At the start of the year, we described geopolitical risk as a “known unknown.” We expected geopolitics to play an important role in shaping markets, but the timing and scale of any escalation were uncertain. Only two months into the year, that risk has materialised in dramatic fashion, with global geopolitical tensions now reaching their highest level in more than 20 years (see Figure 1). 
This sharp rise in tensions has quickly become the dominant theme for global markets and investors.

Figure 1: Geopolitical Risk Index (Source: Caldara and Iacoviello, March)

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What happened?

The escalation followed events on Saturday 28 February, when US and Israeli forces launched coordinated strikes on Iran. The attacks killed Iran’s Supreme Leader, Ali Khamenei, along with several senior Iranian officials. President Trump described the operation as necessary to remove what he called an ongoing threat posed by Iran to the US and its allies, including concerns around nuclear proliferation.

Iran responded quickly, launching missiles at Israel and at American military bases across the Middle East, including strikes in Bahrain, the UAE, Qatar and Kuwait. These developments have significantly heightened tensions across the region and raised concerns about potential disruption to global energy supplies.

How markets responded

Markets reacted swiftly to the news. Major equity indices initially fell as investors assessed the risk of prolonged disruption to global oil and gas supplies.

However, the impact has not been uniform across regions.

US equities proved relatively resilient. The strengthening US dollar provided support, and the United States’ position as a net exporter of oil and gas helped shield its economy from some of the immediate energy-related pressures.

European and UK markets faced greater headwinds, declining by around 7% and 5% respectively. That said, the UK’s significant exposure to energy companies helped cushion some of the losses compared with other European markets.

Asian markets also came under pressure, particularly in energy-importing economies such as Japan, which remain more exposed to rising energy costs.

Figure 2: Regional Equity Returns in Sterling (27 February – 11 March 2026, Source: Pacific Asset Management)

Bonds and interest rates

Government bond markets have also reacted to the shifting outlook.

Initially, investors had expected central banks in the US and UK to continue cutting interest rates as inflation pressures gradually eased. However, the surge in energy prices has changed that narrative.

Oil shocks tend to feed quickly into broader inflation because energy costs affect almost every part of the economy. As a result, markets have begun to reassess the interest rate outlook. Government bond yields have moved higher, with UK gilts falling around 2.9% as investors adjusted expectations.

Markets now see a greater likelihood that the Bank of England will keep interest rates at the current level of 3.75% for longer than previously anticipated.

Policymakers respond

A key question now is how long energy prices remain elevated.

Energy shocks are particularly challenging for economies because they can simultaneously push inflation higher while slowing economic growth. If sustained, higher oil and gas prices could reignite inflationary pressures just as they had begun to ease across Western economies.

Policymakers have already begun responding. The International Energy Agency (IEA), which was established after the oil crisis of the 1970s, has authorised the largest emergency release of strategic oil reserves in its history.

The agency’s 32 member nations have agreed to release 400 million barrels of crude oil into global markets. This represents roughly one third of government-held reserves and is more than double the amount released following Russia’s invasion of Ukraine in 2022. The aim is to stabilise energy markets and prevent supply shortages from pushing prices significantly higher.

Looking ahead

The situation remains highly fluid and continues to evolve.

Historically, equity markets often react to geopolitical shocks with an initial period of volatility before stabilising as investors assess the longer-term economic impact. Ultimately, the path of markets will depend on how events affect corporate earnings, energy prices and inflation.

One key risk would be a prolonged disruption to the Strait of Hormuz, a critical shipping route through which around one fifth of the world’s oil supply passes. If this route were to remain closed for an extended period, energy prices could rise further, increasing the risk of higher inflation and slower global growth.

That said, the global economy is far less dependent on oil than it was during the energy crises of the 1970s. Energy supplies are now more diversified, and alternative sources play a greater role, which helps reduce the potential economic impact compared with previous decades.

History also shows that while geopolitical shocks can create short-term volatility, their effects on equity markets are often relatively short-lived.

As we noted at the start of the year, the combination of a more assertive US administration and the approach of mid-term elections increases the likelihood of geopolitical developments shaping markets. In this environment, we remain vigilant and continue to monitor events closely.

Most importantly, we ensure that portfolios remain well diversified and positioned to navigate periods of uncertainty while continuing to capture opportunities as markets evolve.

