Regret is often a powerful motivator, particularly when it comes to finances, which is why we conducted a survey of over 1,100 people exploring the question, “If you could go back in time, what would you tell your younger self about your money and finances?” The responses painted a vivid picture of the financial challenges people face and possible missed opportunities. Although many were pleased with decisions they had made, it did highlight that no matter what, hindsight is a wonderful thing, so planning can be the key to achieving the financial future you want.  

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The survey revealed that 35% of respondents wished they had put more into their pensions, and 31.3% regretted not saving earlier or saving more. These sentiments underscore a widespread concern about securing financial stability for retirement. At the same time, nearly 20% wished they had spent more on their bucket list, and over 12% regretted not giving more to their loved ones sooner. The latter likely a common dilemma: how to balance enjoying life today with preparing for the future and potentially leaving a meaningful legacy to loved ones, before the taxman gets it!  

Funding your bucket list & supporting loved ones

A significant portion of respondents (1 in 5 people) expressed that they wished they had spent more on their bucket list which likely includes life experiences such as traveling or pursuing hobbies. With just over 1 in 10 respondents wishing they hadn’t been so frivolous with their cash, these regrets point to the importance for the need to create space for things you truly enjoy, whilst maintaining financial security.

Another striking insight was the 12% of respondents that wished they had given more to their loved ones earlier in life. A missed opportunity to potentially help family members during crucial moments — whether to support a child or grandchild buy a home, fund a grandchild’s education, or assist a loved one in a time of need.

Gifting wealth during your lifetime not only allows you to witness your hard-earned money helping your loved ones, which can be deeply rewarding, but it’s also a great way to reduce the size of your estate for inheritance tax purposes. Concerns about affordability over your lifetime, often holds people back from making such gifts.  

Through thoughtful planning, budgeting and saving, you can enjoy today’s pleasures, whether that’s gifting or ticking off your bucket list, and still build a secure tomorrow.

No regrets

Encouragingly, the survey also revealed a heartening statistic: 41.8% of respondents felt their finances were exactly where they wanted them to be. Likely down to intentional financial planning rather than just plain luck, you would like to think that those who took the time to create and follow a comprehensive financial plan were more likely to achieve their goals and avoid regrets.

At the same time, the regrets expressed by other respondents serve as reminders of the importance of early action. Whether it’s building a robust retirement fund, funding life’s special moments, or sharing wealth with loved ones, thoughtful planning is the key to financial well-being.  

The role of a Financial Adviser and Professional Advice

Professional financial advice can bridge the gap between your plans and actually making them happen. Many regrets stem from decisions made without enough information or guidance, and advisers can provide the expertise needed to make informed choices.

At TPO we specialise in creating personalised financial plans that reflect your unique goals and priorities. Whether you want to fund your bucket list, support your loved ones, or build a legacy for the future, we’re here to help. Contact us today for a free initial consultation.

Note: Survey conducted by The Private Office to the Savings Champion subscriber base with 1,132 respondents. Conduct on 28/09/24.

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

Investment returns are not guaranteed, and you may get back less than you originally invested. The Financial Conduct Authority (FCA) does not regulate Savings Champion and their associated services, cash or tax advice.

Both Nationwide and Virgin Money are names that many people will be familiar with and may have opened a savings account with them. So, what does the recent news that Nationwide has completed its buyout of Virgin Money mean - and how will this affect those holding savings accounts with either one or more importantly both providers?

Nationwide had announced the £2.9billion deal in March this year, and it was a controversial decision as Nationwide members did not get a vote. Virgin shareholders on the other hand voted 89% in favour to accept the takeover.

The buyout means that together, Nationwide and Virgin Money will have assets worth around £336.3bn and lending of approximately £283.5bn, making it the second largest savings and mortgage provider in the UK.

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Will my money be protected if I have savings with both brands?

This is always an important question when providers merge. And the good news in this case is that yes, for the time being at least. Virgin Money has stated “For now, it's very much business as usual – there's no impact to Virgin Money (or Clydesdale and Yorkshire Bank) products and services. Customers who have savings with both Virgin Money and Nationwide will continue to benefit from the maximum protection offered by the Financial Services Compensation Scheme on each of their Virgin Money and Nationwide accounts.”

There will be no changes to sort codes, account numbers or any account features either.

Of course, it’s likely that this will change at some stage, but there’s been no indication of if and when the two licences will merge.

Another positive move is that all Virgin Money branches will be included in Nationwide’s Branch Promise, which means that everywhere there is a Nationwide or Virgin Money branch, they promise it will remain until at least the start of 2028.

That said, for the time being customers will not be able to make Nationwide transactions in Virgin Money branches – although the mutual has stated that it expects to broaden its range of services over time.

Virgin Money’s new CEO, Chris Rhodes, has warned customers of both brands to be alert to scammers who may approach them during this time. He said “Just so you know, fraudsters often take advantage of times of change to try and persuade people to share personal or financial information. We’ll never ask you for security details, whether over the phone, by email or via any other channel, so if someone does – please don’t share this information with them.”

Kevin Parry, chair of Nationwide, said: “As we integrate Nationwide and Virgin Money carefully over time, the impact we have in communities across the UK, and the benefits we offer to members and customers, will only increase.”

