master-admin, Author at Investing For Tomorrow

Just as financial difficulties can cause significant stress, taking proactive steps to improve your financial situation can serve as a powerful catalyst for happiness and life satisfaction. By managing your finances, you often reduce the psychological burden. Addressing monetary issues not only enhances your financial outlook but can also notably contribute to greater wellbeing and peace of mind.

Regaining a sense of control

Professional financial advice offers more than just investment management; it helps you regain control of your life. Financial wellbeing fundamentally depends on feeling in charge. It involves having a clear understanding of your income and expenditures, supported by robust budgeting and savings plans.

We can act as impartial observers, helping you analyse your monthly expenditure to identify areas where you can cut waste and increase savings and investments, while also assessing your debt situation and creating a plan to pay it off effectively. This process of taking control of daily finances can turn a vague sense of dread into a clear, practical plan, making you feel more secure about your current situation.

Building resilience for the future

While managing today is important, genuine peace of mind comes from being ready for tomorrow. You may be saving diligently, but would your finances endure a real crisis? If you haven’t yet set up a ‘rainy day’ fund, this should become a priority.

Keeping about six months’ worth of essential expenses in an accessible savings account can act as a buffer between a minor setback and a serious crisis if you encounter unforeseen home repairs or a period of unemployment. Along with savings, we also consider protection elements. Life insurance, critical illness cover and income protection provide vital support for your loved ones if the worst occurs. We can assist you in finding the most suitable solutions for your specific needs.

Staying on track for your goals

You are more likely to feel a strong sense of wellbeing if you feel confident that you are on the right track to achieving your life goals. Whether your aims involve paying university fees, securing a comfortable retirement or leaving a legacy, understanding your position is crucial.

We can evaluate whether you’re on track and, importantly, determine the steps to take if you’re falling behind, helping you navigate the tax landscape effectively. For example, maximising your Individual Savings Account (ISA) allowance of £20,000 in the current 2025/26 tax year, or optimising pension contributions (the current annual allowance is £60,000 for most earners), ensures that more of your money works harder for your future, rather than being diminished by inefficiency.

Freedom to enjoy life today

Ultimately, financial planning is about giving yourself the freedom to enjoy life to the fullest. By outlining your vision, we can estimate how long your money could last in various scenarios. This is essential for understanding the real-world impacts of the choices you make today.

Whether you aspire to reduce your hours to spend more time with family, retire early or sell a business, clarity builds confidence. Knowing the outcomes of your choices removes the fear of the unknown. Money concerns can be a heavy load to carry alone. Together, we can develop a financial plan that shows where you are, where you want to go and how to get there.

This article is for information purposes only and does not constitute tax, legal or financial advice. Tax treatment depends on individual circumstances and may change in the future. The value of your investments (and any income from them) can go down as well as up, and you may get back less than you invest. The Financial Conduct Authority does not regulate estate planning, tax advice or trusts.

For the 2025/26 tax year, every eligible UK resident has an annual ISA allowance of £20,000. You can choose to save or invest the full amount in a single ISA or spread it across multiple ISAs, based on your financial goals. The flexibility of the ISA system means there is probably an option suited to your needs, whether you’re saving for a short-term aim or investing for your long-term future.

Understanding your options

There are different types of ISAs available. The most common is the Cash ISA, which functions similarly to a regular savings account but provides the key advantage of tax-free interest. For those willing to accept a higher level of risk in exchange for the potential for better returns, a Stocks & Shares ISA allows investment in a wide range of assets, including funds, bonds and individual company shares, without incurring Capital Gains Tax or Dividend Tax.

The Lifetime ISA (LISA) has also been in the spotlight following the Autumn Budget 2025. While the current LISA still allows you to save for your first home or retirement and offers a government bonus, the government has announced a consultation to replace it with a new, simpler product aimed solely at first-time buyers.

Other specialised ISAs include the Innovative Finance ISA (IFISA), which involves peer-to-peer lending. Each type has its own rules and benefits, so it is important to understand which one suits your personal circumstances and savings goals.

Changes to Cash ISAs

The Autumn Budget 2025 has announced significant changes to Cash ISAs. From April 2027, the annual limit for new contributions to Cash ISAs will decrease to £12,000 for those under 65. If you are 65 or over, you can still contribute up to the current limit of £20,000 to your Cash ISA each tax year. Despite this change, the overall annual ISA allowance stays at £20,000, allowing you to allocate your remaining allowance to other types of ISAs, such as Stocks & Shares ISAs or Innovative Finance ISAs.