If you have any questions or concerns about your investments or your future plans, don’t hesitate to get in touch with your TPO Adviser or contact us centrally through our website.

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This information in this article is correct as at 12/03/2026.

This market update is for general information only, 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 originally invested; past performance is not a guide to future returns.
 

Rachel Reeves delivered her Spring Forecast this afternoon, which had been overshadowed before it even started by events in the Middle East.

As expected, the Spring Forecast (rather than Spring Statement as it has been referred to in previous years) did not include any fiscal changes, with Reeves previously committing to only holding one fiscal event each year, in the Autumn Budget.

By way of updates, Reeves announced that the Office for Budget Responsibility (OBR) had ‘adjusted the profile of GDP’ resulting in it downgrading its UK Growth projection for 2026 from 1.4% (as forecast in November 2025) to 1.1%, but the OBR increased its forecasts for 2027 (1.5% to 1.6%) and 2028 (again 1.5% to 1.6%).  Reeves also heralded the interest rate cuts seen in recent months, but events in the Middle East have significantly reduced the chance of a further cut in March, given the inflationary oil and gas price rises seen since the weekend.

Therefore, the most important upcoming tax changes are those we already knew about, specifically:

• A 2% increase in dividend tax taking effect on 6 April 2026.
• VCT tax relief being cut from 30% to 20% on 6 April 2026.
• Business and Agricultural Relief limited to £2.5m per individual, with effect from 6 April 2026 – this importantly increased from the previously proposed £1m and can be passed between spouses if not used on first death.
• A 2% increase in savings and property taxes taking effect on 6 April 2027.
• A cap in Cash ISA contributions of £12,000 for under 65s with effect from 6 April 2027.
• Pensions forming part of estates for inheritance tax purposes from 6 April 2027.
• A Mansion Tax being introduced in April 2028.
• Salary Sacrifice pension contributions benefiting from National Insurance Contribution savings limited to £2,000 with effect from 6 April 2029.
• Income Tax thresholds frozen until April 2031.

If you would like to discuss the impact of the above on your personal financial situation, why not get in touch for a free initial conversation 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

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

On Saturday morning, the US and Israeli forces carried out attacks on Iran, killing the Supreme Leader Ali Khamenei and several other high ranking Iranian officials. 

President Trump justified the action as necessary to eliminate the ongoing threats posed by Iran to the US and its allies, including the risk of nuclear proliferation. Iran has retaliated, by launching missiles at Israel and American military bases across the Middle East, including strikes in Bahrain, the United Arab Emirates (UAE), Qatar and Kuwait. 

The range of possible outcomes from this intervention is extremely wide, and will depend on two key factors: how long the conflict lasts, and how Iran's political leadership is resolved, whether through an orderly succession or a broader collapse of the regime.

What this means for portfolios

As of Monday morning, there has been a broad sell off in equities and the US dollar has responded sharply.

The FTSE100 has seen more limited falls because of its sector weighting towards energy companies which have rallied on the back of the rising oil price. 

Government bonds, which have been trending higher over the past month, have eased back slightly on the risk of energy prices feeding through to inflation. 

Oil prices have risen 8% to $78/barrel, not just because of the direct impact on supply through disruptions in the Middle East but also because of the threat of Iranian attacks on the Strait of Hormuz, through which around 20% of global oil supply is shipped.

Once again, gold has proved to be an important source of diversification, with our gold ETF rallying around 4.5% in Sterling as we write. We added back some gold in our core portfolios last week, having reduced our exposure at higher prices in January. This has helped to cushion portfolios on a day when equities and bonds are both falling.

Looking ahead

Clearly this situation is unfolding as we write, and remains highly fluid. Equities always respond to geopolitical events by selling off initially; their subsequent performance depends entirely on the impact of events on corporate earnings and inflation. 

If the Strait of Hormuz is unpassable for a prolonged period, energy prices will move higher from here, which will feed through to inflation and weigh on consumption. But it’s worth noting that the dependence on oil has diminished significantly since the early 70s when the Yom Kippur War triggered a severe bear market. Today, alternative suppliers and sources of energy help to mitigate the economic impact compared to the 1970s. 

History shows that many geopolitical shocks have relatively short-lived effects on equity markets. We pointed out earlier in the year that with mid-term elections looming and an emboldened President Trump, geopolitical events were becoming more likely.