Debbie Crosby, chief executive of Nationwide, added: “All Virgin Money profits will be retained for the benefit of customers and, for the first time in the UK, a full-service business bank will be part of a large and modern mutual.” 

We’ll have to wait and see how this actually manifests. As far as high street providers go, Nationwide does offer savers more than the High Street Banks, although you can still earn more elsewhere. Virgin Money offers new customers some pretty competitive rates, but as I have pointed out on numerous occasions, Virgin also still pays appalling rates of as little as 0.10% on some older closed accounts, so we’ll see if there’s any improvement made to these as part of this new modern mutual. But I wouldn’t hold my breath. If you have money in any of these accounts, make sure you move your cash.

If you want to find out how you can earn more on your hard-earned cash, why not get in touch. We’re offering everyone with £100,000 or more in savings, investments or pensions a free financial review worth up to £500.

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

The Bank of England’s Monetary Policy Committee (MPC) gathered earlier this month to make the penultimate base rate decision of the year – and as was widely expected, it was cut by 0.25%, from 5% to 4.75%

However, whilst there was a consensus that this move would be made, some of the policies announced in the Budget could boost inflation once again and therefore it is now in question about whether there will be another cut at the last meeting of 2024, in December. It now feels as though this is unlikely.

As a result, savings rates as a whole have held far steadier than they might have and in fact we’ve seen some rates increasing.

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Why is this happening?

Quite simply this activity indicates a change to market sentiment about what will happen to the base rate going forward.

The SONIA (Sterling Overnight Index Average) swap rates – which are the rates at which banks lend to one another – are based on future interest rate expectations. And since the Budget, these have been going up.

As at 13th November this year, the 1-year SONIA swap was 4.422% up from 4.307% a month earlier, and the 5-year rate was 4.063%, up from 3.804%. This would indicate that it’s no longer a certainty that there will be another cut in December – and generally the consensus is that base rate will remain a little higher for longer after all.

As a result, we have already seen some positive movement in the fixed term bond and ISA rates, especially the longer-term accounts. Although the longer-term rates are still generally a little lower than shorter term, the gap has narrowed.

At the beginning of the year the top 1-year bond was paying 5.50% whereas the top 5-year bond was 0.75% less – at 4.75%. At the time of writing, although top rates have fallen a little, the 5-year bonds have held up better. The top 1-year bond today is paying 4.85%, whilst the top 5-year bond is paying 4.46% - a gap of just 0.39%.

What should savers do?

With interest rates expected to start to fall again, albeit slightly less than originally thought, while inflation is set to keep close to the 2% target, locking some of your cash up for longer could still be a wise thing to consider. But remember, that once opened there is no access to the money until maturity, so it’s vital to make sure you won’t need it.

Those who need immediate access can also feel relieved that the top rates on offer have fallen by less than the base rate cuts that have occurred this year. The first cut of 0.25% happened in August this year, followed by the latest 0.25% cut earlier this month. However whilst the top rate available at the beginning of the year was 5.22% AER, today you can still achieve 4.87% AER.

However, it’s important to keep an eye on the rates, as easy access accounts are variable, so if the rate you are earning becomes less competitive, ditch and switch. For example, the Metro Bank Instant Access Savings Limited Edition that was market leading at the beginning of the year paying 5.22% AER is paying 3.70% today – a drop of 1.52% - three times that of the base rate!

The financial landscape remains uncertain as market sentiment shifts in response to evolving base rate expectations and broader economic policies. While savers have benefited from a steadier-than-expected interest rate environment, the coming months will likely require continued vigilance.

For those looking to make the most of their savings, a balanced approach could be the key: consider locking in competitive fixed-term rates for part of your funds to secure returns over time, while keeping some savings in easily accessible accounts to maintain flexibility. Regularly review your savings accounts to ensure they remain competitive, as rates can change quickly in the current climate.

Looking ahead, as we approach the final MPC meeting of the year savers should remain adaptable, ready to act as the market evolves, ensuring their hard-earned money continues to work as effectively as possible.

If you want to find out how you can earn more on your hard-earned cash, why not get in touch. We’re offering everyone with £100,000 or more in savings, investments or pensions a free financial review worth up to £500.

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

The accounts and rates mentioned in this article are accurate and correct as of 15/11/2024.

The latest figures from the Bank of England revealed cash ISAs continue to rise in popularity, with the amount people are saving up 17% in the year to September 2024, from £3.25 billion to £3.79 billion. 

One of the primary drivers is that people can simply earn more in ISAs than bonds due to the tax-free status. This is despite bond rates being relatively high, with some offering as much as 5% returns on investment. But that is before tax is deducted – if applicable. 

Before the base rate started to increase in December 2021, many people did not pay any tax on their savings, as the interest earned was within their Personal Savings Allowance (PSA). But with interest rates rising, more and more savers are using their PSA, which means that they have to pay tax once again. 

For example, in December 2021, the top 1-year bonds were paying around 1.30%, and although you could earn a little more if you were prepared to fix for longer, the top 5-year bonds were still only paying around 2%. 

With a 1-year fixed rate bond paying 1.30%, you would need a deposit of £76,924 to breach the £1,000 PSA for basic rate taxpayers. 

With the top 1-year bond still paying 5% today, just £20,000 will produce £1,000 in interest.