However, the new regulations will prevent transfers from Stocks & Shares ISAs or Innovative Finance ISAs into Cash ISAs. Additionally, interest earned on cash within Stocks & Shares ISAs or Innovative Finance ISAs will now be taxed, discouraging the accumulation of large cash balances in investment-focused accounts. These changes aim to encourage younger savers to explore investment options for long-term growth, while safeguarding older savers who might prefer the security of cash savings.

Don’t miss the deadline

The ISA allowance is available on a ‘use it or lose it’ basis each tax year. Your allowance for the 2025/26 tax year cannot be carried forward, so it is crucial to make your contributions before the 5 April 2026 deadline. Failing to utilise your allowance means missing out on a valuable opportunity to grow your savings tax-efficiently.

Whether you’re an experienced investor or just starting your savings journey, making full use of your annual ISA allowance is a wise financial decision. Take control of your financial future by exploring the advantages of ISAs. Whether you’re aiming to grow your wealth tax-efficiently or secure a reliable income stream, ISAs provide a flexible and effective way to reach your goals.

The findings are eye-opening: one in four UK adults (26%) admit they do not know who their current pension provider is[1]. This lack of engagement is made worse by the fact that two-thirds (66%) have never attempted to locate a lost pension, even though the average lost pension pot is worth around £9,470[2]. This reveals a widespread misunderstanding of how pensions work when people change jobs, with a quarter (24%) unaware that switching employers can result in multiple, separate pension pots.

Growing problem of scattered savings

Fewer than one in three people (30%) have carefully kept records of all their pension funds from previous jobs. Although merging these scattered savings into a single plan is often recommended as a practical solution, most have not taken this step. A significant 60% of adults have never combined their workplace pensions, a trend surprisingly common among older, more experienced generations.

This reluctance is clear across all age groups. Nearly three-quarters of the Silent Generation (73%) and two-thirds of both Baby Boomers (65%) and Gen X (66%) have never combined their pensions. Younger workers show a similar pattern, with over half of Millennials (50%) and Gen Z (55%) still to consolidate. Despite the potential advantages of these unclaimed savings, many who haven’t combined their pensions have no plans to do so, often because they don’t know where to start (31%) or feel it would be too much trouble (10%).

Simple steps to locate your lost funds

Even if a pension pot seems small, it can grow substantially over time, making the effort to find it worthwhile. Tracking down your savings might seem intimidating, but there are simple ways to help you re-establish control. A good starting point is to look for any old paperwork, as pension providers are required to send you an annual statement with important details about your plan.

If you cannot locate any documents, you can contact your previous employers directly. They will have records of the pension scheme they offered and can give you the administrator’s contact details. For those still having difficulty, the government’s free Pension Tracing Service is an invaluable resource. With your National Insurance number and employment dates at hand, you can use the service to find up-to-date contact details for past employers and providers.

How to keep your pensions in order

Once you have found all your savings, it is important to keep them secure and prevent them from being misplaced again. Ensure your personal details, such as your address and personal email, are up to date with all your pension providers. This allows them to contact you with important information, even long after you have left a job. Keeping a clear record of each plan will give you a complete overview of your retirement savings.

This comprehensive overview helps you make informed decisions, such as whether consolidation is right for you. Combining your pots can simplify your finances and, in some cases, reduce fees. However, it is crucial to check carefully beforehand, as some older pension schemes may include valuable guarantees or benefits that could be lost if you transfer them. Taking the time to understand what you have is the first step towards a more secure financial future.

This article is for information purposes only and does not constitute tax, legal or financial advice. tax treatment depends on individual circumstances and may change in the future. A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available. Investments can fall as well as rise in value, and you may get back less than you invest.

Source data:

[1] Research conducted amongst 2,000 UK adults on behalf of Standard Life by Opinium from 12–15 August 2025.
[2] The average size of a lost pension pot, according to the Pensions Policy Institute.

Understanding these developments is essential for planning your financial future. Although the above-inflation increase in the State Pension provides some immediate relief, the new restrictions on salary sacrifice may impact those contributing to certain workplace schemes. Here, we look at what’s changing, what remains the same, and why these announcements should not deter you from prioritising your retirement savings.

