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Here’s why you should consider maximising this tax-efficient savings opportunity in 2025.

Benefit from tax-efficient compound growth

Investing in an ISA earlier in the tax year gives your money a vital head start. The longer your investments stay in the account, the more they can benefit from tax-efficient compound growth. Over time, even small returns can accumulate significantly, creating real wealth.

This is particularly important during an inflationary environment. As inflation reduces the purchasing power of cash in regular savings accounts, keeping your investments in an ISA not only protects them from taxes but also guards against the declining value of money in traditional savings.

Protect your gains from Capital Gains Tax

One of the main reasons to choose an ISA is its ability to protect your investments from taxes. If you keep investments outside of an ISA, you may be liable for Capital Gains Tax (CGT) on profits over your CGT allowance. For higher rate taxpayers, CGT can be as high as 24%.

The annual CGT allowance exemption was cut to £3,000 in April 2024 and remains frozen this financial year. This reduction in exemptions has emphasised the importance of finding tax-efficient solutions. An ISA ensures that any growth your investments achieve remains fully protected from CGT, helping you maximise your returns.

Make the most of tax-efficient income

An ISA provides benefits beyond just capital gains. Any income generated from your investments, such as dividends from shares or interest from bonds, is also tax-efficient when held within an ISA. With the annual dividend allowance remaining at just £500 for the 2025/26 tax year, this tax-efficient wrapper is more important than ever. Currently, shareholders pay personal tax on dividend income exceeding the dividend allowance. The tax rates are 8.75%, 33.75% and 39.35%.

For income-focused investors, this tax-efficient status allows you to keep more of your earnings, which can be reinvested to enhance your overall returns or used to support your lifestyle. Either way, an ISA makes sure your income works harder for you.

Choose the investment approach that works for you

Investing in an ISA is also versatile, accommodating various investment strategies and financial circumstances. If you have a lump sum available, using it early in the tax year allows the full amount to begin growing tax-efficiently over a longer period.

Alternatively, if you prefer to take a more cautious approach, you can gradually enter the market through monthly contributions. Known as ‘drip-feeding’, this strategy has the advantage of spreading your investments over time, smoothing out the impact of market fluctuations and reducing risks associated with market downturns.

Ease the process with automated savings

Even if you don’t have a lump sum to invest, you can arrange automated monthly contributions into an ISA. This method also helps prevent the temptation to ‘time the market’, a risky strategy that can harm long-term returns.

Regular contributions help you stay on track with your savings goals, and over time, this consistency can produce impressive results. It’s an effective way to maximise your ISA allowance.

Don’t lose your ISA allowance

The ISA allowance works on a ‘use it or lose it’ basis. For the 2025/26 tax year, you can invest up to £20,000 across ISAs, but any unused allowance cannot be carried over. By acting earlier in the tax year, you avoid a last-minute rush before 5 April 2026, giving you confidence and clarity.

Whether you plan to invest the full allowance at once or spread payments throughout the year, planning ahead ensures your savings are working effectively and are aligned with your financial goals. It also helps you avoid potential delays or disruptions when setting up an account during peak tax season demand.

Seek guidance to maximise your results

While an ISA offers a way to create tax-efficient savings and investments, there isn’t a one-size-fits-all solution. Deciding how much to invest, where to allocate your funds and which strategy best suits your circumstances can be daunting.

This is where professional financial advice becomes crucial. We can assist you in choosing the right investments for your ISA, ensure your portfolio aligns with your goals and guide you on how to maximise your allowance. With our support, you’ll have peace of mind knowing your decisions are well-informed and on schedule.

Start early, start smart

Whether you’re motivated by tax-efficient growth, flexible investment choices or the ability to secure tax-efficient income, utilising your ISA allowance today will help build a stronger future. Don’t wait until the end of the tax year – start now and make sure your money works smarter and harder for you in the coming years.

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.

Without a plan, the financial impact on your family could be considerable if a steady income stream is interrupted. This is especially true for those who are self-employed or retired, as employer-provided protection often no longer applies. To safeguard your family’s lifestyle, preparation and the right financial solutions are essential.

Determine your essentials before anything else

Consider your family’s daily living costs, including mortgage payments, council tax, utilities and groceries. Ensuring these essentials are covered guarantees they will be cared for, even in the worst-case scenario. Beyond this, think about the extras your family enjoys. From holidays and social outings to memberships and events, these lifestyle elements can also be protected with the right plans.

