involved physical money.
Being able to see a visual representation of your wealth could help you better understand your assets, get to grips with your budget, and support your long-term goals. In addition, it can be reassuring to see all your assets, including those that are intangible.
The good news is you don’t need to unroll an Exchequer cloth and gather counters when you want to visualise your wealth. Today, cashflow modelling could help you assess your financial position now and in the future. Read on to find out how cashflow modelling works.
1. Set out your goals and priorities
A cashflow model is used as part of your wider financial plan. You can begin creating one by talking with your financial planner about what you want to achieve in the short and long term, whether that’s travelling the world more in the next five years or being able to retire at age 60.
2. Gather your financial information
To calculate if you’re on track for the future, you need to understand your current financial position.
So, you’ll need to gather information that can be added to your cashflow model. This might include how much you’ve saved in your pension, the value of your home, or the amount in your emergency fund.
Your financial planner will then make realistic assumptions about factors that could affect your wealth, such as investment returns or the rate of inflation.
3. Project how your wealth might change
You can then see how your wealth will change over the long term. One of the reasons cashflow modelling is powerful is that it allows you to see multiple possibilities to explore your options and stress test your financial plan.
So, you might see if increasing your pension contributions by 1% now could mean you’re able to retire earlier. Or if you could gift assets to loved ones and still have enough to reach your other long-term goals.
You might also want to model scenarios that you’re worried about, so you’re able to take steps to protect yourself should they happen. For instance, you might want to see how taking an extended period off work due to ill health could affect your long-term security. Understanding the potential effect might highlight how you’d benefit from increasing your emergency fund or taking out appropriate financial protection.
4. Regular reviews are important for reflecting changes
Life doesn’t always turn out how you expect. Sometimes unexpected events or simply changing your mind might mean your goals and financial circumstances are different. So, to get the most out of your cashflow model, it’s important to update it regularly.
As well as personal changes, other factors outside of your control could also affect your wealth and the decisions you make. For example, a period of high inflation might mean you need to take a greater income in retirement, or market volatility could mean investment returns are lower than expected. Working with your financial planner to incorporate these events into your cashflow model could help you understand what they mean for you.
If you’d like to understand your assets and how they might change in the future, please get in touch. We could work with you to create a cashflow model and use the information to build a long-term financial plan that focuses on your aspirations.
This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested.
The Financial Conduct Authority does not regulate cashflow modelling.