Good news on tax-free cash and relief

After months of speculation that the Chancellor might target pension tax benefits, both tax-free cash allowances and pension tax relief remained untouched. This provides significant relief for savers. Currently, you can typically take up to 25% of your pension pot as a tax-free lump sum once you reach the age of 55 (which will increase to 57 in 2028), subject to a maximum of £268,275, subject to protections.

Additionally, there were no modifications to the valuable Income Tax relief available on pension contributions. This relief remains applied at an individual’s marginal rate of Income Tax, meaning higher rate taxpayers receive more tax back on their contributions. These consistencies provide a stable foundation for long-term retirement planning, allowing you to continue building your pension with confidence in the current tax benefits.

State Pension boosted by triple lock

The Chancellor confirmed that the State Pension will increase by 4.8% in the 2026/27 tax year, thanks to the government’s triple lock guarantee. This policy ensures that the State Pension rises each year based on whichever of the following three measures is highest: average earnings growth, September’s Consumer Prices Index (CPI) inflation rate or a baseline of 2.5%.

The new full State Pension will rise from £230.25 a week to £241.30 in April, adding an extra £575 annually. For those claiming the basic State Pension (who reached State Pension age before April 2016), weekly payments will increase from £176.45 to £184.90. However, the amount you get depends on your personal National Insurance record.

Cap on salary sacrifice contributions

A major change announced in the Budget is the cap on salary sacrifice pension contributions. From April 2029, any contributions made through this method exceeding £2,000 annually will be liable for National Insurance. Salary sacrifice remains a popular feature of many workplace schemes, enabling you to exchange part of your gross salary for an employer pension contribution. This reduces your taxable income and your National Insurance liability.

Under current auto-enrolment minimums, individuals earning less than £40,000 annually are unlikely to be affected by this cap. For higher earners, the impact will depend on how employers customise their pension schemes. It could lead to many individuals seeing their monthly National Insurance contributions rise and their take-home pay fall. Despite this change, the overall tax advantages of pension saving remain substantial and should not be overlooked.

Staying informed is your best strategy

The Autumn Budget has undoubtedly brought a mixture of positive and challenging news for those planning for retirement. While the increase in the State Pension offers a welcome boost, upcoming changes to salary sacrifice make it more important than ever to reassess your existing pension strategy and understand how you could be affected.

Staying informed and maximising available tax benefits will help ensure your retirement savings continue to work as hard as possible for you. Proactive planning is the best defence against policy changes, enabling you to adapt and maintain a strong financial footing for the future.

This article is for information purposes only and does not constitute tax, legal or financial advice. Tax treatment depends on individual circumstances and may change in the future. A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available. investments can fall as well as rise in value, and you may get back less than you invest.

However, the data has also identified that managing daily finances remains the top priority for 40% of people, followed by saving for holidays at 31%. In contrast, only 15% state that contributing to their pension is one of their main financial goals. This ‘live for today’ attitude persists despite growing awareness that auto-enrolment alone may not guarantee a comfortable retirement.

Confidence in conflict with reality

While over a third (35%) acknowledge that they might not be saving enough for their later years, almost half (45%) still believe they are on track. This reveals a disconnect between their confidence and the actual situation they face in retirement. A growing sense of uncertainty is also affecting people’s attitudes toward the future.

Almost half of adults (47%) believe that factors beyond their control influence their retirement prospects. A significant 83% perceive the world as less stable than in previous years. More than half (59%) attribute their declining confidence in financial futures to changes in the UK, and 57% to global shifts.

Taking control in uncertain times

Understandably, many people concentrate on covering daily expenses and prioritise a well-earned break. However, even during more difficult times, keeping an eye on the future can make a substantial difference. Regularly setting aside something for later life, no matter how small, can help you stay aligned with your long-term plans without sacrificing what matters today.

Taking manageable, steady actions can create a lasting impact and help you feel more secure. Whether that’s setting a clear budget, building an emergency fund or checking your pension, small steps can improve your overall financial wellbeing and boost your sense of control.

Balancing the present with the future

It’s not about giving up what you enjoy today; it’s about finding a balance that works for both the present and the future. By creating a clear picture of your finances, you can track your income and expenses to understand where your money goes each month. Budgeting apps or a simple spreadsheet can help you categorise spending and identify areas for saving without sacrificing all enjoyment.