Once your essentials are taken care of, you can begin exploring personalised plans for debt repayment, future family priorities or educational goals. The approaches vary depending on individual circumstances, but the constant is the peace of mind that financial protection provides.

Explore healthcare with private medical insurance cover

Health issues can occur unexpectedly, and NHS waiting times are at an all-time high. This has led many to consider private medical insurance (PMI). Figures from the Association of British Insurers (ABI) reveal a record 6.2 million people now have access to prompt diagnoses and quality treatment for acute health conditions through insurers.

PMI provides access to private healthcare facilities and specialists, which can significantly reduce waiting times and speed up treatments. Beyond healthcare, it offers a sense of security and ensures that health concerns do not jeopardise your family’s financial wellbeing.

Addressing major medical challenges with critical illness cover

Critical illness cover pays a lump sum or regular payments upon diagnosis of a specified covered condition. This financial support can help cover medical treatment, replace lost income and provide additional resources during recovery.

Some policies even permit add-ons, such as children’s critical illness cover, providing a financial safety net if your child is diagnosed with a serious condition. These funds could enable a parent to take unpaid leave, ensuring they remain with the child and are better able to provide care and support.

Income protection safeguards the stability of lifestyle

Income protection acts as a safety net during illness or injury, providing regular payments to compensate for lost earnings while you recover. Policies can be customised for short-term or long-term needs, with options to defer payments and manage premiums.

Typically, you can cover between 50% and 67% of your income, ensuring your family continues to meet financial obligations despite unexpected work interruptions. This option is especially useful for individuals without other income safety nets.

Life insurance offers tailored security for your family

Life insurance is a basic part of financial security for any family. It provides either a lump sum or regular payments when the policyholder passes away, ensuring financial stability during a challenging transition.

This type of insurance is especially useful for covering major expenses like mortgages or school fees. Payments can be customised to align with life milestones, such as supporting children until a specific age or giving a spouse enough time to adjust.

Leave an inheritance without unnecessary financial strain

Inheritance planning often involves tax implications that can be easily overlooked. Without proper preparation, families may face difficulties such as selling the family home to pay tax liabilities. Establishing a suitable trust could address this proactively.

Trusts offer many benefits, including quick access to funds after death without the need to go through probate. Moreover, money placed into a trust remains outside your estate as long as you survive for at least seven years after establishing it, entirely avoiding Inheritance Tax. Trusts also give you full control over how and when your dependents receive their funds.

Bringing everything together

Protecting your family’s lifestyle requires careful planning and a personalised approach. Each layer of cover, from healthcare to income replacement and inheritance strategies, helps strengthen financial resilience.

We understand that navigating these options can feel overwhelming, but it doesn’t have to be. Taking proactive steps today provides confidence and peace of mind, knowing that your loved ones will thrive, no matter what happens. With the right protection in place, you can safeguard the lifestyle you’ve built together.

This article does not constitute tax, legal or financial advice and should not be relied upon as such. The Financial Conduct Authority does not regulate estate planning, tax advice or Trusts.

The current IHT system already captures more estates as frozen thresholds lag behind rising house prices and, from 2027, unused pensions will also be included. With household finances strained by the cost of living crisis, intergenerational financial support has become an essential safety net. According to the research[1], UK retirees gift an average of £2,500 annually to family members, much of which goes towards essential costs such as education and living expenses.

Could modest families bear the greatest burden?

Unlike the current system, where gifts made more than seven years before death are exempt from IHT, a lifetime cap would regulate all gifts given during a person’s lifetime. If set too low, such a cap could unfairly affect ordinary families, especially in areas where property values often exceed the frozen inheritance thresholds. Instead of targeting wealthy estates, the cap might unintentionally penalise middle-class households simply trying to support their loved ones.

The administrative challenge of monitoring lifetime gifts could be considerable. His Majesty’s Revenue and Customs (HMRC) would need to maintain detailed records over many decades, a task susceptible to errors and disputes. Families might face retrospective tax bills due to incomplete or lost records, which can cause additional stress and confusion.