For now, we will remain highly vigilant and ready to respond whilst ensuring that portfolios remain well diversified. 

As ever, we remain long-term investors and whilst short-term market volatility is something that informs our portfolio decisions, the importance remains in the long-term plan and remaining both prudent and disciplined in our planning together.

If you have any questions or concerns about your investments or your future plans, don’t hesitate to get in touch with your TPO Adviser or contact us through our website.

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This information in this article is correct as at 02/03/2026.

This market update is for general information only, 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 originally invested; past performance is not a guide to future returns.

Despite high-profile geopolitical events and headline risk, global markets started 2026 on a resilient footing, supported by solid economic fundamentals and growth momentum.

The themes that dominated markets last year have carried into the new year, dispelling any expectation that 2026 would be ‘quieter'. The US’s audacious extradition of Nicolás Maduro from Venezuela and President Trump’s announcement to pursue the acquisition of Greenland have reinforced this dynamic.

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Once again, we see a clear divergence between the prevailing narrative ‘the noise’ and what is happening in financial markets. Despite these headline grabbing risks, which ultimately proved to be temporary flashpoints, global equity markets were buoyed by stronger growth expectations and a macroeconomic backdrop that remains broadly supportive. In this environment, economic resilience has helped offset lingering inflation concerns.

Equities

Figure 1. Equity market returns (January 2026, Source: Pacific Asset Management)

Equity markets were broadly positive across regions, although US equities lagged as technology stocks came under pressure. Microsoft notably fell 10% in a single day, highlighting growing investor caution over elevated valuations and increasing scepticism regarding the scale of spending on AI and related projects.

US policy uncertainty increased with the nomination of Kevin Warsh as the next Federal Reserve Chair, set to succeed Jerome Powell in May. Front-runner Kevin Hassett was ultimately passed over, partly due to concerns over his perceived political alignment amid scrutiny of Fed independence. Warsh’s appointment was broadly welcomed, but questions remain given his past reputation during his previous tenure at the Federal Reserve as an inflation hawk - prioritising price stability - and how this will align with President Trump’s preference for lower interest rates, leaving markets watching closely how his approach will unfold.

European equities ended the period higher, despite earlier pressure from President Trump’s threat to impose tariffs on European countries over Greenland. Sentiment improved as tensions eased, supported by stronger-than-expected Q4 2025 GDP growth of 0.3% and a near record-low unemployment rate of 6.2% in December.

In the UK, the FTSE 100 surpassed 10,000 points for the first time since its launch in 1984, led by basic materials benefiting from higher metal prices. Domestically focused companies maintained positive momentum, with mid-cap stocks outperforming large caps. Inflation rose to 3.4%, the first increase in five months, leaving the UK with the unenviable record of the highest inflation in the G7. Markets continue to view this as largely transitory, driven by factors such as higher airfare over the Christmas period, and expect inflation to gradually return toward the 2% target.

In Japan, equities continued to rise following the announcement of a snap lower house election on 8 February, called by Prime Minister Sanae Takaichi to strengthen her mandate and support her agenda of easier monetary policy and targeted fiscal stimulus.

Fixed income

Government bond markets came under pressure as stronger-than-expected economic growth and concerns over elevated public spending dampened expectations for near-term policy easing, pushing yields higher. US Treasuries fell, especially at the short end of the curve, as robust data delayed anticipated Federal Reserve rate cuts. UK gilts also declined, with December inflation coming in above expectations, reducing the likelihood of further easing from the Bank of England. European government bonds were relatively resilient, led by France and Italy, supported by improved risk sentiment across core and peripheral markets. In Japan, government bonds faced significant pressure, recording a particularly challenging start to the year as yields adjusted to evolving domestic policy expectations.

Figure 2. Fixed Income returns (January 2026, Source: Pacific Asset Management)

Commodities

Commodity markets extended their positive momentum early in the year, underpinned by strong gains in precious metals and oil. Gold performed well through most of the month, buoyed by sustained central bank buying particularly from emerging-market reserve managers and heightened geopolitical tensions that supported safe-haven demand. However, the metal sold off late in the period as speculative positioning shifted and investors took profits from earlier strength. Brent crude oil also advanced, holding near multi month highs as ongoing supply risk concerns continued to provide support to energy prices.