Dividing your savings into separate pots for different goals, such as holidays, home improvements and retirement, can make saving feel more manageable. Automating transfers into these pots simplifies the process, while watching each one grow provides a sense of achievement. Even if you cannot increase pension contributions at the moment, maintaining consistency is vital, as regular payments benefit from compound growth over time.

Maximising your long-term potential

If your employer offers pension matching, it is essential to take full advantage of it if affordable, as it effectively provides extra money for your retirement fund. It is also beneficial to be aware of government incentives and tax reliefs that can help your savings go further. A simple review of your finances once or twice a year can keep you aligned with your goals and motivate you as you see how much you have progressed.

Ultimately, financial wellbeing doesn’t mean sacrificing fun. Including enjoyment in your budget allows you to live in the moment without guilt, while also ensuring your future is protected. In fact, the contributions you make today could enable you to enjoy more freedom and choices later, whether that’s taking longer trips, travelling more frequently or simply exploring the world on your own terms.

Source data:

[1] Research conducted by Ipsos on behalf of Standard Life in June 2025. In total, 6,000 participants completed the online survey. Participants were aged 18-80 and included working, unemployed and retired individuals. Quotas and weights were used to ensure respondents were representative of the UK general population by age, gender and region.

This article is for information purposes only and does not constitute tax, legal or financial advice. Tax treatment depends on individual circumstances and may change in the future. A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available. Investments can fall as well as rise in value, and you may get back less than you invest.

However, income investing isn’t just about today’s payouts. It’s about ensuring your capital grows sufficiently to keep pace with inflation. Balancing the need to preserve purchasing power while also achieving long-term growth is the key challenge for any income strategy.

Power of dividends

Dividends are often regarded as a mark of financial discipline. When a company commits to returning cash to its shareholders, it indicates responsible management and a focus on sustainable, long-term value creation. For investors, dividends are among the most tangible rewards for loyalty and trust in a business.

A company with a consistent history of paying and increasing dividends often signals quality. Historically, dividends have contributed significantly to overall stock market returns. While growth-focused investors may pursue the ‘next big thing’, overlooking well-established dividend-paying firms could be costly. The true secret is not in choosing between growth and income but in recognising dependable companies that provide both.

How to evaluate dividend reliability

When choosing dividend-paying stocks, it can be tempting to pursue the highest yields. However, high yields can sometimes indicate risk, particularly if they are unsustainable. The most reliable dividends come from companies with consistent profits and adequate earnings to comfortably cover their payouts. Investors rely on three key metrics to assess dividend reliability.

Diversification, dividend growth and dividend cover. Diversification helps lower risk by preventing over-reliance on a small number of companies for most returns. Dividend growth indicates a company’s financial stability and commitment to shareholders, as demonstrated by a consistent record of increasing payouts over time. Lastly, dividend cover assesses how comfortably a company can sustain its payments from current profits, with a higher ratio signifying greater reliability.

Role of bonds in a balanced portfolio

While equities offer growth potential, bonds deliver much-needed stability. Bonds pay regular interest, providing a predictable income stream with amounts known beforehand. This fixed characteristic acts as a buffer against the volatility of stock market dividends, helping to smooth out fluctuations in your portfolio.

The timing of bond investments often hinges on the economic cycle. Government and high-quality bonds tend to perform well during periods of economic downturn, while higher-yielding corporate bonds may be more appealing during times of economic growth.

Safeguarding your income

Inflation can decrease the purchasing power of your income over time, but dividends can act as a strong defence. Companies that regularly boost their profits often raise their payouts at a rate exceeding inflation, thus maintaining the real value of your money. By combining the stability of bonds with the growth potential of dividend-paying stocks, you can build a balanced portfolio that provides a reliable income stream. This strategy not only satisfies your short-term income needs but also supports your long-term financial objectives.

Building an income portfolio involves a careful balance of reliability, growth and flexibility. By focusing on high-quality dividend-paying stocks, diversifying your investments and including bonds for stability, you can develop a resilient income stream that endures over time.

This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice. The value of your investments (and any income from them) can go down as well as up.

Five ways to maximise tax year-end planning opportunities 2025/26

Book a meeting now to review your year-end investments and options to maximise your available allowances before the 5th April deadline:

Tax year-end planning can help you save money, improve your long-term investments, and make better use of government incentives before they reset in April. Here are five key areas to consider before the deadline.