Unintended behaviours and complex planning

Introducing a limit on lifetime gifting could also prompt behavioural changes with notable effects. Families might accelerate financial gifts, opting to use their allowances early, which could leave some individuals short of resources later in life. Conversely, those seeking to keep financial control might turn to more intricate planning structures like trusts.

Trusts, although potentially advantageous, complicate estate planning and require professional guidance to execute correctly. They can assist in preserving wealth for future generations, but might also introduce additional layers of regulation for families and advisers to oversee. Whether such solutions offer broad relief largely depends on the specific details of the proposed lifetime cap.

Supporting families, not penalising them

Family dynamics have changed considerably over recent decades, with intergenerational financial support being vital in easing economic hardships. A lifetime gifting limit could undermine these efforts by discouraging small, regular gifts that assist with everyday expenses for younger generations. Reform should strike a balance, tackling tax avoidance without unfairly burdening families trying to manage daily responsibilities.
The outdated gift allowances have remained unchanged for over 40 years. Current rules exclude small gifts under £250 and allow an annual gift allowance of £3,000, amounts that are relatively insignificant in today’s economy.

Source data:

[1] Quilter Plc research 13 August 2025

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. Past performance is not a guide to future performance. The Financial Conduct Authority does not regulate estate planning, tax advice or Trusts.

We’re delighted to introduce Lesley-Ann Poolan, who has recently joined our team as our new Office Manager.

Lesley-Ann brings with her a wealth of experience in financial services and a real passion for delivering exceptional client care. She will ensure that everything runs smoothly behind the scenes – supporting both our advisers and our clients to maintain the high standards of service that you expect from us.

You may be hearing from Lesley-Ann in the coming weeks as she settles into her new role, so please join us in giving her a very warm welcome.

A key benefit of pensions generally, and SIPPs in particular, is tax relief. This can substantially boost your retirement savings. When you contribute to a SIPP, the government offers tax relief according to your income tax rate. For instance, if you’re a basic rate taxpayer, a £100 contribution only costs you £80, as the government adds the remaining £20. Higher and additional rate taxpayers can claim even more through their tax returns. This tax-efficient setup enables your pension fund to grow more quickly.

Investment options and portfolio flexibility

Unlike typical personal pensions, which may restrict you to a limited range of investment options, the top SIPPs provide access to a wide array of assets. From individual shares and investment funds to government bonds, commercial property and more, this flexibility enables you to create a personalised portfolio. Whether you prefer managing these investments yourself or working with a professional, SIPPs can be tailored to meet your specific requirements.

This level of customisation could appeal to experienced investors who want to actively manage their retirement fund. However, if you prefer to leave the detailed work to someone else, some providers offer managed account services or pre-selected portfolios.

How SIPPs work with annual allowances

SIPPs operate within the tax rules that apply to all pension types. The annual allowance for pension contributions in the current 2025/26 tax year is £60,000. This includes both your personal contributions and those made by your employer. However, you cannot personally contribute more than 100% of your UK-earned income or £ 3,600 per annum, if more, as tax-relievable contributions. Additionally, if you are a very high earner, your annual allowance might be reduced to as little as £10,000 due to tapering rules. These complexities mean that professional advice could be essential for maximising your allowances effectively.

Another important rule is the ‘carry forward’ provision. This enables you to use unused annual allowances from the past three tax years. To qualify, you must have been a member of a registered pension scheme during each of those years, and your earnings in the current tax year must be sufficient to support the contributions.

Flexible contributions and employer options

SIPPs provide flexibility in how and when you make contributions. Deposits can be made as lump sums or monthly, usually via direct debit. Some employers might also offer the option to contribute to your SIPP. If you’re already saving into a Workplace Pension, it’s generally best to maximise your employer’s contributions to that scheme first before considering additional savings in a SIPP.

It’s important to recognise that pensions, including SIPPs, are long-term savings options; you cannot access your money until you reach retirement age. Currently, the minimum age for accessing pension savings is 55, but this will rise to 57 on 6 April 2028. Therefore, while flexibility is a key feature of SIPPs, planning ahead is crucial to ensure they fit with your wider financial plans.

Options for accessing your pot

Once you reach retirement age, you have several options for accessing your SIPP savings. Typically, the first 25% of your fund can be withdrawn tax-free, while the remaining amount is taxable under current regulations. You can choose to withdraw lump sums as needed, purchase a guaranteed lifetime income through an annuity or leave your money invested while using a drawdown facility to receive income gradually.