Portfolio implications

The start of the year has reinforced the case for international diversification, with opportunities increasingly emerging outside the US. Uncertainty is likely to continue - the classic ‘known unknown’ - requiring investors to remain proactive and adaptable in navigating the evolving market landscape.

If you have any questions or concerns about your investments or your future plans, don’t hesitate to get in touch with your TPO Adviser or contact us centrally through our website.

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This information in this article is correct as at 13/02/2026.

This market update is for general information only, 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 originally invested; past performance is not a guide to future returns.

2025 will be remembered as a year in which uncertainty and strong investment performance were not mutually exclusive. For the first time since 2019, global equities, bonds and commodities all delivered positive returns, supported by AI-driven investment themes, central bank easing and eventually falling tariffs.

This headline performance, however, understates the challenges investors faced over the year. Policy and trade uncertainty dominated the news flow early on, with U.S. equities falling more than 20% in sterling terms as markets grappled with the implications of global tariff rates reaching levels not seen since the 1930s. At the same time, government balance sheets came under increased scrutiny amid fiscal largesse, while a shifting world order heightened geopolitical risks.

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Equity markets

Equities reached new highs, but unlike much of the past decade, leadership did not come from the United States. Instead, investors were rewarded for adopting a more global approach, as market performance broadened beyond U.S. mega-caps into more attractively valued regions. Structural themes such as artificial intelligence and clean energy also gained traction across a wider range of geographies, reinforcing the shift toward more diversified sources of return.

European equities

European equities led global markets, delivering returns of over 26% in sterling terms. Performance was supported by a combination of attractive valuations and improving investor sentiment, as falling inflation enabled the European Central Bank to cut EU interest rate to 2%. In addition, a renewed commitment to fiscal expansion - most notably in Germany, which announced plans to allocate €500 billion to infrastructure and adopted a “whatever it takes” approach to defence spending - provided a further boost to the region.

UK equities

Outside Europe, UK equities also delivered strong results, recording their fifth-best annual return since 1984. Performance was underpinned by renewed investor interest in lower-valued markets, as well as the index’s structural bias toward defensive sectors, which performed particularly well over the year.

Emerging markets

Emerging markets, meanwhile, challenged the notion that the United States is the sole driver of equity returns. A rally in technology companies outside the U.S. supported a broader advance across emerging market equities, with particularly strong performances in China, Taiwan, and South Korea. Combined with a weakening U.S. dollar and that many emerging economies carry lower debt levels and are growing faster than their developed-market peers, the outlook for the asset class remains constructive.

Figure 1: 3 and 12 month equity returns (Source: Pacific Asset Management, January 2026)

Fixed income

In fixed income, declining inflation and the gradual easing of monetary policy supported bond markets overall.

Interest rates fell in the UK and Europe as the Bank of England and the ECB reduced rates to their lowest levels since 2023. Meanwhile, after holding steady for much of the year, the Federal Reserve resumed its rate-cutting cycle, delivering reductions in September. This contributed to a decline in short-term rates. However, fiscal concerns continued to weigh on government bonds, leading to a steepening of yield curves across major markets as long-term yields rose, which could have implications for future borrowing costs.

Corporate bond spreads - the premium investors receive for holding credit risk - recovered from the widening seen in April. For much of the year, spreads narrowed amid a risk-on environment, which saw higher prices for both investment-grade and high-yield bonds.  


Figure 2: 3 and 12 month fixed income returns (Source: Pacific Asset Management, January 2026)

Gold

Gold surged to its strongest performance in half a century, reflecting investors concerns provoked by fiscal profligacy among Western governments, political uncertainty, and a weaker U.S. dollar. The safe-haven metal broke multiple records over the year, reaching $4,482 per ounce in December. Looking ahead, we expect gold prices to remain supported by ongoing central bank purchases and elevated fiscal deficits.

Outlook

Continued global growth and resilient consumer demand underpin a constructive outlook for equities. However, valuations remain high in concentrated markets, and investors are increasingly cautious about the risks associated with AI-driven themes.

This environment presents opportunities as markets broaden, with previously overlooked areas likely to benefit. Thoughtful portfolio construction and rigorous risk management will be critical as emerging opportunities - and potential risks - come into focus over the year.

If you have any questions or concerns about your investments or your future plans, don’t hesitate to get in touch with your TPO Adviser or contact us centrally through our website.

