The Pensions and Lifetime Savings Association, representing UK pension schemes, has called on the Government to increase the minimum contribution level after concerns around the number of people not prepared for retirement.

Currently the level is set to 8% of pensionable earnings, defined as a worker's basic salary excluding bonuses, commission, and overtime. Of this, employers are required to contribute at least 3%, while employees contribute 5%. It was proposed to increase this to 12% of total salary over the next decade, with employees and employers each contributing an equal share.

The annual retirement report, published this week by Scottish Widows, reveals that the percentage of people not on track for even a minimum retirement lifestyle has risen from 35% to 38% during the last year, equating to an extra 1.2 million people.

The Proposals

The proposal to raise the minimum contribution level from 8% to 12% with a 50/50 split is intended to enhance the retirement savings of over 15 million private sector employees. The proposals also include measures to help workers track their pensions when they change jobs, introduce value for money tests for pension schemes and include initiatives such as helping employees keep track of their pensions when they move jobs.

Industry professionals highlighted the urgency of increasing minimum contributions, which currently stand at 8% of pensionable salary, of which companies must pay at least 3% and employees 5%.

The Government announced that its pension bill measures could add an extra £11,000 to the pension pot of an average worker, although no supporting analysis was provided to explain how this figure was calculated. The bill includes an initiative to ensure schemes offer “value for money,” with underperforming funds being removed from the market.

The Government stated that these measures would “enable security in retirement” while allowing pension schemes to invest in a broader range of assets, which should, in turn, help to promote economic growth.

Currently, most people are left on their own to navigate the complex retirement income market. If you’re interested in how to manage your pension contributions to ensure the best possible wealth protection for you or your family, we can help. Give us a call on 0333 323 9065 or book a free non-committal initial consultation with a member of our team to find out more. 

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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.

As expected, Keir Starmer’s Labour party have won the 2024 General Election with a landslide victory, but what could this mean for your finances and when will any changes be implemented?

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Taxation

In terms of taxation, the introduction of VAT on Private School fees is expected, though there will likely be complexities around the implementation of this change.  Beyond this, the Labour Party have said they will not increase taxes on ‘working people’, indicating income tax, national insurance and VAT are unlikely to increase in the short term, though it is understood Labour will retain the Conservative Party’s plans to freeze income tax thresholds until at least 2028.  However, there has been no such pledges in respect of capital gains tax or inheritance tax, so these are areas Starmer’s new government may look at.

Pensions

Regarding pensions, the subject of reintroducing the Lifetime Allowance (LTA) for Pensions has been a hot topic since it was announced in the 2023 Spring Budget that the LTA was to be abolished.  At the time, Labour pledged to reintroduce the LTA, but it is difficult to see how this could be implemented in practical terms given the abolition has now taken place and additionally, Labour are keen not to disincentivise Doctors who have reached the limit from working.  Labour have now indicated they will in fact not reintroduce the LTA, but they have pledged to conduct a detailed review of pensions, so it will be interesting to see the outcome of this review, specifically whether there will be any changes to tax relief on pension contributions, the taxation of pension death benefits or the 25% tax free lump sum.

When might changes be implemented?

In terms of a timeframe for any changes to be implemented, Labour have committed to including a forecast from the Office for Budget Responsibility (OBR) in their first budget, as they look to distance themselves from the approach taken by Liz Truss, who famously did not utilise the OBR’s analysis ahead of her disastrous “mini-budget” in September 2022. Given the OBR require 10 weeks’ notice to provide their forecast, the Budget is therefore unlikely to be delivered before mid-September 2024.

If you would like to discuss the implications of the new government for your finances, please get in touch to arrange a free consultation with one of our Independent Financial Advisers.

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

Please note: 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 tax advice. Investment returns are not guaranteed, and you may get back less than you originally invested.

Being self-employed offers the unique opportunity to ‘be your own boss’, but this comes with its own responsibilities and challenges.

Alongside the operational implications of working for yourself or running a business, navigating the world of taxes as a self-employed individual can be complex, and if you don’t manage your tax affairs correctly, this could result in costly penalties. Being on top of your tax planning and being aware of and navigating around potential pitfalls whilst making use of valuable allowances is therefore critical for any self-employed person.

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Income Tax and the 60% ‘trap’

A benefit of being self-employed is being able to claim allowable expenses against your taxable income, which can significantly reduce your tax bill. This can range from office costs such as rent, to business-related travel expenses, and professional fees such as accountancy fees.  

It is however important to be aware of tax traps that you may fall into, such as the 60% income tax ‘trap’. This is a band of earnings between £100,000 and £125,140 where you will effectively experience an income tax rate of 60%. This is because for every £2 you earn over £100,000 per annum, alongside being subject to income tax at 40%, you lose £1 worth of your £12,570 tax-free Personal Allowance. Within this banding of earnings, you will also be subject to national insurance contributions of 2%, given a combined rate of income tax and national insurance contributions of 62%. Known as the 62% tax trap.

One of the main levers you can pull to help reduce your tax liability and help you avoid this trap is increasing your pension contributions, as this reduces your ‘adjusted net income’. Pension contributions can effectively receive tax relief of 60% within this band of earnings. As an example, for a higher rate taxpayer earning £110,000, a £10,000 gross pension contribution will effectively only ‘cost’ £4,000, once all income tax relief (totalling £6,000) is received.