And this is why cash ISAs have become so popular once again. Although the headline rates on bonds look as though they will provide more, they may not if you pay tax on your savings. For example, the top 1-year bond currently available is paying 5% - but if you deduct basic rate tax, the net rate is 4%. In the meantime, the top 1-year fixed rate ISAs are paying 4.60% tax free! 

The difference is clear to see – people are simply choosing the option that gives them the highest returns possible. And when tax is taken into account, the higher rates that bonds offer simply become less advantageous compared to fixed rate ISAs. 

What is an ISA? 

An ISA, or ‘Individual Savings Account’, is a scheme that allows anybody to hold cash, shares and unit trusts free of tax on dividends, interest, and capital gains. Essentially, it’s a savings account that you don’t pay tax on. Cash ISAs allow people to save money without incurring income tax on interest, while Stocks-and-Shares ISAs shelter investors from income tax on dividends and capital gains tax when selling shares. There are several different versions, including the Innovative ISA and Junior ISA. 

You can save up to £20,000 each tax year and receive tax-free interest payments, so when the value of your cash ISA increases, you get to keep all of it tax-free. 

When choosing a style of investment to suit your needs, you may want to consider how long you plan to invest for and how much you would like your money to grow. It is also important to understand what movement in value you may or may not be happy with and any potential losses that may happen. That is why seeking financial advice can be crucial for understanding how to take those first steps towards a secure financial future. 

If you want to find out more, why not give us a call on 0333 323 9065 or book a free, non-committal initial consultation with one of our chartered financial advisers to see how we can help. 

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

In one of the longest ‘Budget’ speeches in memory, Chancellor Rachel Reeves gave the first Labour Budget speech for nearly 15 years on 30 October 2024.  

Here we’ve summarised the main elements of interest for financial planning, with further details on tax rates and allowances for 2025/26 (to compare to 2024/25) available on the government website.  

If you have any concerns or questions about any of the announcements and would like to speak to one of our expert financial advisers, contact us for a free initial consultation to see how we can help.

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Non- domicile changes

The non-domicile tax regime is to be abolished from 6 April 2025. Domicile will no longer be a feature of the UK tax system and will be replaced by a system based on residency.

The government will:  

• Introduce a new 4-year foreign income and gains regime for new arrivals who have not been UK tax resident in the previous 10 years
• Allow individuals previously taxed on the remittance basis to remit pre-6 April 2025 foreign income and gains using a new Temporary Repatriation Facility
• Reform Overseas Workday Relief
• Replace the domicile-based system for inheritance tax with a residence-based system

VAT on private school fees

From January 2025, 20% VAT will apply to private school fees across the UK and the business rates charitable rates relief for private schools in England will be removed.

Income tax and personal National Insurance (NI)

Income tax bands and personal NI thresholds remain frozen until April 2028. This time period hasn’t been extended and from 2028/29 these bands/thresholds will increase with inflation.

Capital gains tax (CGT) changes

Investors’ Relief

Investors’ Relief (IR) provides for a lower rate of CGT to be paid on the disposal of ordinary shares in an unlisted trading company where certain criteria are met, subject to a lifetime limit of £10 million of qualifying gains for an individual.

This measure reduces the lifetime limit from £10 million to £1 million for IR qualifying disposals made on or after 30 October 2024.

CGT rates

The main rates of Capital Gains Tax (that apply to assets other than residential property and carried interest), will increase from 10%/20% to 18%/24% respectively for disposals made on or after 30 October 2024.

The main rate of Capital Gains Tax that applies to trustees and personal representatives will increase from 20% to 24% for disposals made on or after 30 October 2024.

The rate of Capital Gains Tax that applies to Business Asset Disposal Relief and Investors’ Relief is increasing to 14% for disposals made on or after 6 April 2025 and from 14% to 18% for disposals made on or after 6 April 2026.

Carried interest

Carried interest, which is a form of performance-related reward received by fund managers, primarily within the private equity industry, will be subject to a CGT rate of 32% from April 2025 (current rates are 18% and 28%). From April 2026, carried interest will be subject to a revised regime within the income tax framework.  

Inheritance tax (IHT) changes

Freezing of IHT thresholds

The Inheritance Tax thresholds were already fixed at their current levels until April 2028. This time period has been extended to April 2030. This measure will fix the:

• Nil-rate band at £325,000
• Residence nil-rate band at £175,000
• Residence nil-rate band taper, starting at £2 million

Inherited pensions

From 6 April 2027, when a pension scheme member dies with unused funds or without having accessed all of their pension entitlements, those unused funds and death benefits will be treated as being part of that person’s estate and may be liable to Inheritance Tax. The current distinction in treatment between discretionary and non-discretionary schemes will be removed.  

The change will apply to both DC and DB schemes. It will apply equally to UK registered schemes and QNUPS. This will ensure that most pension benefits are treated consistently for Inheritance Tax purposes, regardless of whether the scheme is discretionary or non-discretionary, DC or DB.  

A small number of specified pension benefits will remain outside scope for Inheritance Tax, including where funds can only be used to provide a dependants’ scheme pension. These are currently out of scope in non-discretionary schemes and so will remain out of scope under this change.  

Pension scheme administrators will become liable for reporting and paying any Inheritance Tax due on pensions to HMRC. This will require pension scheme administrators and personal representatives to share information with one another.  