For those who favour financial security over investment risk, annuities offer peace of mind. They can be tailored to suit your circumstances, such as providing a spouse’s pension after death or higher rates for individuals with certain health conditions. Equally important, it’s prudent to compare the best annuity rates available.

Should you consolidate your pensions?

If you have held multiple jobs over the years, it’s likely you’ve accumulated a variety of pension schemes. SIPPs can be an excellent way to consolidate these into a single, more modern and flexible account. Defined contribution pensions, such as personal pensions, can often be easily transferred into a SIPP. This simplifies management and offers better oversight of your retirement plans.

However, it is important to exercise caution when transferring pensions. Some schemes offer ‘safeguarded benefits’, such as defined benefit pensions or guaranteed annuity rates, which are usually best left unchanged. If you are considering making a transfer, regulated financial advice is generally required for pensions with such features.

Smart investment strategies

When planning for retirement, your strategy should be guided by your timeline and risk appetite. If you’re still some way from retiring, adopting a more growth-oriented approach, often involving equities, might be advantageous. Regular contributions to your fund can also benefit from pound-cost averaging, a method that helps to reduce the impact of price fluctuations over time.

Conversely, if you are nearing access to your SIPP, it is sensible to adopt a more cautious approach. Market fluctuations can considerably affect your savings if you intend to withdraw lump sums or purchase an annuity soon. Choosing lower-risk investment options can help maintain the value of your fund as you reach this critical stage.

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.

Investing For Tomorrow has a long history of investing in our local community, from supporting our local blood transportation service to backing the local rugby league team. We also have a long-running partnership with our local hospice to help them raise funds for this critical local service.

Overgate Hospice provides expert care, support, advice and information for patients and their loved ones in Calderdale who have a terminal illness or a long term condition that cannot be cured.

We have supported many of their fundraising initiatives and this year our team decided not just to sponsor Overgate’s 10-mile Midnight Walk, but Toby, Naomi, Callum and their partners decided to take on the challenge themselves. Thank you to many of our clients who sponsored the team, raising a total of £1,260 for this very worthwhile local cause.

Almost 43% of all flexible pension withdrawals were made by people under 60, according to the DWP. An additional 28% of withdrawals were carried out by individuals aged between 60 and 64.

Scale of withdrawals raises questions

Since the pension freedom rules came into effect in 2015, the findings show a total of £102.3 billion has been withdrawn flexibly from pension pots. Of this, £36 billion (35%) was taken by those under 60, while another £29 billion (28%) was accessed by those aged 60 to 64.
The average amount withdrawn by individuals under 60 was £27,600, rising to £34,500 for those aged between 60 and 64. Importantly, these figures exclude tax-free lump sum withdrawals, which could add billions more.

Changing the State Pension age adds complexity

Currently, the UK’s State Pension age is 66 for both men and women, but it is gradually increasing. From 2026 to 2028, it will rise to 67, followed by a further increase to 68 between 2044 and 2046. This gradual rise reflects the government’s response to increasing life expectancy and financial pressures.

Simultaneously, the official minimum pension age, which is the earliest age people can access their pension, will rise from 55 to 57 in April 2028. This adjustment addresses growing concerns about early pension access and its potential long-term effects.

Pressures driving early withdrawals

Changes to Inheritance Tax (IHT) rules have also affected early pension withdrawals. From April 2027, defined contribution pension pots will be counted in IHT calculations. This upcoming change has led some savers to prioritise spending their pension funds rather than leaving an inheritance.

However, withdrawing pension funds early carries significant consequences. Savers must carefully consider how this might impact their future financial security and the sustainability of their retirement income.

Seeking the right professional advice

Navigating decisions about when to access pension savings can be complex, as it involves weighing various financial, personal and long-term factors. Seeking professional advice is essential, as it provides a clearer understanding of the available options and helps individuals make informed decisions that align with their unique goals and circumstances.

For those considering withdrawing

money from their pension before reaching retirement age, it’s crucial to understand the full consequences. Accessing pension
savings early can result in significant outcomes, such as potential tax charges, a reduced retirement income and an impact on long-term financial security.

By recognising the tactics used by scammers, you can better protect yourself and your loved ones from their schemes. Below, we explore eight common scams and provide practical tips to keep you safe.