National insurance contributions and your State Pension entitlement

For the employed, as the case with income tax, national insurance contributions are typically taken directly from gross earnings, hence there is no need to calculate your national insurance liability due each tax year. For the self-employed, it is critical to make sure you calculate your correct national insurance liability, otherwise you may end up paying too little or too much national insurance contributions.

You must tell HMRC when you become self-employed, as most people pay any required class of national insurance contributions through a self-assessment tax return. There are two types of national insurance contributions you may have to make as a self-employed individual, which will depend on your profits for the tax year.

If your profits are £6,725 or more a year:

• Class 2 national insurance contributions are treated as having been paid, hence do not have to be paid.
• If your profits are more than £12,570, you must pay class 4 contributions. For the 2024/25 tax year, you’ll pay 6% on profits between £12,570 and £50,270, and 2% on profits over £50,270.

If your profits are less than £6,725 a year:

• You do not have to pay anything, but you can pay voluntary class 2 contributions.
• The class 2 rate for the 2024/25 is £3.45 a week.

One potential pitfall in planning is that if your profits are below £6,725 a year, and you do not make voluntary class 2 contributions, you may not receive a ‘qualifying year’ towards your national insurance record. In more challenging lower profits years, it therefore may be wise to pay voluntary contributions (totalling £179.40 a year currently) in order to access a potentially higher state pension entitlement along with other state benefits.

You may also have ‘gaps’ in your national insurance record for previous years, where profits were below the threshold for receiving a qualifying year’s credit. This could result in a reduced State Pension. However, you may be able to pay voluntary contributions to plug any gaps. It is therefore worthwhile checking your national insurance record, which can be done online on the government gateway, to see if you have any gaps, or how much it will cost to pay voluntary contributions and if you’ll benefit from paying voluntary contributions.  

Have you built up enough wealth in a private pension?

Employers are obliged to automatically enrol their employees into a workplace pension plan, but if you’re self-employed then it’s up to you to set up a private pension plan. Some self-employed people say their business is their pension and can be sold when they want to retire. However, this can be a high-risk strategy, and if your business goes under, not only have you lost your job, but also your potential pension fund.

It is therefore important to be diligent with pension saving if you are self-employed. One strategy may be to allocate a proportion of your income, or a fixed amount each month, to a private pension plan. This way any pension saving may be ‘automatic’ and builds good saving discipline.  

This approach can be combined with lump sum pension contributions. This type of planning is often undertaken towards the end of a tax year when there is a better understanding of earnings for the year, which may be more appropriate for those with more variable earnings year on year.    

Each year, as a self-employed individual, you will have an ‘annual allowance’ for pension contributions that are eligible for tax relief, as is the case for personal pensions in general. The annual allowance is currently set at £60,000 per tax year, although your tax relievable pension contributions will be restricted to 100% of your profits if your profits are lower than £60,000 in a tax year. 

If your earnings are over £260,000 as a self-employed person who is therefore not receiving employer pension contributions, your annual allowance may be ‘tapered’ down to as low as £10,000 per tax year.

It can also be possible to make use of any unused annual allowance from the previous three tax years, known as ‘carry forward

Registering for VAT

You must register for VAT with HMRC if your annual turnover in a year exceeds £90,000, or if you expect your annual turnover to go over £90,000 in the next 30 days. This threshold was recently increased from £85,000.

The registration timeline is within 30 days from the end of the month in which you exceed the threshold. For example, if total business sales in the previous 12 months exceed £90,000 on 14th March, you will have until 30th April to register.

Should I set up a limited company?

Setting up a limited company means your company’s finances are independent from your own. If you choose to be a sole trader, you only need to register with HMRC and complete a personal self-assessment tax return. If you are setting up a limited company, you’ll need to register the business with Companies House and with HMRC for tax purposes.

With a limited company, as the business is a distinct separate legal entity, the company’s finances are separate from the shareholders’ or directors’ personal finances, so you are only responsible for the amount of money you put into the business. As a sole trader, you are responsible for both personal and business debts, so personal assets such as your home could be at risk if something goes wrong.

Forming a limited company does come with incorporation costs, along with additional responsibilities such as filing annual accounts and management responsibilities. Being a sole trader comes with few formalities in comparison.  

A sole trader is typically a more straightforward approach and involves limited paperwork and obligations, but you might be at a disadvantage when it comes to benefiting from tax reliefs and being more tax efficient. The business structure that is the best option for you ultimately will depend on your personal circumstances, with both advantages and disadvantages to each approach. 

It's all about the planning

Whether you are a sole trader or run a limited company, it is crucial to work closely with professional advisers to ensure that you are mitigating tax as far as possible, as well as making use of valuable tax allowances. Alongside helping put in place a suitable financial planning approach, we can make suitable introductions to accountants and solicitors where appropriate.  

As a business owner you may be working tirelessly to create and grow a legacy to give you financial freedom. Our expert business financial advisers can help you accomplish these goals and work with you to protect the legacy you’ve worked hard to achieve.  

Please do therefore get in touch for a free initial consultation if you have any concerns surrounding tax planning as a business owner. We’re offering anyone with £100,000 or more in pensions, investments or savings a free cash flow 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, tax or trust advice. 

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. 

After years of frozen thresholds, reduced personal allowances and fiscal drag, tax planning for high earners has become increasingly important. The Autumn Budget 2025 and Spring Statement 2026 added further pressure, particularly for those with larger pension pots, higher value homes, investment income or estates already close to inheritance tax allowances.