A technical consultation has been issued on the processes required to implement these changes for UK-registered pension schemes. After the consultation, the government will publish a response document and carry out a technical consultation on draft legislation for these changes in 2025.

The government will continue to incentivise pension savings for their intended purpose of funding retirement, supported by ongoing tax reliefs on both contributions into pensions and on the growth of funds held within a pension scheme.  

Agricultural relief and business relief  

From 6 April 2025, the existing scope of agricultural relief will be extended to include land managed under an environmental agreement with, or on behalf of, the UK government, devolved governments, public bodies, local authorities, or relevant approved responsible bodies.  

From 6 April 2026, agricultural relief (AR) and business relief (BR) will be reformed, as summarised below:

• The 100% rate of relief will continue for the first £1 million of combined agricultural and business property to help protect family farms and businesses, and it will be 50% thereafter.  
• The rate of business relief will reduce from 100% to 50% in all circumstances for shares designated as “not listed” on the markets of recognised stock exchanges, such as AIM.  

The reforms are expected to only affect around 2,000 estates each year from 2026/27, with around 500 of these claiming agricultural relief and around 1,000 of these holding shares designated as “not listed” on the markets of recognised stock exchanges.  

The government will publish a technical consultation in early 2025. This will focus on the detailed application of the allowance to lifetime transfers into trusts and charges on trust property. This will inform the legislation to be included in a future Finance Bill.

More detail is available at gov.uk. 

National insurance

Employer NI is to increase to 15% (from 13.8%) from April 2025 and the secondary threshold will reduce to £5,000 (from the current £9,100), i.e. employer NI will become payable on an employee’s earnings above £5,000pa.

The Employment Allowance, a National Insurance exemption for smaller businesses, will increase to £10,500 (from £5,000).  

Pensions

Qualifying recognised overseas pension scheme (QROPS)

The Overseas Transfer Charge (OTC) is a 25% tax charge on transfers to QROPS, unless an exclusion from the charge applies.

The government has announced that they are removing the exclusion from the OTC for transfers made on or after 30 October 2024 to QROPS established in the EEA and Gibraltar.

Also, from 6 April 2025, the conditions of OPS and ROPS established in the EEA will be brought in line with OPS and ROPS established in the rest of the world, so that:  

• OPS established in the EEA will be required to be regulated by a regulator of pension schemes in that country
• ROPS established in the EEA must be established in a country or territory with which the UK has a double taxation agreement providing for the exchange of information, or a Tax Information Exchange Agreement

From 6 April 2026, scheme administrators of registered pension schemes must be UK resident.  

Aligning the treatment of transfers to QROPS established in the EEA and Gibraltar with that of transfers to QROPS established in the rest of the world will help to ensure that some UK residents do not benefit from a double tax-free allowance whilst remaining in the UK and reduces the risk of around £1 billion of UK tax-relieved pension savings being transferred overseas across the scorecard.

Changing the conditions EEA schemes need to meet in order to become an OPS or ROPS will mean that they will have to meet the same conditions as those which are established anywhere else in the world.

Requiring scheme administrators of registered pension schemes to be UK resident will mean that all administrators of registered schemes will need to meet the same conditions.    

Further details are available at gov.uk. 

Employee Ownership Trusts and Employee Benefit Trusts

Targeted reforms are to be made to the Employee Ownership Trust tax reliefs to ensure that the reliefs remain focused on the intended purpose of encouraging and supporting employee ownership, whilst preventing opportunities for the reliefs to be abused to obtain tax advantages outside of these intended purposes.

Details are available at gov.uk

Stamp Duty Land Tax (SDLT)

The higher rates of Stamp Duty Land Tax (SDLT) for purchases of additional dwellings (second properties) and for purchases by companies is increasing from 3% to 5% above the standard residential rates of SDLT.  

This measure also increases the single rate of SDLT payable by companies and other non-natural persons purchasing dwellings over £500,000, from 15% to 17%.  

Both changes apply to transactions with an effective date on or after 31 October 2024.  

National Minimum Wage

The National Living Wage will increase from £11.44 to £12.21 an hour from April 2025.  The National Minimum Wage for 18 to 20-year-olds will also rise from £8.60 to £10.00 an hour.

State benefit and state pension increases

From April 2025, a 4.1% increase to the basic and new State Pension meaning the full new State Pension will rise from £221.20 to £230.25 a week, while the full basic State Pension will increase from £169.50 to £176.45 per week.

The Pension Credit Standard Minimum Guarantee will increase by 4.1% from April 2025, meaning an annual increase of £465 in 2025/26 in the single pensioner guarantee and £710 in the couple guarantee.

Working-age state benefits and the Additional State Pension will rise by 1.7% in April 2025, in line with inflation.

Furnished holiday lettings (FHL)

As previously announced, the furnished holiday lettings (FHL) tax regime will be abolished from April 2025, removing the tax advantages that landlords who offer short-term holiday lets have over those who provide standard residential properties.