1. Make the most of your ISA allowance

Individual Savings Accounts (ISAs) remain some of the most effective methods to protect your money from tax. For the 2025/26 and 2026/27 tax years, the annual allowance is £20,000. Any returns earned from an ISA are completely free from Income Tax and Capital Gains Tax.

You can allocate your allowance among different types of ISAs, such as cash, stocks and shares, or innovative finance, or use it all in one. The key is to act before 5 April 2026, as unused allowances cannot be carried forward. When the new tax year begins on 6 April, your allowance resets, offering a fresh opportunity to save or invest tax-free.

If you have a flexible ISA and have taken any withdrawals from it this tax year, then you can also put that amount back into the ISA without it counting towards your £20,000 allowance – but it must be done in the same tax year.

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2. Boost your pension contributions

Pensions remain one of the most tax-efficient ways to save. In the 2025/26 tax year, you can contribute up to £60,000 annually or 100% of your earnings, whichever is lower. The annual allowance includes all contributions, such as those from your employer. However, the 100% earnings limit applies only to personal contributions that qualify for tax relief. Contributions benefit from tax relief at your highest marginal rate, meaning every £80 contributed by a basic-rate taxpayer effectively becomes £100 in their pension fund. Higher and additional-rate taxpayers can claim further relief through self-assessment, but only on contributions matched by income taxed at those rates.

If you have unused allowances from the past three tax years, you could use the ‘carry forward’ rule to make larger contributions. Even those who are not earning can contribute up to £2,880 each year, with the government adding £720 in tax relief. Boosting your pension contributions before the end of the tax year can lower your taxable income and enhance your long-term retirement savings.

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3. Use your personal allowance wisely

Everyone has a personal allowance, currently £12,570, which is the amount you can earn each year without paying tax. Married couples and registered civil partners can also benefit from the Marriage Allowance, which allows a non-taxpayer to transfer a fixed £1,260 of their personal allowance to a partner who pays basic-rate tax. This could save up to £252 in the 2025/26 tax year, and claims can be made retrospectively for up to four years.

If one partner pays less or no tax, and if appropriate, you might think about holding savings or investments in their name to reduce overall tax liabilities. Remember that unused personal allowances cannot be carried forward, so careful planning can help maximise the use of both partners’ allowances each year.

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4. Review your Inheritance Tax position

Inheritance Tax (IHT) is levied at 40% on estates exceeding £325,000, a threshold that remains unchanged until April 2030. An additional £175,000 residence nil-rate band applies if you pass on your home to direct descendants.

You can reduce future IHT liabilities by making gifts during your lifetime. Everyone has an annual gifting allowance of £3,000, which can be carried forward for one year if unused, along with the ability to give unlimited small gifts of up to £250 per person. Larger gifts may also be exempt if you live for at least seven years after making them.

Regular gifts made from surplus income, such as paying a grandchild’s school fees, can also fall outside your estate if structured correctly. Reviewing your estate plans annually ensures you are maximising these allowances.

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5.Manage your capital gains

If you hold investments outside of tax wrappers, consider reviewing them before the end of the tax year. The Capital Gains Tax (CGT) annual exempt amount is £3,000 (a maximum of £1,500 for trusts) for 2025/26. Gains exceeding this threshold are taxed at 18% for basic-rate taxpayers on any gain falling within the basic rate band and 24% for higher and additional-rate taxpayers (or basic rate income tax payers where any gain falls above the basic rate band when added to income).

Couples can transfer assets without tax to optimise both exemptions. Making strategic disposals before 5 April could help realise gains efficiently and reduce potential tax liability in future years.

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Are you prepared for the 2025/26 tax year-end?

Book a meeting now to review your year-end investments and options to maximise your available allowances before the 5th April deadline:

This article is for information purposes only and does not constitute tax, legal or financial advice. Tax treatment depends on individual circumstances and may change in the future. A pension is a long-term investment not normally accessible until age 55 (57 from april 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available. Investments can fall as well as rise in value, and you may get back less than you invest.

Since their introduction over twenty years ago, Individual Savings Accounts (ISAs) have become vital for UK savers. Despite their popularity, there is still a widespread lack of clarity about how they work, especially concerning the specific benefits of Stocks & Shares ISAs. With new research indicating that 60% of Cash ISA savers might be persuaded to invest, it is time to reassess how we approach our long-term savings goals.