A ‘high earner’ in terms of tax used to be reserved only for someone earning a very large salary, but now someone earning over £50,270 can fall into higher rate tax bands, while those earning more than £100,000 can lose their personal allowance entirely. The £12,570 tax-free Personal Allowance reduces (tapers) by £1 for every £2 you earn over £100,000. By the time your adjusted net income reaches £125,140, your allowance drops to zero.  

For people with significant assets, the challenge is wider than income tax alone. Pensions, property, investments and inheritance tax all need to be considered together. 

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Tax can have a big impact on your ability to preserve and grow your savings and investments in retirement. As such, one of the main focuses when advising clients, is creating a plan that helps them achieve their objectives in the most tax-efficient manner. There are several ways to reduce the tax you pay on your annual income, especially if you’re in the higher or additional rate tax bracket.

What are the main taxes?

Income tax

Income tax is a tax imposed directly on your personal income. In simple terms, it is paid at rates between 0% and 45% dependent on which of the income tax brackets you fall into.

Once your earnings exceed your personal allowance, you are required to pay tax on the following sources of income:

• Income from employment
• Income from pension
• *Interest on savings
• Property rental income
• Employment benefits
• Income from a trust

*Interest would only be taxable above the personal allowance, the starting rate and personal savings allowance.

As of the 2026/27 tax year:

• The personal allowance remains at £12,570
• Basic rate tax (20%) applies to income from £12,571 to £50,270
• Higher rate tax (40%) applies from £50,271 to £125,140
• Additional rate tax (45%) applies from £125,141+

These thresholds are now frozen until 5 April 2031, further extending the impact of fiscal drag.

Dividend Tax

The dividend allowance remains £500, but dividends above this are taxed at 10.75% for basic rate taxpayers, 35.75% for higher rate taxpayers and 39.35% for additional rate taxpayers. From April 2027, tax on savings interest and property income is also due to rise by two percentage points.

If you are a Scottish taxpayer, income tax bands differ from the rest of the UK, so regional rules should be factored into your planning. 

Capital Gains Tax

Capital Gains Tax (CGT) is paid on the profit made when you dispose of certain assets, such as shares, second homes, or other investments held outside of a tax-efficient wrapper.

For 2026/27, the CGT annual exemption remains £3,000, much lower than £12,300 in 2022/23. Gains above the allowance are generally taxed at 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers, depending on how the gain falls across your tax bands. 

Inheritance Tax

Inheritance Tax (IHT) is a tax on the value of an estate upon death or on certain gifts made during your lifetime.

• The nil-rate band remains at £325,000
• *The residence nil-rate band offers an additional £175,000 if passing a home to direct descendants
• The standard rate of IHT is 40%, or 36% if at least 10% of the net estate is left to charity

*To qualify for the Residence Nil Rate Band (RNRB), an estate must pass a residential property (or equivalent assets if downsized) to direct descendants. The deceased must have lived in the home at some point, and the net value of their total estate must be under £2 million.

From 6 April 2027, most unused pension funds and pension death benefits will be brought into a person’s estate for IHT purposes. This is one of the biggest upcoming changes for high earners, as pensions have often been used as an efficient way to pass wealth to the next generation.  

Options to consider may include reviewing beneficiary nominations, drawing pension income differently, lifetime gifting, life insurance cover, charitable giving, trust planning where suitable, and using other assets before pensions. The right approach will depend on income needs, tax position, health, age, family circumstances and estate value.

High value property is also becoming a bigger issue. The proposed mansion tax, formally expected to be a High Value Council Tax Surcharge, is due to apply from April 2028 to homes in England valued above £2 million. For high earners with substantial property wealth, this could add an annual cost and may influence gifting decisions, estate planning and whether it remains practical to retain a family home. 

How to reduce taxable income as a high earner

Reducing your taxable income can be one of the most effective ways to lower your overall tax bill. For high earners, this might mean utilising pension contributions, salary sacrifice, or charitable giving to stay within lower tax bands or reclaim lost allowances.

Reducing adjusted net income below £100,000 can help restore some or all of the personal allowance. Keeping income below £80,000 may reduce or remove the High Income Child Benefit Charge, while keeping income below £50,270 may help avoid higher rate tax. 

Why is tax planning important?

Tax planning involves minimising tax liabilities by utilising allowances,  exemptions, and tax reducers to lower the tax you pay, so it should be an essential part of an individual’s financial plan.

For high earners, planning is particularly important because several thresholds interact. These include the personal allowance taper above £100,000, the High Income Child Benefit Charge above £60,000, the tapered pension annual allowance for the highest earners, the £2 million IHT residence nil rate band taper and the future inclusion of pensions in estates from April 2027.

What is higher rate tax?

For 2026/27, higher rate tax begins with earnings between £50,271 and £125,140, which are taxed at 40%. Those earning above £125,140 are taxed at 45%. Because thresholds are frozen until 2031, more people are likely to pay 40% or 45% tax even if their real spending power has not improved.  

Those earning less than £50,270 and more than £12,571 will pay the basic rate of tax at 20%. Most people do not pay income tax on the first £12,570 they earn because this falls within the personal allowance. Income above this is then taxed in bands. 

High earners cutting pay: should you consider it?

Some high earners are now deliberately cutting their pay or exchanging salary for pension contributions or other benefits as a strategic way to reduce tax liability. This is often done through salary sacrifice or personal pension contributions, which can lower your taxable income, increase pension savings, and in some cases reclaim lost allowances such as the personal allowance or avoid additional tax charges like the High-Income Child Benefit Charge.