The current rules provide beneficial tax treatment for furnished holiday lettings compared to other property businesses in broadly four key areas:

• Exemption from finance cost restriction rules (which restrict loan interest to the basic rate of Income Tax for other landlords)
• More beneficial capital allowances rules
• Access to reliefs from taxes on chargeable gains for trading business assets
• Inclusion as relevant UK earnings when calculating maximum pension relief

The abolition of the FHL regime will mean that income and gains will then:

• Form part of the person’s UK or overseas property business
• Be treated in line with all other property income and gains

If you’d like to discuss any of the changes announced in the Autumn Budget or would simply like to explore ways that you can minimise the amount of tax you pay on your wealth, why not get in touch and speak to one of our expert team of advisers. We’re offering anyone with £100,000 in savings, investments or pensions a free financial review worth £500.

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

The Financial Conduct Authority (FCA) does not regulate cash flow planning, estate planning or tax. 

The information contained within this article is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. 

Nearly 4 months after the general election, Chancellor Rachel Reeves finally delivered her eagerly anticipated Budget this afternoon.

It had been widely reported that there would be tax rises and speculation had been rife that pensions, capital gains tax and inheritance tax could be targeted to raise tax revenue following Labour’s manifesto commitment not to increase taxes on “working people”.

In the end, changes to all three of these areas were announced as Reeves looks to raise taxes by £40bn, though the changes were not to the extent that many had feared.

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Capital Gains Tax

The main rate of Capital Gains Tax will increase for basic rate tax payers from 10% to 18% and for higher rate tax payers from 20% to 24%. This change will take effect immediately. Capital Gains Tax on second properties will remain unchanged.

There had been rumours that capital gains tax rates would be equalised with income tax rates, so the changes could be viewed as relatively modest compared to potential increases of this level.

Pensions

Investors will have been pleased to see that no changes were announced to the maximum tax free cash that can be taken from pensions or the tax relief available on pension contributions. However, it was announced that unused pension funds and death benefits payable from a pension will be included in the value of estates for inheritance tax purposes from 6 April 2027. This will affect individuals who were previously planning to leave their pensions to beneficiaries rather than to spend them in their lifetimes, though income taken from pensions in excess of tax free cash entitlements is subject to income tax and will then form part of the estate for inheritance tax purposes if not spent, so careful planning will be needed to ensure funds are not taxed twice.

Inheritance Tax

Aside from inherited pensions entering the estate for inheritance tax purposes in 2027, there were a couple of additional changes to inheritance tax rules.

Firstly, the freezing of the nil rate band (£325,000) and Residence Nil Rate Band (£175,000) until 2030 was announced. For reference, the Residence Nil Rate Band is generally available when a main residence is passed to direct descendants and this, combined with the nil rate band, generally gives married couples £1m which can be passed to direct descendants inheritance tax free on the second death of them both.

Additionally, there had been rumours that the inheritance tax break on shares listed on the Alternative Investment Market (AIM), if held for two years before death, would be scrapped. However, the Chancellor instead took a ‘half way’ approach by introducing a 20% inheritance tax rate in respect of these shares.

The Chancellor also announced changes to two lesser-known inheritance tax reliefs, Business Relief and Agricultural Relief, which will now be subject to a 20% inheritance tax charge on qualifying asset values over £1 million.

Income Tax, Employee’s National Insurance and VAT

As expected there were no increases in these three areas given they affect “working people”. However, with income tax bandings already frozen until 2028, there was an expectation the Chancellor may extend this date, but this did not prove to be the case, as the Chancellor confirmed the freezing of these bandings would end in 2028.

Given the above changes were not to the level expected, how has the Chancellor raised £40bn?

Employer’s National Insurance

A large proportion of this £40bn (an estimated £25bn) will be funded by a large increase in employer’s National Insurance contributions from 13.8% to 15% and a reduction in the threshold from which these are paid from £9,100 to £5,000.

Stamp Duty on second properties

Landlords will be disappointed to see the stamp duty surcharge on second properties increasing from 3% to 5% with effect from 31 October.

Non-Dom tax status abolished

As expected, the Chancellor confirmed Labour’s plans to abolish “non-dom” tax status.

Overall, after weeks of speculation, the tax rises announced in the budget were not to the extent that many had feared. Individuals with pensions will be relieved to see no reduction in their maximum tax free cash entitlement and no change to the tax relief they can receive on pension contributions. Investors may also feel increases in capital gains tax rates could have been worse. Instead, businesses were left to fund the majority of the tax rises through their National Insurance contributions.

However, these changes to inheritance tax, pensions and capital gains tax rules will mean financial plans will need to be revisited. To discuss the implications of the budget for your personal financial situation, please contact your TPO Independent Financial Adviser.

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The Financial Conduct Authority (FCA) does not regulate estate planning or tax advice.

This article is intended as information only and does not constitute financial advice.  

The opinions shared in this article are solely those of the individual and they do not necessarily reflect those of The Private Office.

The information contained in this article is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change.

In order to prepare for later life, we’re often told to put aside as much as possible into our pension pots. But is it possible to overpay into our pensions? And can this have a knock-on effect when it comes to the tax we pay?

It’s important to know the rules around how much you can pay into your pension, and the tax considerations. 

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What is the pension annual allowance?

In the UK, there is no limit on the amount of money taxpayers can pay into their pension annually. However, there is a limit to how much you can contribute tax-efficiently. 