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This information in this article is correct as at 16/01/2026.

This market update is for general information only, 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 originally invested; past performance is not a guide to future returns.

The first Budget of my professional career was the 1988 Nigel Lawson “Giveaway” Budget. As an office junior, my job was to head into the city and queue up (with dozens of other fresh faced office juniors) to receive the printed full Budget from the Government’s press offices. I dutifully returned to work, clutching it in my sweaty palms, so that the senior advisers could pore over it. No internet, no leaks, just a bundle of white pages hastily stapled together.

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Since that March day (it always used to be in the Spring) Budgets have come and gone but they all have one thing in common. Namely, the fear and rumour that ferments in the days and weeks beforehand. I have to say that the media are one of the major guilty parties and, more than ever, are responsible for whipping up a frenzy of bitterness and resentment, even before the Chancellor, whoever they happen to be, has stepped up to the dispatch box.

I don’t think I’m wrong in saying that I’ve never witnessed quite so much ‘bracing’ in fear and anticipation as this Budget. The nation became paralysed in apocalyptic fear as if the end of the world were approaching.

So, I thought it was time to take stock and look at the Budget in the clear light of day and also in the context of historical Budgets.

The fear and rumour mill

Ever since that dreary March day in 1988, I can say that one fear has pervaded every single Budget. Namely, the fear that higher rate tax relief will be removed from pension contributions. This Budget was, of course, no exception and the fear spread even further than that. About sometime in September this year, a rumour started (I don’t know from where) that tax free cash (now technically known as the Pension Commencement Lump Sum, or PCLS) would be reduced from £268,275 to £40,000. Personally, I thought it was unlikely and wasn’t afraid to say so. Not only would it not result in higher tax take for the Treasury (who in their right mind would now willingly withdraw £286,275, subjecting themselves to income tax on £246,275?) but it would also have made Rachel and Labour, even more unpopular than they are already.

Nevertheless, a huge number of people acted and withdrew their tax free cash and are now sitting on it in a taxable environment.

But pensions were definitely going to take a bullet somehow. After all, they are still highly efficient methods of saving, something which seems to have been lost on some of the general public, based on a tsunami of negative press, again, which doesn’t always help. Animal Farm springs to mind when the animals, having taking over the farm, come up with the tenets of animal life. “Four legs good, two legs bad”. And so, the media has a similar chant “non pensions good, pensions bad”. But are they? If I were to tell you that you could invest in a pension and get 41.6% tax free cash from it, would you be interested? If you are a higher rate taxpayer, this is exactly what you get! For every £100 put in, you only pay £60 (20% tax relief at source and a further 20% back in your tax returns). So, tax free cash at 25% means 25% of £60 which equals 41.6%. When you retire, if you’re a basic rate taxpayer, you are only paying 20% on the £75 whenever you draw on it. By the way, if you make pension contributions and your earnings are between £100,000 and £125,140, because this income reduces your personal allowance, the equivalent tax relief is not 40%, it is 60% so the effective tax free cash rate is a whopping 62.5%.

Given how generous tax relief is, I think that the slight knock pensions took (future reductions in salary sacrifice) is really getting away with it.

The hammer blow came last year

Of course, last year’s Budget delivered a hammerblow to pensions in that, from April 2027, Inheritance Tax (IHT) will apply. For ten years, since George Osborne announced pensions ‘freedom’ many have earmarked their pension funds for Estate Planning purposes, since so this recent news was very unwelcome. In effect, this now puts pensions in roughly the same position as they were before 2015. Before 1995, remember, people were forced to buy annuities with their pension funds so, in spite of goal post moving, pensions are still the best tax planning vehicles around, so let’s not throw the baby out with the bath water.

Overall, it has to be said that the Budget was probably a slight relief. Many, myself included, had expected increases in Capital Gains Tax and even Income Tax and none of these came to pass. Instead, we saw a continued freezing of allowances. Stealth taxes. The death of wealth by a thousand cuts. Each one painless, but in five years’ time, we’re all significantly worse off without immediately feeling the pain. 

Stealth taxes are at the heart of the Budget

There were a few other ‘tampering's’ such as the reduction in cash ISA contributions from £20,000 to £12,000 for under 65s, and an increase to the tax rate on savings interest, both from April 2027, but this is mostly tinkering around the edges and irritants for some, at worst. There was an innovation in the introduction of ‘Mansion tax’ for houses worth over £2m but, again, this was kicked into the future and will not apply until 2028. But the stealth taxes, freezing of allowances, are at the heart of this budget.