The Autumn Budget 2025 announced a significant change to Cash ISAs: starting April 2027, the annual tax-free savings limit will be reduced from £20,000 to £12,000 for individuals under 65. This move aims to encourage younger savers to explore investment options such as Stocks & Shares ISAs while maintaining the £20,000 limit for those aged 65 and over.

Overcoming the barriers to investing

The primary barrier preventing many from investing is financial constraints. The research shows that 42% of those not currently investing believe they lack sufficient disposable income. This belief is slightly more common among women (45%) than men (38%), highlighting a confidence gap that goes beyond just financial resources.

The second main concern is risk. Over a third (35%) of non-investors worry about potential financial losses, a valid concern in any investment journey. An additional 12% express anxiety about their ability to access their money quickly if needed. These issues, though understandable, often stem from a lack of detailed information on how Stocks & Shares ISAs can be managed to suit individual risk tolerance and financial timelines.

The pull of greater returns

What motivates a person to switch? For 39% of Cash ISA holders, the main motivation is the chance of better financial returns. This increases to 50% among those aged 18 to 34, a group very aware of the importance of making their money work harder. The ability to generate returns that outpace inflation is also a crucial factor for 27% of savers, which is especially relevant in the current economic climate.

If this sentiment encourages action, a significant portion of the funds currently in Cash ISAs, potentially up to £216 billion, could be redirected into investments. This shift would rely entirely on savers feeling confident and well-informed enough to proceed, highlighting the crucial need for better financial education and guidance.

Closing the knowledge and confidence gap

Many people admit that limited knowledge holds them back. A quarter (25%) of non-investors say they do not understand stocks and shares, while 16% are unsure where to begin. This uncertainty is more apparent among younger savers, with nearly a third of those under 50 acknowledging a lack of understanding.

Surprisingly, even those with a Stocks & Shares ISA report a lack of knowledge. Over half (58%) feel they only have ‘a little knowledge’ about how their investments work. Furthermore, a significant two-thirds of UK adults are incorrect or uncertain about the tax rules, with 25% mistakenly believing they pay tax on gains from a Stocks & Shares ISA. This basic misunderstanding prevents many from recognising one of the account’s most valuable benefits: tax-efficient growth.

Making an informed decision for your future

While cash is essential for short-term savings and emergencies, a Stocks & Shares ISA can be a valuable option for those with a longer-term perspective of at least five years. The data highlights a clear opportunity to empower savers with the knowledge they need to make informed decisions that align with their financial goals.

By demystifying the world of investing and highlighting the significant tax advantages, we can help people unlock the full potential of their savings. Investing is not suitable for everyone, and capital is always at risk. However, for many Cash ISA savers, the potential for higher long-term returns could be be life-changing.

Source data:

[1] The Opinium research for Royal London was conducted online between 4–11 April 2025, with a sample of 4,000 UK adults, weighted to be nationally representative.

Although the tax-free lump sum and pension tax relief remain unaffected, the government confirmed that unused defined contribution pension funds and death benefits paid from a pension will be included in a person’s estate for IHT purposes. This change will take effect from 6 April 2027, meaning children inheriting their parents’ pension savings could face a significant tax bill that was previously avoidable.

Understanding the new tax landscape

When you die, IHT is charged on the value of your assets above a certain threshold. This IHT threshold, known as the ‘nil rate band’, is currently set at £325,000, and any assets exceeding this amount are liable to a 40% tax charge. The threshold has been frozen at this level since 2009, and Chancellor Rachel Reeves announced in the Budget that it will remain at £325,000 until April 2030, causing more families to fall into the tax net as asset values rise.

If you are married or have a registered civil partner, you can currently leave your entire estate to your spouse or partner free of IHT. Under current rules, your pension usually isn’t counted as part of your taxable estate on death. From April 2027, unused pension funds and certain death benefits will be brought into scope for IHT, meaning they may form part of your estate for tax purposes.

Impact on unmarried partners and beneficiaries

The pension pots targeted by these new proposals include both defined contribution benefits paid as income to dependants through an annuity or drawdown, and defined benefit pension lump sum death benefits. Careful implementation and clarity will be essential, particularly for unmarried partners who may be at a disadvantage compared to their married counterparts.