Whenever you pay into your pension, you get tax relief from the government. How this tax relief manifests will depend on your tax banding and your pension scheme. Most employers operate a salary sacrifice arrangement, which provides you with income tax and NI relief at source, regardless of your tax-banding. However, if you pay privately into a pension, the tax treatment is slightly different. Basic rate tax relief (20%) is applied to the contribution, meaning higher and additional rate taxpayers, are still owed a further 20% and 25% tax relief respectively. This relief must be reclaimed by the individual separately via a self-assessment tax return.  

The pension annual allowance is currently £60,000. This allowance is inclusive of personal contributions, employer contributions and any government tax relief you receive. Contributions which exceed the Annual Allowance (AA) will be subject to a tax charge, known as an Annual Allowance charge, which is the removal/reclaim of any tax relief applied to the excess.  

However, it is important to note that if your income is less than £60,000 per annum, you are restricted to contributing up to a maximum of 100% of your relevant UK earnings (unfortunately, rental income and dividends don’t count).

Equally, if your ‘adjusted income’ exceeds £260,000 per annum, you may be subject to the Tapered Annual Allowance (TAA), which sees your annual allowance reduced by £2 for every £1 of adjusted income above £260,000. Therefore, for adjusted income £360,000 per annum or above, your annual allowance is reduced to £10,000 per annum. 

Can you carry forward unused annual pension allowance? 

In certain circumstances, you may be able to carry forward annual pension allowances from up to three previous tax years. In this instance, you are given permission to exceed your annual allowance and still receive tax relief. 

To benefit from carry forward, you must meet the following conditions: 

• You have been a member of a UK pension scheme (not including State Pension) in each of the years you wish to carry forward from.
• You must have fully utilised your available Annual Allowance in the current tax year first
• Unused Annual Allowance is then drawn from the furthest year first I.e. 2021/22 is the third year back from the current tax year.
• You cannot contribute more than 100% of your relevant UK earnings in a given tax year. I.e. if your gross earnings are £70,000, this would be the total pension contribution you can make in the current tax year, regardless of whether your available carry forward allowances are higher. 

What is the Lump Sum Allowance and Lump Sum Death Benefit Allowance? 

The Lump Sum Allowance (LSA) refers to the maximum amount of tax-free cash that can be taken across all of your pension arrangements throughout your lifetime (including lump sums from defined benefit pensions). 
Whilst the previous Lifetime Allowance (LTA) was abolished as of 6th April 2024, it does still have some relevance.

The LSA is capped at £268,275, which is 25% of the old Lifetime Allowance (£1,073,100)

The Lump Sum Death Benefit Allowance (LSDBA) refers to the total amount of pension wealth that can pass tax-free by way of a ‘death benefit lump sum’ to your chosen beneficiaries on death before the age of 75.

The standard LSDBA uses the value of the former Lifetime Allowance - £1,073,100. However, if you hold transitional protection, protecting your Lifetime Allowance at a higher value, this remains the appropriate figure.

For example, if you hold Fixed Protection 2016, your LSDBA will remain at the higher protected amount of £1,250,000.

Should your total pension wealth exceed the ‘standard’ or ‘protected’ amount on death before age 75 and your pension is paid as a lump sum, your beneficiaries would be subject to income tax at their highest marginal rate on the excess.

If, however, your pension is passed to your beneficiaries as a pension, rather than a lump sum, the amount will not be tested and remains tax-free on death before age 75.

The rules remain the same on death post-75, in that any pension benefits passed as either a lump sum or as a pension will be subject to income tax at your beneficiaries highest marginal rate, either on payment (if received as a lump sum), or upon withdrawal (if received as a pension).

The Benefits of Pension Contributions

Pension contributions come with several valuable benefits that make them an attractive option for long-term savings:

• Tax Relief: Contributions are tax-efficient, with immediate relief for basic rate taxpayers and the ability to reclaim additional tax relief for higher and additional rate taxpayers (20% and 25% respectively).
• Employer Contributions: Some employers offer generous contributions above the statutory minimum (3%), effectively increasing your retirement savings at no extra cost.
• Investment Growth: Pensions are invested in markets and have the capacity to grow over time. Returns are compounded which can be enhanced by regular contributions.
• Inheritance Benefits: Defined Contribution pension benefits sit outside your estate, meaning they are not subject to inheritance tax on death, resulting in a potential 40% tax saving.
• Financial Security in Retirement: Maximising your pension contributions throughout your working life helps ensure you have sufficient income to meet your lifestyle requirements in retirement. For most people, the full State Pension (£221.20 per week) is unlikely to be sufficient alone to meet expenditure requirements. 

How much should I pay into my pension? 

How much you should pay into your pension will depend on a number of factors, including your age, earnings and financial goals. 

According to Fidelity International, a rough rule of thumb for determining your ideal pension contributions is to aim to save 10 times your pre-retirement income salary by the age of 67. So, if your average salary is £40,000, it’s recommended that you aim for a pension pot of around £400,000.  

Others say that you should aim to save 12.5% of your monthly salary. If your employer offers a more generous contribution than the statutory 3% then this figure can be reduced accordingly.  