I sometimes think of the 1988 “giveaway” Budget with fondness. Lawson reduced higher rate income tax from 60% to 40% and basic rate from 27% to 25%. All of this was possible due to the fact that the economy had been overheating (remember that?) but was now under control and the predicted Budget surplus allowed for such cuts. What luxury! There was uproar in the house and the Speaker had to suspend proceedings due to “grave disorder”. A lesser known MP called Alex Salmond exclaimed that it was an “obscenity” and was duly suspended for breaching Parliamentary convention.

The world has changed though, and the UK doesn’t have the room for manoeuvre afforded by those halcyon days. Nigel Lawson didn’t have the fallout of QE, Brexit, Covid and the Ukraine invasion to hamper him and I doubt if any modern day Chancellor from any persuasion would make us all happy, given the state of the economy. The only one who tried, and failed, was Kwasi Kwarteng who, in cahoots with Liz Truss, grabbed the Treasury money bag and started running down Whitehall throwing £20 notes in the air before being rugby tackled by the bond markets. I sadly, don’t expect too much from any Chancellor, from whichever party, over the next few years at least.

On the plus side, bond markets (the ultimate bellwether of economic prudence) have reacted well to the Budget. Gone are the days when a Labour Government would react to fiscal shortfall by applying for a payday loan!

So, in the final analysis, maybe the 2025 Budget was a bit of a non-event. But fear and loathing were the lasting memories of the days leading up to it, which probably explains why the UK economy reported a contraction in October. Meanwhile, back at Animal Farm, I’d like to paraphrase another animal tenet. “All Budgets are equal, but some are more equal than others”.

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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. 

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

Global markets were a mixed bag in November, pausing after several months of strong gains. Volatility increased, as concerns over stretched AI-related and technology stocks resurfaced, prompting a switch towards defensive sectors such as healthcare and consumer staples. The technology sector was challenged, recording its biggest decline since March 2025.  

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Figure 1. Regional equity returns  (Source: Pacific Asset Management, November 2025)

US Markets

US equities remained largely unchanged as investors looked past the positives of strong Q3 earnings and the end of the 43-day government shutdown - the longest in US history - and instead focused on uncertainty around interest rates and concerns around an AI-driven bubble. Volatility was driven primarily by the shifting expectations around Federal Reserve policy. The probability of a December rate cut swung sharply, falling from nearly 98% in late October to about 40% by mid-November, before rebounding above 80% by the end of November. Market movements reflected not only the potential timing of rate cuts, but also investor interpretations of the Fed’s economic outlook and the likelihood of a ‘soft landing’. 

European Markets 

Across the Atlantic, Eurozone inflation in November ticked up to 2.2% from 2.1%, slightly above forecasts and suggesting that price pressures remain. Economic expansion was modest, with Q3 growth at 0.2% and unemployment steady at 6.4%. The European Central Bank (ECB) indicated a cautious stance, signalling that keeping interest rates unchanged remains the prudent course. European equities remained relatively flat as investors navigated these mixed economic indicators. 

Japan Markets 

In Japan, headline inflation climbed to 3.0% in October - the highest since July - driven by energy costs, currency fluctuations, and ongoing supply chain strains. A softer yen provided support to export-focused equities but also contributed to higher inflation, while government bonds underperformed as yields rose amid doubts over the long-term sustainability of fiscal and monetary support. 

UK Markets

 The UK’s Autumn Budget 2025, long anticipated and partially pre-empted by the early Office for Budget Responsibility (OBR) publication, had a relatively muted immediate impact on markets.

The Chancellor outlined £26 billion in tax measures; however, with many provisions deferred over several years - some beyond the next general election - the near-term fiscal landscape remains largely unchanged. Fiscal flexibility is set to improve, with the Chancellor projecting a buffer of approximately £22 billion - more than double last year’s level - which had been largely eroded and fueled months of speculation over potential tax increases. While this represents a meaningful increase in fiscal headroom, it remains below average, with the typical revision to an OBR forecast over six months around £21 billion, leaving little room for error (see Figure 2.). 

Figure 2. Forecast headroom against fiscal room  (Source: Pacific Asset Management, IfG, November 2025). 