Because the IHT spousal exemption allows married couples and registered civil partners to pass their estates to their spouses without tax, benefits paid to an unmarried partner may face IHT charges. Now that pensions are set to fall within the scope of IHT, surviving unmarried partners could end up with considerably less income and, consequently, a lower standard of living in retirement.

Administration and strategic shifts

According to the Treasury, pension scheme administrators (PSAs) will be responsible for reporting and paying any IHT due on unused pension funds and death benefits. Including pensions in the IHT net is likely to encourage many savers to consider alternative ways of passing on their wealth without facing a significant tax bill.

The long-standing practice of shielding pensions from IHT has been a key element of retirement planning; removing this benefit will inevitably alter the approach to intergenerational wealth transfer. We might see more pensioners inclined to draw down their pension funds during their lifetime rather than leaving them as inheritance.

Rethinking your financial future

This change could direct attention towards other tax-efficient savings options, such as Individual Savings Accounts (ISAs). While ISAs offer tax-efficient growth and withdrawals, pensions still provide immediate tax relief on contributions and may include employer contributions. However, their appeal as a method of passing on wealth might be diminished by these new factors, encouraging some savers to make more generous gifts during their lifetime.

Gifts benefit from the ‘seven-year rule’, meaning if a gift is made more than seven years before a donor’s death, no IHT is payable. There are also several other gift allowances available that haven’t been affected by the Budget. While the changes are significant, avoid making panic decisions. It is worth noting that estate planning and determining the best way to manage your pension can be complex, and professional advice is often the safest approach.

This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice. The value of your investments can go down as well as up, and you may get back less than you invested. The Financial Conduct Authority does not regulate estate planning, tax advice or trusts.

The data shows a significant gap

between the ambitions of younger generations and the outlook of those nearing retirement. Only 3% of people aged 50 to 69 expect to need the same six-figure sum for a comfortable standard of living. This divergence in expectations comes amid ongoing speculation about potential tax reforms that could substantially alter the landscape for long-term savers, adding another layer of complexity to financial planning.

Generation shaped by uncertainty

The high-earning ambitions of younger adults may be shaped by their direct experiences with significant economic pressures. Having navigated multiple economic downturns and periods of high inflation, many naturally worry about their future quality of life. This generation anticipates a more financially challenging retirement, mainly due to a surge in housing costs that earlier generations did not face to the same extent.

This concern is clear in their housing outlook. Nearly half (48%) of adults aged 18 to 34 expect to still be paying mortgage or rent in retirement. This is a significant increase from one in three (33%) of those aged 50 to 69 who anticipate the same. Making the situation more complex, younger people plan to retire earlier, aiming to do so at 59. This goal to leave the workforce sooner further hampers their ability to save enough for retirement.

The guidance gap

Despite these concerns, a surprising number of people are not seeking professional help. Research shows that over a quarter (26%) of individuals feel anxious about their retirement funds after checking their pension balance, while 15% believe it is either too early or too late to make any meaningful changes. However, over half (52%) of employees with a workplace pension have never sought professional guidance or advice.

This troubling reluctance to seek advice could significantly hinder achieving a comfortable retirement. It is evident that many younger adults are uncertain whether the State Pension and their personal savings will be sufficient. Removing barriers to accessing financial guidance, particularly regarding cost and trust, is crucial to help bridge this generational gap and enable individuals to plan effectively for their future.

Persistent gender divide

Across all age groups, the research also uncovers a notable gender gap in anticipated retirement income. Men consistently expect to need more than women to live comfortably. Among younger adults aged 18 to 34, men anticipate requiring around £81,300 annually, while women in the same age group expect to need approximately £69,000.

This gap remains across all age groups, with men nearing retirement (50 to 69) expecting to need £38,900, compared to £31,800 for women. Lower income expectations among women may be linked to concerns about pension adequacy, often driven by earnings gaps during their careers and time taken out of work for caring responsibilities. Whether due to these factors or others, this gap highlights the urgent need to tackle the specific challenges women encounter when planning their financial futures.

Source data:

[1] Royal London’s workplace pensions research was conducted between 4–14 July 2025, with a sample of 4,000 UK workers with a pension, of whom 3,404 had a workplace pension.

This article is for information purposes only and does not constitute tax, legal or financial advice. Tax treatment depends on individual circumstances and may change in the future. A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available. Investments can fall as well as rise in value, and you may get back less than you invest.