Beyond these generalised points, however, there are a number of factors influencing the amount you should pay into your pension. Below are some of the most important: 

• What is your target income for retirement?   
• What age do you plan to retire? / What timeframe does this give you to save?
• What is your state of health/family history?  
• What level of income/expenditure are you expecting in retirement?  
• Do you have other assets/income that can support you in retirement?  
• Target income is often considered the amount you will need to maintain your current lifestyle. To get an idea of this, you can add up your current monthly expenses and deduct any that will no longer apply by the time you reach retirement (mortgage, commuting costs, etc.).
• Adding in any extra money you anticipate needing - This is for things like holidays, home renovations, or supporting family members, hobbies and interests.  
• Increases to inflation - The cost of living typically doubles every 25 years, so it’s worth incorporating this into any financial projections.  
• Length of retirement - This is a combination of the age you intend on retiring at and how long you expect to live. The latter is obviously a little less predictable, but you can find a good estimate by considering lifestyle factors and family history.
• How much state pension you will receive - If you qualify for the full new state pension, you will receive £221.20 per week, or £11,502.40 a year for the tax year 2024/25. This is not likely to be enough to live on but could be a good top up tp your personal pension pot and other savings and investments. 

Despite the pension annual allowance of £60,000, if you’re getting close to retirement age, it may still be worthwhile making contributions in excess of this. Despite the annual allowance charge that would apply (ignoring any carry forward allowances), pensions offer additional tax benefits on death, sitting outside of your estate, so they can usually be passed onto your loved one's tax-efficiently.

It’s worth bearing in mind that pensions cannot be accessed before age 55 (57 from 2028), unless you are diagnosed with terminal illness. Therefore, it is important to maintain sufficient funds that can be easily accessed in the short and medium term to facilitate expenditure.  

Does my employer have to pay into my pension? 

By law, all employers must offer a workplace pension scheme. This means that three bodies contribute to your pension: you, your employer, and the government. 

If you qualify for automatic enrolment, then your employer is obliged to enrol you into a pension scheme and make contributions to your pension. If your employer is not obligated to enrol you by law, then you can still opt into their pension scheme — and your employer cannot stop you. 

However, they do not have to contribute if you earn an amount equal to or less than £520 a month, £120 a week or £480 over 4 weeks. 

Once you’re enrolled in your employer’s pension scheme, they must, by law, punctually pay at least the minimum contributions to the pension scheme, allow you to opt out of the pension scheme and refund you the money you’ve paid into it (if you do so within 1 month). Plus, they have to allow you to re-join the scheme at least once a year if you have previously opted out. 

Under no circumstances can your employer try to encourage or coerce you into opting out of the scheme, terminate your employment or discriminate against you if you decide to stay in a workplace pension scheme. Nor can they insinuate that somebody is more likely to get hired if they choose to opt out of the pension scheme or end a workplace pension scheme without automatically enrolling all members into another one. 

So in summary, there is no limit to how much you can pay into your pension. However, the limit for tax free contributions is £60,000 annually, which is known as the pension annual allowance, or 100% of relevant UK earnings (whichever is the lower figure). Exceed this, and you’ll be expected to pay an annual allowance charge. 

How can we help? 

Here at The Private Office, our experienced pension planning advisers can provide you with clear advice on your options for your pension, tailored to your unique circumstances and individual needs. Get in touch to arrange a free initial consultation.

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.  

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. Your pension income could also be affected by the interest rates at the time you take your benefits.

Investment returns are not guaranteed, and you may get back less than you originally invested.  

The information contained within this article is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. 

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UK inflation, as measured by the Consumer Price Index (CPI) fell unexpectedly to 1.7% in the year to September, the lowest rate in three-and-a-half years.

The latest figures from the Office for National Statistics (ONS) revealed the dramatic fall, meaning UK inflation is now below instead of above the Bank of England’s 2% target for the first time in years.  

Lower airfares and petrol prices were the main drivers behind the surprise slowdown, official figures showed.  

Core inflation also dipped to 3.2% from 3.6% in August, due in part to a slowdown in wages growth. Core inflation strips out more volatile items such as food or energy prices and is a key inflation rate that the Bank of England watches as it is a better indication for longer term trends.

Separately, September's CPI inflation figure is also normally used to set the increase for many benefits, which will take affect in April next year.

September's CPI inflation is part of the State Pension triple-lock calculation. The triple lock means that each year the State Pension increases by either wage growth, CPI or 2.5% - whichever is the highest, so pensions will be increased by the higher wage growth figure of 4.1%, worth more than £470 a year.

Universal Credit meanwhile is linked to CPI, locking in a 1.7% increase next April.

What is inflation and how is it measured?

Inflation is a measure of how the prices of goods and services have increased over time.  

Goods are tangible items sold to customers, such as food, while services are tasks performed for the benefit of recipients, such as a haircut. Generally, this increase is measured by considering the cost of things today compared to how much they cost a year ago. The average increase between these prices is demonstrated in the inflation rate.  

Rising interest rates directly affect the cost of living. For example, if the price of a bottle of milk is £1, and inflation is increasing by 5%, then your bottle of milk will cost you 5p more. Or, in other words, the spending power of your money has decreases by 5%. 

Ideally, the Government wants to keep inflation low and stable. The general mandated target for the Bank of England is 2%. Anything significantly above or below this target is thought to cause issues for the economy.  

The cost of living surged in recent years, with inflation peaking at 11% in 2022 - way above the Bank of England's 2% target, partly due to the increase in energy prices following Russia's invasion of Ukraine.

To try to slow price rises, the Bank increased rates to encourage people to spend less and bring inflation down.