Salary sacrifice is especially valuable for high earners because it can provide both income tax and National Insurance savings. It may also allow an employer to pass on some or all of its own National Insurance saving into the pension. For those affected by the personal allowance taper, it can be particularly powerful because reducing adjusted net income can improve the effective rate of relief.

However, this benefit is changing. From April 2029, the National Insurance exemption for employee pension contributions made through salary sacrifice will be capped at £2,000 a year. Contributions above that level can still be made, but the National Insurance advantage will be reduced. This is likely to affect high earners most because they are more likely to sacrifice larger sums into pensions.

Ways to reduce your income tax bill

There are a few ways in which you can reduce your income tax bill. Broadly, they are as follows:

Contribute to your pension

Pension contributions remain one of the most effective tax planning tools for high earners. Contributions usually receive basic rate relief automatically, with higher and additional rate relief claimed through self assessment where appropriate.

The pension annual allowance remains £60,000 for 2026/27, although it can be tapered for the highest earners. ‘Carry forward’ may allow unused annual allowance from the previous three tax years to be used, provided the rules are met and the individual has enough relevant UK earnings.

For those earning between £100,000 and £125,140, pension contributions can be especially valuable. This is because the personal allowance is reduced by £1 for every £2 of income above £100,000, creating an effective marginal tax rate of up to 60%. A pension contribution can reduce adjusted net income and potentially restore some or all of that allowance. 

Contribute to your pension via salary sacrifice

You can ask your employer to enter into a salary sacrifice contribution arrangement to your pension, which will reduce the amount of money subjected to the highest rate of income tax (or various rates depending on the tax bands the income falls into after the sacrifice), along with also providing valuable National Insurance savings. This can become quite complicated, and more details can be found on the government website.

A notable additional benefit of salary sacrifice arrangements is that depending on your employer, they may pay the National Insurance Contributions savings they make from the forgone salary into your pension.

Do take care though as the government is planning to make changes to how salary sacrifice for pension contributions work from April 2029 by capping the National Insurance (NI) exemption to £2,000 per year.

Make full use of your ISA annual allowance

ISAs remain a valuable way to shelter income and growth from tax. The overall ISA allowance remains £20,000 for 2026/27. From April 2027, the Cash ISA limit for those under 65 is due to fall to £12,000, although the overall ISA allowance is expected to remain £20,000. 

Up to 60% tax relief available when you invest in a pension

Investing in your pension pot is an attractive option to increase your savings in a tax efficient way. We actively encourage clients, when suitable, to contribute regular amounts to their pension to not only build up their pension pot but also to benefit from tax efficiencies.

For those earning between £100,000 and £125,140 you could be in the 60% tax trap. But this also presents an opportunity when it comes to saving for retirement. If you have taxable income in this range, you can effectively receive income tax relief of 60% on your pension contributions as this is the marginal rate of tax paid on earnings within this band. This is due to the impact of your personal tax allowance of £12,570 being reduced by £1 for every £2 you earn over £100,000 meaning the allowance is reduced to zero when your income reaches £125,140. A pension contribution within this band of earnings effectively reclaims part, or all, of your personal allowance thus increasing the rate of tax relief to 60%.

How to avoid the High Income Child Benefit Charge

For 2026/27, the High Income Child Benefit Charge applies where the higher earning partner has adjusted net income above £60,000. The charge removes 1% of Child Benefit for every £200 of income above that level, with the full amount effectively lost once income reaches £80,000. Pension contributions and Gift Aid donations can reduce adjusted net income, which may reduce or remove the charge. 

The benefits of charitable giving

Giving to charity can reduce income tax and, in some cases, inheritance tax. Through Gift Aid, a charity can claim an extra 25p for every £1 donated by a UK taxpayer. Higher and additional rate taxpayers can then claim further relief through self assessment.

Charitable giving can also reduce IHT if at least 10% of the net estate is left to charity, as this can reduce the IHT rate from 40% to 36%. 

Tax relief schemes and other allowances

Venture Capital Trusts (VCT), Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS) investments can offer valuable income tax relief, although they carry higher risk and are not suitable for everyone. For 2026/27, EIS relief remains 30% and SEIS relief remains 50%, while VCT income tax relief has reduced from 30% to 20% from 6 April 2026. 

These investments can appeal to high earners who have already used pensions and ISAs, but they should only be considered as part of a diversified plan and with appropriate advice.

Don’t invest unless you are prepared to lose all the money you invest. This is a high risk investment and you are unlikely to be protected if something goes wrong. 

But, as higher risk investments they are not suitable for all investors. There is a chance that all of your capital could be at risk and you should not invest into these types of plans without seeking expert advice from a reputable firm of independent advisers such as The Private Office.

How we can help

If you would like to find out more about how The Private Office can help with personalised tax efficient financial planning, please enquire for a free initial consultation with one of our Independent Financial Advisers.

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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.

The content in this article is for information only and does not constitute individual financial advice.

The value of your investments can go down as well as up, so you could get back less than you invested.

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 eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation. 

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

VCTs are high risk investments and there may be no market for the shares should you wish to dispose of them. You may lose your capital.

According to a recent report in the Financial Times, The Labour Party will be dropping their previous pledge to reinstate the lifetime allowance on pensions after Chancellor Jeremy Hunt abolished the policy earlier this year.

Labour is due to publish its manifesto on June 13, and it is understood that the reintroduction of the lifetime allowance will not appear in their manifesto as anticipated previously. This u-turn will cost an estimated £800m but is likely to be welcomed by many savers, particularly higher earners with generous defined-benefit schemes.