Bank impersonation scams

One of the most common and harmful tactics involves scammers pretending to be bank representatives. You might receive a call, email or text message claiming there is an urgent issue with your account that requires immediate action. Fraudsters often exploit fear and urgency to pressure victims into sharing personal information, such as account details, PINs or passwords, or even transferring money to a so-called ‘safe account’ under the pretence of protecting your funds.
How to stay secure: Legitimate banks will never ask for your full PINs or passwords, nor will they pressure you into making immediate decisions. If you receive a suspicious message, verify its authenticity by contacting your bank directly using the official phone number listed on their website or by calling your bank card provider – never use contact details provided in the message. Be cautious of links in emails or texts and avoid clicking them unless you are certain they are legitimate. If something feels wrong, trust your instincts and take the time to investigate.

Investment scams

Investment scams often target individuals looking to grow their wealth. Fraudsters may promote fake opportunities such as high-return schemes, pyramid schemes or unregistered securities. These scams frequently employ professional-looking websites, counterfeit testimonials and pressure tactics to persuade victims to part with their money.
How to stay secure: Be wary of any investment opportunity that promises guaranteed returns or seems too good to be true. Investigate the company or individual offering the investment thoroughly, checking for licences, reviews and any regulatory warnings. Always confirm the legitimacy of the opportunity through official channels, such as government financial regulatory authorities. Avoid making decisions under pressure and consult us before committing to any investment.

Romance scams

Romance scams exploit emotions and trust, often starting on online dating platforms or social media. Scammers create convincing profiles, build emotional connections over time and then fabricate crises – such as medical emergencies or travel issues – that require financial assistance. Victims are frequently manipulated into sending money, under the impression they are helping someone they care about.
How to stay secure: Never send money or share financial details with someone you’ve only met online, regardless of how convincing their story seems. Take your time to verify their identity by performing reverse image searches on their profile pictures or requesting a video call. Share your concerns with trusted friends or family members for an impartial view – they might notice red flags you missed. If something feels wrong, trust your instincts, cut ties immediately and report the profile to the platform.

Employment scams

Job seekers, particularly those urgently looking for work, are vulnerable to employment scams. These often involve fake job advertisements, dishonest recruiters asking for upfront processing fees or fake job applications designed to gather personal information. Scammers take advantage of job seekers’ hopes, leaving them financially and emotionally drained.
How to stay secure: Research every company offering you a position. Look for reviews, verify their website and ensure the job listing is genuine. Check the company’s official website or LinkedIn profile to confirm the job posting. Authentic employers will never ask for upfront payments, sensitive personal details like your National Insurance number or bank information during the early stages of recruitment. If a job offer seems too good to be true, it probably is. Trust your instincts and don’t hesitate to walk away from suspicious opportunities.

Travel scams

Planning a holiday can be thrilling, but fraudsters often exploit this by offering fake holiday rentals, counterfeit airline tickets or seemingly unbeatable holiday packages. Victims are lured in by irresistibly low prices, only to find that their bookings vanish after payment.
How to stay secure: Always book through reputable travel platforms or directly with trusted providers. Verify contact details, double-check reviews and ensure the website has secure payment options (look for ‘https’ in the URL). Be cautious of offers that seem significantly cheaper than market rates, as they might be too good to be true. Avoid direct bank transfers or payments to unknown individuals, and prefer credit cards or payment methods that offer buyer protection.

AI-powered scams

Advances in artificial intelligence have equipped scammers with new tools to deceive. From deepfake audio that mimics loved ones to highly realistic chatbots, AI-powered scams can be alarmingly convincing. These scams often involve urgent requests for money or sensitive information, making it difficult for victims to tell truth from falsehood.
How to stay secure: Be sceptical of unusual or urgent requests, even if they appear to come from trusted sources. Always verify the authenticity of such requests through direct contact, such as a phone call or face-to-face confirmation. Be cautious about sharing personal information online, particularly on social media, as scammers can exploit it to make their schemes more convincing. Educate yourself about the capabilities of AI and stay alert to emerging threats.