While the rate has dropped, falling inflation does not mean the goods and services are coming down in price overall, it is just that they are rising at a slower pace.  

Typically, some prices fall whilst some rise – and those prices that are still rising may do so at a slower pace, therefore slowing the overall rising cost of living. For example, the price of Olive Oil increased by 33% over the last 12 months, but the price rise has been even higher over the last couple of years – at times rising by over 50%.  

On the flip side, air fare prices actually fell in the 12 months to September, by 5%.

What does this mean for interest rates?

The unexpected fall in the inflation rate will likely pave the way for further interest rate cuts.  

UK interest rates are currently at 5%. The Bank of England made its first cut in four years, in August but decided to hold them last month.

Now that the inflation figure is below the Bank of England’s 2% target, further interest rate cuts in the coming months are very likely, with a November rate cut almost being guaranteed and a December rate cut also looking likely following the recent figures. 

Make sure you’re getting the most out of your savings. If you have over £100,000 in savings, investments or pensions, why not get in touch for a free financial review worth £500.  

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The details in this article are for information only and do not constitute individual advice.

The latest inflation figures from the Office for National Statistics (ONS) revealed headline inflation holding steady at 2.2% in the year to August.

This means that headline inflation is hovering just 0.2% above the Bank of England’s 2% target. With that, inflation is on the brink of being exactly where it should be for a healthy economy, according to the Bank of England.  

Grant Fitzner, chief economist at the ONS, said inflation "held steady" in August as price falls in some areas compensated for rises in others.

"The main movements came from air fares, in particular to European destinations, which showed a large monthly rise, following a fall this time last year," he added.

"This was offset by lower prices at the pump as well as falling costs at restaurants and hotels. Also, the prices of shop bought alcohol fell slightly this month but rose at the same time last year."

Despite inflation holding at 2.2%, separate figures showed that private rents across the UK increased by 8.4% in the year to August, demonstrating that it will still take some time for cost of living related expenses to settle.

What is inflation and how is it measured?

Inflation is a measure of how the prices of goods and services have increased over time. Goods are tangible items sold to customers, such as food, while services are tasks performed for the benefit of recipients, such as a haircut. Generally, this increase is measured by considering the cost of things today compared to how much they cost a year ago. The average increase between these prices is demonstrated in the inflation rate.

Rising interest rates directly affect the cost of living. For example, if the price of a bottle of milk is £1, and inflation is increasing by 5%, then your bottle of milk will cost you 5p more. Or, in other words, the spending power of your money has decreased by 5%.

Ideally, the Government wants to keep inflation low and stable. The general mandated target for the Bank of England is 2%. Anything significantly above or below this target is thought to cause issues for the economy.

Our chartered advisers are unbiased, meaning that they can give whole of market advice, and so are best placed to give you a plan tailored exactly to your personal financial goals.  

If you’d like to know more, request a free non-committal initial consultation with one of our team or give us a call on 0333 323 9065 and get in touch.

Arrange your free initial consultation

The details in this article are for information only and do not constitute individual advice.

The UK government has scrapped plans for a ‘British ISA’ over concerns that it would “complicate” the investment market for individuals.

The planned British ISA would have channelled savers’ cash into London-listed stocks, in a bid to boost both savings and the economy.

Sources said that Labour had abandoned plans to push ahead with the new Individual Savings Account (ISA) product drawn up by the last Conservative government, which would have allowed an extra £5,000 tax-free allowance when investing in UK companies or equities.

Before the general election, Labour had “no plans to drop the British ISA”, but now it appears that this plan has changed.  

The planned British ISA

The previous government proposed the new product earlier this year, in the March budget, in an effort to encourage savers to invest and support UK stocks, which have seen a decline as investors have shifted towards global shares in recent years. The British ISA would have offered an extra tax-free, allowance, on top of the existing £20,000 annual limit.

Jeremy Hunt, then Tory Chancellor, said in his March Budget that it would ensure savers “benefit from the growth of the most promising UK businesses”.

Although the current government has decided to drop plans for the British ISA, Chancellor Rachel Reeves has set out a blueprint that could support UK equities by funnelling more defined contribution pension money into a wider range of UK assets, which, although positive, does nothing to take the sting away for everyday savers that would have benefited from the new ISA with its larger allowance.  

What is an ISA?

An ISA, or ‘Individual Savings Account’, is essentially a savings account that you don’t pay tax on. Cash ISAs simply allow people to save money without incurring income tax on interest, while Stocks-and-Shares ISAs shelter investors from income tax on dividends and capital gains tax when selling shares. There are several different versions, including the Lifetime ISA and the Innovative ISA.

You can save up to £20,000 each tax year into one or a combination of ISAs and receive tax-free returns, so when the value of your ISA increases, you get to keep all of it tax-free*. 

When choosing a style of investment to suit your needs, you may want to consider how long you plan to invest for and how much you would like your money to grow. It is also important to understand what movement in value you may or may not be happy with and any potential losses that may happen. That is why seeking professional advice can be crucial for understanding how to take those first steps towards a secure financial future.  

If you want to find out more, why not give us a call on 0333 323 9065 or book a free non-committal initial consultation with one of our chartered advisers to see how we can help. 

Source: Gov.uk  

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The details in this article are for information only and do not constitute individual advice.

Investment returns are not guaranteed, and you may get back less than you originally invested.