What was the ‘lifetime allowance’?  

Essentially, the lifetime allowance was the total amount of capital you could accumulate in all your pension savings tax efficiently. When it was abolished by chancellor Jeremy Hunt earlier this year, the lifetime allowance stood at £1,073,100. This included any employer contributions or investment returns that your pension had amassed over the course of its life.  

If your total pension size exceeded this limit then you would be taxed on the excess amount. The amount you will be taxed depended on how you accessed the funds. If the excess was taken as a lump sum then it would have be taxed at 55% but if you took the excess as an income then you would have only been taxed at 25%. This 25% tax charge was paid in addition to the tax you paid on the income you received. 

Reintroduction considerations  

Despite Labour’s pledge to reinstate the lifetime allowance, the legislation to reintroduce this has proven to be more complex than anticipated.  

Last week, the Institute for Fiscal Studies said reintroducing a reformed LTA would be "sensible" and it laid out several options for how this could happen.  

The first would be to simply reinstate it at its previous level, but this would raise several questions, it stated. One option set out by the IFS was to reinstate the lifetime allowance at a higher value alongside a reduction in the amount of pension from which 25 per cent can be taken tax free. Another option could be to reintroduce the lifetime allowance as a cap on contributions to DC pensions and accrued benefits in DB pensions, rather than on the pensions’ estimated value.  

Carl Emmerson, deputy director of the IFS and co-author of the piece, said given the current way in which pensions are taxed there is a case for reintroducing a lifetime allowance. This is mainly because many other aspects of the system are overly generous to high earners who get sizeable employer contributions and accumulate big pension pots, he said.

He added: “Rather than a simple knee jerk return to the system of two years ago, a new Labour chancellor would be well advised to implement a comprehensive and lasting reform which could rationalise, simplify and make fairer the current system of pension taxation whilst also raising revenue in the medium term."

“The danger is that a reintroduced lifetime allowance ends up being just another bump in the pensions tax road, and another missed opportunity to rationalise the system with a coherent package of measures.”

Although the Lifetime Allowance has been abolished, it has been replaced with two new allowances, so some complexity remains if you planning to take benefits from your pension funds. At The Private Office we can offer advice and guidance about how to best navigate this often difficult area, particularly if you have already taken benefits from some of your pension funds before the new allowances were introduced. 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. 

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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 recent report found that the delays in the delivery of the Pensions Dashboards Programme (PDP) were due to a shortage of digital skills and governance issues, according to the national spending watchdog.

The report, produced by the National Audit Office (NAO) after a year-long investigation, found that there were “capacity and capability issues” in the rollout of the programme.  

Now almost eight years on from the initial proposition, and still with no official release date set for the public launch of the Pensions Dashboards Programme, the NAO report has detailed a range of delivery problems for the project. So far, an estimated £54 million more of tax-payer’s money has been used to help deal with these unexpected delivery problems, and the figure is only rising as the delays continue.  

The Pensions Dashboards Programme  

First proposed by the Government back in 2016, the Pensions Dashboards Programme was intended to allow individuals to see their own pensions information – state, workplace and personal – for free in one place online. The programme was also intended to help reunite savers with lost or forgotten pensions, whose combined value totals over £19 billion as of 2023.  
With the ability to access information easily it was hoped that the service would increase individuals’ awareness and understanding of their pension information and that it could support people with better planning for their retirement. 

What did the NAO report show about the delays? 

The report found numerous factors contributing to the delays that cast the organisation and management of the development of the Pensions Dashboard Programme in an unfavourable light.

The report outlined that in 2019, the Department for Work and Pensions delegated responsibility for delivering the programme, or the digital architecture to make Dashboards work, to the Money and Pensions Service (MaPS). However, the DWP did not have assurances at the outset that MaPS had the capability and capacity to deliver a major digital project as the Pensions Dashboards Programme was forecasted to be.

In December 2022, MaPS informed DWP that the PDP’s delivery timetable was no longer viable. A subsequent review carried out by DWP in February 2023 found that multiple factors had contributed to the delivery problems, including a lack of skilled digital resources and ineffective programme governance.

As the delays and issues in development pile up, the cost of the programme, and by extension the cost on the taxpayer, rises in equal measure. The NAO investigation also found that estimated cost of the Pensions Dashboard Programme had risen from £235m in 2020 to £289m in 2023, an increase of 23%. 

Gareth Davies, head of the NAO, commented on the findings. 

“Delivery delays due to shortfalls in digital capacity and capability have pushed back the final deadline for pension providers and schemes to connect to the Pensions Dashboard Programme by a year, with no date currently set for citizens to benefit.” 

With no official date in sight, it is unknown when, if ever, taxpayers will be able to access the Pensions Dashboard Programme that they have been waiting for – and paying for – for over eight years.

If you’d like to discuss your own retirement options why not contact us for a free initial consultation 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. 

As the landscape of pensions continues to evolve, understanding the nuances of regulatory changes is paramount for maximising tax efficiency and optimising your financial plans.

One recent development is the introduction of Transitional Tax-Free Amount Certificates, which offer a bespoke approach to deductions from the Lump Sum Allowance and Lump Sum and Death Benefit Allowance.