Phishing scams

Phishing scams remain a common tactic among fraudsters. These scams typically arrive via emails, text messages or embedded links that appear to come from trusted organisations like banks, government agencies or well-known companies. The goal is to trick victims into revealing sensitive information such as passwords, credit card details or financial data.
How to stay secure: Carefully check emails for spelling mistakes, generic greetings or suspicious links. Avoid clicking on links or downloading attachments unless you are sure of the sender’s identity. Hover over links to verify their destination before clicking. Keep your antivirus software up to date and enable spam filters to reduce the risk of phishing. When in doubt, contact the organisation directly, using official contact details to verify the message.

Grandparent scams

This particularly malicious scam targets older individuals by pretending to be grandchildren or other family members in trouble. The scammer frequently claims they are in a hurry, such as being stranded or arrested, and requests money to resolve the issue.
How to stay secure: Encourage elderly relatives to verify such claims by independently contacting family members. Discuss these types of scams with your loved ones and develop a plan for managing such situations. For example, establish a family code word that can be used to verify a caller’s identity. Remind them to never send money or share personal information without confirming the story through trusted channels.

Take action if fraud strikes

Even with your best efforts, anyone can become a victim of a scam. If it occurs, act quickly to minimise the damage. Contact the authorities to report the crime, change your passwords and notify important service providers such as your bank and other relevant institutions. Fraud can be reported to Action Fraud at actionfraud.police.uk or by calling 0300 123 2040.

For those on the brink, the report paints an even grimmer picture, with 9% of adults reportedly nearing a financial crisis and 2% already firmly caught in one.

Mid-life adults are encountering greater challenges

When analysed by demographics, middle-aged adults emerge as the group most at risk of financial instability. Strikingly, 16% of those in their 40s and 50s are either close to or already experiencing a crisis. Moreover, satisfaction levels among this group regarding their standard of living are alarmingly low, with only 41% expressing contentment.

Despite this concerning situation, there has been a slight improvement for some. The percentage of adults reporting disposable income at the end of the month increased to 59% this year, compared with 49% in 2024. Additionally, average cash savings rose modestly from £15,549 to £15,864.

Many families still feel the pinch

This recovery, however, is not universal. Families with children under 18 continue to struggle disproportionately. Nearly half (47%) of these families report being on the brink of a financial crisis, while others are already adopting coping mechanisms. Among their strategies, 36% admitted to reducing heating usage, 33% to cutting down on social outings and 11% to skipping meals altogether.

Consumers most impacted by these increases are renters, particularly those in the private rental sector. Last year, nearly 72% of single-person households saw rises in housing costs. On average, these costs increased by £218 per month, with private renters facing a sharper rise of £304.

Housing costs squeeze UK renters and homeowners

According to the report, housing costs have also increased for mortgage holders. Over half of those with mortgages reported an average annual rise in payments of £327 per month. Single mortgage borrowers living alone faced a similar increase of £298, with serious implications for the sustainability of their living arrangements.

This income squeeze naturally impacts an individual’s ability to save or keep savings. However, it also has far-reaching effects on long-term financial security, particularly regarding retirement contributions. While only 5% of adults reported reducing or stopping their pension payments, a notable 43% admitted that their retirement plans had been altered by the ongoing cost of living crisis.

Tackling retirement blind spots

Perhaps unsurprisingly, the report highlights a lack of engagement with retirement planning among UK adults. A startling 69% of adults admitted to being unaware of the amount of money they currently have in their defined contribution pension funds. Equally concerning is the finding that over half of those surveyed (52%) had not thought in the past year about how much they would need for a comfortable retirement.

This oversight in planning exposes a broader problem, as many people simply don’t know where to start. With life expectancy increasing and retirement costs rising, it is vital for individuals to think about their financial futures early on.

Practical steps to improve resilience

The report offers several practical suggestions to help households prepare for and manage the storm. Key advice includes reviewing household bills for potential savings and exploring social tariffs that could provide financial relief. Families are also encouraged to draw up a clear and realistic budget, enabling them to plan for rising costs.

A crucial part of enhancing resilience is creating a financial safety net. Even modest savings can shield individuals from borrowing at high interest rates during unforeseen financial crises. Furthermore, it is important to consider how shocks, such as illness or redundancy, could affect the household’s financial stability. Practical measures, such as reviewing employment benefits and exploring income protection insurance, can help reduce these uncertainties.