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But if this all sounds like jargon and hard to wrap your head around, lets us better explain as we delve into the intricacies of these certificates, examining eligibility criteria, potential benefits, and potential drawbacks. Our primary focus will be on illustrating how these certificates can potentially benefit Defined Benefit pension holders (also known as a final salary scheme, but also include public sector schemes for example, Career Average Revalued Earnings or CARE) through a detailed calculation demonstrating the potential impact on their tax-free cash entitlement at retirement.

What are Transitional Tax-Free Amount Certificates?

Transitional tax-free amount certificates serve as tools to accurately reflect tax-free lump sums received before April 6, 2024, within the new pension framework. They are issued by registered pension schemes, allowing members to increase the level of tax-free cash available to them.

The Lump Sum Allowance sets the tax-free lump sum a pension holder can withdraw from their pension pot during their lifetime. This is currently standardised at £268,275; however, this can vary depending on individual protections. Pension Protections were introduced to protect pension savings from previous reductions in the Standard Lifetime Allowance.

The lump sum and death benefit allowance governs the tax-free lump sum payments beneficiaries can take following the pension holders passing and is currently set at £1,073,100. However, this may be reduced by tax free lump sums already taken by the member.

For individuals who accessed their benefits post-April 5, 2024, a standard transitional calculation is used to ensure adjustments are made to the lump sum allowance and lump sum and death benefit allowance. In most cases this standard calculation effectively reflects past benefits utilised and aligns correctly with the new regulatory framework. However, in certain circumstances, some individuals may qualify for a higher allowance by applying for a transitional tax-free amount certificate.

For Defined Benefit Pension Scheme members, two such circumstances are as follows:

• Members of Defined Benefit Pension Scheme where they opted to take a full scheme pension and did not receive a tax-free lump sum. 
• Members of a Defined Benefit Pension Scheme who received a tax-free lump sum which was less than 25% of the pension’s value for lifetime allowance purposes (calculated as 20x the pension, plus any tax-free lump sum).

In these circumstances transitional tax-free amount certificates may offer a bespoke adjustment to the lump sum allowance and lump sum and death benefit allowance, ensuring a more accurate representation of the individuals tax-free lump sum entitlement. By accounting for actual lump sum benefits received, before the regulatory shift, transitional tax-free amount certificates provide a tailored approach that may prove advantageous for some pension holders.

Impact for Defined Benefit Pension Holders:

Here we will provide an example situation to further clarify how transitional tax-free amount certificates could provide a benefit to an individual who has taken tax-free cash under the 25% from their Defined Benefit Scheme.

Scenario: 

Tom decided to begin drawing income from his Defined Benefit Pension t in 2020/2021. He took pension income of £27,500 per annum and chose to take tax free cash of £50,000.

If we assume Tom has Fixed Protection 2012 (giving him a Lifetime Allowance of £1,800,000) taking these benefits used up 33.33% of his Lifetime Allowance (£27,500 x 20, plus £50,000 = £600,000 which is 33.33% of £1,800,000).

As this example explores, if you have not taken your full tax-free cash entitlement, you could be entitled to a larger lump sum allowance and lump sum and death benefit allowance by applying for a transitional tax-free amount certificate. This could allow you to take more tax-free cash from any other pension schemes you may hold and the implications of this could be significant. In this example, c. £100,000 of additional tax-free cash could be available to the individual, though please note this is still based on 25% of the value of any pension funds from which tax free cash has not yet been taken (for defined contribution pensions). Therefore a £400,000+ pension pot would be required to take full advantage of the additional tax free cash which is now available.

How to apply for transitional tax-free amount certificates:

Eligible individuals must submit a transitional tax-free amount certificates application to the pension scheme before taking any tax-free cash post-April 5, 2024. The success of a transitional tax-free amount certificates application hinges on the provision of complete and accurate evidence verifying the individual's entitlement to a reduced deduction from lump sum allowance and lump sum and death benefit allowance. Applicants must thoroughly compile documentation demonstrating their actual tax-free lump sum entitlements before April 6, 2024, ensuring compliance with regulatory requirements.

Potential pitfalls of applying for transitional tax-free amount certificates

While transitional tax-free amount certificates offer tailored adjustments to allowances, individuals must carefully evaluate the potential impacts on their pension benefits. Notably, calculations can vary significantly from individual to individual. For example, not everyone who took less than their 25% tax-free cash will benefit from applying for transitional tax-free amount certificates. In some cases, the issuance of a certificate may result in a reduction of allowances. If the outcome proves to be unfavourable creating less tax-free cash entitlement after applying for the certificate, this decision cannot be reversed.

How we can help

In this article we delved into the potential benefits offered to individuals with Defined Benefit pensions by the new Transitional Tax-Free Amount Certificates. If you believe this could be advantageous to you, it is important to seek financial advice before proceeding further. The possibility of this decision weakening your future pension position underlines the need for a comprehensive analysis of your previous benefits taken across your pension schemes.

At The Private Office we offer the guidance required to navigate these complex changes to pension legislation, ensuring that you are positioned optimally for your future and that you maximise the tax efficiency of the benefits you are entitled to. We can provide tailored financial advice to aid you in establishing the impact of transitional tax-free amount certificates on your specific situation, and we can assist you by preparing your application for potential submissions to your pension scheme providers, should these prove advantageous.

If you would like to schedule a call with one of our advisers, please get in touch. We can arrange an initial meeting at no cost and with no obligation, to further explore your own personal situation together.

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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 tax advice.

A pension is a long-term investment. The value of an investment and the income from it could go down as well as up.  The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

The information in this article is based on current laws and regulations which are subject to change as at future legislations.

Those who have gaps in their National Insurance (NI) contributions can now top up their entitlement using a new government-backed online service.  

The new payment service from HM Revenue & Customs (HMRC) and the Department for Work and Pensions (DWP) lets people see any gaps they have in their NI record and enables them to pay voluntary contributions to plug any holes so that they can access their state pension in full.  

Historically, people have only been able to make voluntary contributions covering the past six years, but last year the Government extended this temporarily, meaning that anyone can make up NI gaps between April 6, 2006 and April 5, 2018. This temporary service will be available until April 5, 2025 as things stand.  

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How can I access my state pension? 

In order to get access to a state pension when you retire you are required to pay at least 10 years’ worth of National Insurance Contributions (NICs). And for those wanting to claim the full amount of their state pension, which currently pays up to £221.20 a week (£11,502 a year), 35 years’ worth of NICs are needed.  

Although widely agreed to be insufficient to cover sometimes even the basic cost of living alone, the UK state pension is nevertheless important to understand as currently it is a guaranteed source of income in retirement, provided you’ve made enough NI contributions. Additionally, due to the ‘triple lock guarantee’, the state pension currently  increases each year in line with Consumer Price Index (CPI) inflation, average wages or by 2.5%, whichever is higher.  

Plugging the gaps

Anyone can have gaps in their NICs. If you were unemployed, took time out to raise a family, in education or even if you were not earning enough, you may have periods where no NIC payments were made.  

As mentioned, you need to have been paying NIC for at least 10 qualifying years in order to receive any kind of state pension, and you need to have been paying for a full 35 years to receive the full amount possible.  

The new Government online service allows anyone to view their current state pension entitlement and to make up NI gaps between April 6, 2006 and April 5, 2018. But this opportunity is only available for a short period as you only have until April 5, 2025. This means that if you want to receive your full state pension and you have gaps going back further than six years, now is the time to think about plugging those gaps by purchasing missed years.  

About National Insurance Contributions 

National Insurance (NI) is an umbrella term for universal health care, unemployment benefits and the public pension program.

National Insurance Contributions (NICs) are a form of tax that employees and employers pay to the Government through payroll deductions. NICs are paid automatically through the PAYE (Pay As You Earn) system, which deducts an amount based on a percentage of your income, and this generally continues until you reach retirement age. Employees are able to make additional voluntary payments to increase the pension amount that they will be entitled to receive.  

NICs are generally considered to be collected in order to fund various state benefits, such as the NHS and state pensions.  

If you are thinking about your options at retirement, you can book a free non-committal initial consultation where you can discuss your plans with one of our accredited advisers who will be happy to guide you through the process. Alternatively, you can give us a call on 0333 323 9065 to get in touch with a member of our team to find out more.

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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.

This article is based on our understanding of Government practice as at 6 April 2024. 

The Rest is Elections

The British electoral system does not lend itself to coalition governments. Ask anyone from the Liberal Democrats how they feel about the Conservative/Lib Dem coalition of 2010 and they probably won’t refer to it in glowing terms. Historically, this means that the UK is subject, every now and then, to a lurch from right to left, or vice versa. With this lurch we tend to see fairly fundamental changes in policy. At least, we used to.

I don’t think I am being controversial by suggesting there is a strong possibility that Kier Starmer will be the next Prime Minister at some point this year. The last time we had a change from Conservative to Labour was Tony Blair’s victory, 27 years ago, in 1997, with a majority of 179. According to a recent poll, Labour is heading for a majority of 298! We’ll see. But already, many of our clients are thinking about what a Labour Government will mean for them and what, if anything, should they be doing to protect their finances.

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For Financial Advisers, we are always in a difficult position when it comes to offering advice on an unknown. At the time of writing, the Labour manifesto has yet to be written and we are short of precise detail. Without a crystal ball it would be unwise for us, or any other adviser, to recommend a course of action based on speculation. 

To a certain extent, we experience the same thing every year with the budget. I have been advising clients for over 35 years and every year I hear the same fears. Are we going to see the end of tax-free cash in pensions? Will higher rate tax relief on contributions be removed? Will any changes be retrospective? They are, in essence, the same fears as those before an election.

Will Labour tax the rich and give to the poor? 

Labour, in blunt terms, has always been associated with taxing the rich and redistributing to the poor. The Labour administration of the 70s imposed an eye-watering top rate of income tax at 83% for those with incomes above £20,000 (£221,741 in today’s terms). With the investment income surcharge of 15% added, this resulted in the now famously high-water mark of 98%, the highest rate since the war.

I think it is worth pointing out that politics from the 70s was far more polarised than it is today.  Tony Benn was openly attempting to nationalise virtually every British industry in sight, and the unions were hell bent on removing anyone from government who was more right wing than Che Guevara. If you haven’t done so already, I thoroughly recommend listening to the excellent ‘The Rest is History’ podcast ‘Britain in 1974’. Apart from highlighting this polarity, it is also a stark reminder of just how bad things had become.

Since the 90s the major parties have become (in historical terms at least) more centrist, and both Labour and Conservatives exhibit the same general desires when it comes to taxation and government debt. The current tax take (under the Tories) is the highest it has been since the war. The highest rate of income tax now is 45%, higher than it was under Labour in 2010. Admittedly, both parties have, in recent years, examined their political extremities (Corbyn for Labour and the Reform breakaway for the Conservatives) but the truth seems to be that monetarism has won the day and the days of ultra-high taxation and reckless borrowing seem to be history. At least for now.

How can you protect yourself? 