Preparing for a secure retirement

For long-term stability, planning ahead is crucial. Preparing for retirement – from estimating your desired retirement age to forecasting living costs – can help ease future financial burdens. Tools such as budget planners or apps, as well as checking your State Pension forecast, can provide a helpful starting point.

Ultimately, although external economic conditions are often beyond individual control, proactive measures can greatly enhance financial resilience.

Source data:

[1] All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 4003 adults. Fieldwork was undertaken between 26th February
– 5th March 2025. The survey was carried out online. The figures have been weighted to be representative of all GB adults (aged 18 and above).

Large contributions can assist individuals who have delayed pension saving due to cost concerns or competing financial priorities. They are also attractive for those looking to transfer significant funds into a tax-efficient account. However, there are annual limits to consider, and understanding how these operate is essential to avoid unnecessary charges.

How pension contributions work

When you contribute to a pension plan, your contributions benefit from tax relief. For personal pensions, such as a Self-Invested Personal Pension (SIPP), your provider claims 20% tax relief from HM Revenue & Customs (HMRC). If you are a higher or additional rate taxpayer, you can claim additional relief through your self-assessment tax return or tax code adjustment for higher rate only, which can significantly reduce your overall tax bill.

Another advantage is that your investments grow tax-free as long as they remain within the pension. Investment income, interest and any gains are exempt from taxes. However, remember that once you start withdrawing from your pension, Income Tax will be applicable, except for the current first 25% (often called the tax-free lump sum), up to a maximum of £268,275 for most people.

Understanding your annual allowance

Your own pension contributions that qualify for tax relief are subject to limits. This is capped at the higher of 100% of your UK taxable earnings or £3,600 (including tax relief). There is also an annual allowance that limits how much you and others can contribute across all your pensions each tax year without incurring additional taxes.

For the 2025/26 tax year, the annual allowance is set at £60,000. For defined contribution pensions, this allowance is straightforward to calculate; it includes your contributions, tax relief and any payments made by employers or third parties. However, for final salary or defined benefit pensions, the situation is more complex. The annual increase in the pension’s capitalised value over the tax year is used as the benchmark, and your scheme administrator can perform this calculation.

Impact of tapered allowances

High earners might face a reduced annual allowance, known as the ‘tapered annual allowance’. This applies if your threshold income exceeds £200,000 and your adjusted income surpasses £260,000. It could reduce your annual allowance to as little as £10,000, depending on your earnings and employer contributions.

After retirement, opting for flexi-access to your pension, such as through drawdown, triggers the Money Purchase Annual Allowance (MPAA) as soon as anything above your tax free lump sum is withdrawn. This limits your tax-efficient annual contributions to money purchase pensions to just £10,000 (including employer and third party contributions as well as your own). Recognising these restrictions is crucial to avoiding tax penalties on excess payments.

Carry forward unused allowances

If you haven’t used your full annual allowance in previous tax years, you may be able to carry forward unused portions to make larger contributions now. This rule allows you to access unused allowances from the past three tax years, giving you the opportunity to ‘catch up’ on missed contributions.

Carry forward is particularly helpful for self-employed individuals with fluctuating incomes or those expecting large contributions from a windfall, such as an inheritance or the sale of a business. However, the process has certain requirements. For example, you must have been a member of a UK-registered pension scheme in previous years, and your earnings in this tax year must support the contribution amount you plan to make if the contribution is to be a personal one.

Planning for employer contributions

For business owners, there is greater flexibility when making contributions through a company. Employer contributions are permitted up to the individual’s annual allowance and carried forward amounts. Importantly, these payments do not need to be connected to taxable income. However, if they are to receive corporation tax relief, the company contributions must satisfy the ‘wholly and exclusively’ test, ensuring they are reasonable in relation to your role and salary.

Remember that in previous years, the annual allowance was lower, limited to £40,000 prior to the 2023/24 tax year. Also, any reductions due to the tapered annual allowance must be included. These details emphasise the complexity of correctly applying carry-forward rules.

Monitor your tax position

Exceeding your annual or carried forward allowances has consequences. Any excess contributions are subject to a tax charge. It is your responsibility to report this to HMRC and pay the required charges through your self-assessment tax return or from the pension plan.
Considering the complexities involved, from the MPAA to implementing rules, seeking professional advice is crucial. Whether you want to optimise your contributions or understand personalised strategies, we can guide you towards making the most of your pension.

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. 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.