So, returning to the steps our clients can take to protect their positions, in advance of the general election, I think it will probably focus on the peripheral subjects such as the Lifetime Allowance, or good savings fundamentals, which apply regardless of elections.

The Lifetime Allowance (LTA) has just been abolished, but as soon as its demise was announced, Labour publicly stated that they would reinstate it. But without knowing what shape this will take, it is impossible for us to advise. They could simply reinstate the previous level (£1,073,100). If this is the case, it may be in our clients’ interests to ‘crystallise’ their pensions above this figure beforehand. But what if they don’t? What if the LTA is increased to £1.8 million and tax-free cash is increased to 25% of this figure as a conciliatory gesture? In this case, you would be penalised by crystallising pensions now, up to this number. This is because there is now a new ‘Lump Sum Allowance’ (LSA) which is £268,275, and this represents the aggregate maximum amount of tax-free cash that can be taken from all schemes. There is also no guarantee that any change, whatever it might be, wouldn’t be retrospective.

So, what else might change? As I mentioned earlier, this is a question which also crops up every budget and the best protection anyone can take is probably to make the most of any tax breaks which are currently available. 

First on the list is pensions. Obtaining tax relief on contributions is, and always has been, an extremely tax efficient move, especially for higher rate and, particularly, additional rate taxpayers. Not only do you receive tax relief on contributions (subject to annual allowance limits) but all pension funds grow free of capital gains tax and personal income tax. The pension fund is also outside of the estate for inheritance tax purposes.

ISAs are probably the next port of call with individuals permitted to invest up to £20,000 each tax year (plus a forthcoming British ISA allowing a further £5,000 each tax year). ISA funds are also free from capital gains tax and income tax which makes them superb retirement planning vehicles.

If a new government chooses not to change them then, well, they were a good idea anyway, and if they do change them (for the worse) then you have maximised tax efficiency beforehand (subject to there being no retrospective changes).

I think one thing is fairly certain. The UK is not in fine financial health and handouts will not be the order of the day. But like him or loathe him, Kier Starmer is no Tony Benn and, to quote Benjamin the donkey in Animal Farm, I suspect things will continue much the same as they did before. That is to say, badly! 

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

Financial Conduct Authority does not regulate tax planning.

A pension is a long-term investment. The value of an investment and the income from it could go down as well as up.  The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

The information in this article is based on current laws and regulations which are subject to change as at future legislations.

Following the announcement that the state pension would rise by 8.5% this year, research from Standard Life showed that 22% of adults still don’t know what state pension they will be receiving. This rose to 29% for those aged between 55 and 64, which either demonstrates a lack of pension knowledge or a lack of concern for those already at pension age.

It’s no secret that the UK state pension is known for being insufficient for a complete source of income in retirement, often unable to cover even the basic costs of living. This situation has been exacerbated by rocketing inflation over recent years. However, even for those with higher incomes, the state pension remains a valuable additional income source and an essential one for those who earn little or no additional retirement income.

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It’s worth remembering that not everyone gets the same state pension amount. How much you get depends on your National Insurance record. For many people, the State Pension is only part of their retirement income, as the maximum a person in the UK can receive from their state pension currently is £221.20 a week for the 2024/25 tax year. Instead, they may also have money from a workplace pension, other pension and/or earnings, which is increasingly essential.

Sadly, even those who are able to access the current maximum £11,502.40 a year are still almost £3,000 shy of what is considered, by the pension industry guidelines, to be the amount required to have a minimum standard of living. And following the Governments freeze on allowances, many more pensioners, even on low-income levels that push them over the annual allowance, will be paying more tax. In fact, charities including Age UK, have reported an increase in concern among pensioners who fear being dragged into paying income tax.

How the state pension compares across the world

While the state pension is certainly not enough to live on alone, it’s interesting to see what the state pension looks like in other major countries to get a complete picture of where the UK stands comparatively.

In the UK, if you have 35 years of National Insurance contributions, you are currently eligible to receive the full state pension amount of £958 a month. Between Australia, Denmark, France, Germany, the Netherlands, Spain and the United States, the UK has by far the lowest state pension, according to recent figures from This is Money. Most offer between the equivalent of £1,500 - £2,500 a month, with Spain offering the equivalent of £3,060, more than triple what the UK state pension pays to pensioners.

One reason for this is due to the UK’s flat-rate pension. You get the same amount regardless of earnings, while in many other countries the state pension is linked to your earnings. This means that while the maximum may be high in other countries that have pensions based on earnings, this would not necessarily be what the average pensioner would receive, with many receiving less than the flat-rate amount offered for UK pensioners. The flat-rate approach is more beneficial for those on low incomes and, by the same token, higher earners in the UK get less from the state pension than their international counterparts who are enrolled in systems based on what they earn.

Another point of comparison to consider is what is required to access these state pensions. In the UK, you are required to have 35 years’ worth of National Insurance contributions before you can access the modest state pension on offer. By contrast, the Netherlands, which offers a more attractive £1,230 a month, requires a full 50 years’ worth of National Insurance contributions. Even though the state pension is higher in the Netherlands, the extra 15 years of National Insurance contributions that you have to make, should not be understated.  

If you’re thinking about or approaching your retirement and would like to speak to an expert to assist in mapping out your financial future, why not get in touch. We’re offering all of those with £100,000 or more in pensions, savings or investments 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.

This article is based on our understanding of Government practice as at 6 April 2024. 

This article is accurate and correct as the time of writing 01/05/2024.