Markets responded positively to the extra fiscal headroom and the reduced risk of near-term borrowing pressures or unexpected tax adjustments. UK government bonds delivered one of their strongest Budget-day performances in twenty years, reflecting renewed confidence in the fiscal outlook. Meanwhile, equity markets, which had softened amid pre-budget leaks and speculation, stabilized as investors assessed the measures as supportive of macroeconomic stability without introducing major new uncertainties. 

Commodities and Gold

Away from equities, commodities posted modest gains in November, with performance varying across sectors. Gold emerged as the standout performer, supported by sustained investor demand for safe-haven assets amid ongoing macroeconomic uncertainty, including inflationary pressures, central bank policies, and geopolitical risks.  

While November’s advance was more measured than recent rallies - partly due to profit-taking - the metal’s underlying fundamentals remain strong. Structural demand, constrained supply, and its role as a portfolio diversifier continue to underpin gold’s outlook into 2026. Gold mining companies also continue to benefit from elevated gold prices and more disciplined capital management, with earnings growth reflecting these favourable conditions (see Figure 3.). 

Figure 3: Goldmining companies return and earnings profile (Source: Pacific Asset Management, November 2025). 

Summary

Despite some volatility in November, global equities are positioned to deliver another strong year in 2025. Equity markets in the UK, Europe, and Japan have all shown relative outperformance compared with the US, underscoring the value of international diversification. Moreover, the recent underperformance of technology stocks highlights the importance of sector diversification - not only as a risk management tool but also as a potential source of returns.

Looking back over November, there were no major shifts in economic fundamentals. Instead, market movements reflected changes in sentiment, emphasizing how investor perceptions and expectations can drive short-term volatility - even in the absence of significant economic or market developments. This serves as a reminder that as we move into the next year, investors will continue to face sentiment-driven risks alongside structural considerations, including central bank policy, inflation dynamics, and sector-specific trends.

Overall, the performance of global equities this year reinforces the importance of maintaining a diversified investment approach that balances geographic exposure, sector allocation, and risk management strategies. 

If you have any questions or concerns about your investments or your future plans, don’t hesitate to get in touch with your TPO Adviser or contact us centrally through our website.

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This information in this article is correct as at 12/12/2025.

This market update is for general information only, 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 originally invested; past performance is not a guide to future returns.

Chancellor Rachel Reeves gave her second Budget speech on 26 November 2025. After much worry and speculation, there were thankfully no changes announced to the rules around pension tax relief and tax-free cash (pension commencement lump sums). However, there are going to be changes to the salary sacrifice rules for pension contributions - from April 2029, only the first £2,000 per annum of sacrificed salary will be exempt from employer and employee National Insurance (NI).  

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Other announcements included an increase in the rates of income tax on dividends, property and savings income by 2 percentage points (some changes from April 2026 and some from April 2027) and a freezing of the income tax bands in England, Wales and Northern Ireland for a further three tax years until April 2031.

From April 2027, changes will be made to the ISA allowance so that only the over 65s will be able to place the full £20,000 into Cash ISAs (capped at £12,000 into Cash ISAs for the under 65s).

TPO Partner, David Dodgson, appeared on BBC Money Box Live on budget day, sharing his thoughts on the Chancellor's statement.

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We have summarised the main points of the Budget below, along with a reminder of various changes from April 2026 that we were already aware of. Further guidance will be published as necessary and as more detail becomes available. 

Pensions

Salary sacrifice  

From April 2029, anyone sacrificing more than £2,000 per tax year for employer pension contributions won’t save NI on the excess. Employers will also pay NI on any excess.

Such contributions still receive income tax relief as they would if made via a different method such as relief at source.

State pension

The triple lock means the new state pension and basic state pension are expected to increase by 4.8% in April 2026. This will mean a full new state pension figure of £241.30 per week and a full basic state pension of £184.90 per week. The government has committed to maintaining the triple lock for the duration of this Parliament.

Restrictions will be introduced on the making of Class 2 voluntary NI (VNICs) to achieve state pension for those living overseas by increasing the initial residency or contributions requirement for VNICs to 10 years. The government is also launching a wider review of VNICs, with a call for evidence to be published in the new year.

Changes will be made from 2027 to avoid those whose sole income is the state pension having to pay small amounts of income tax through Simple Assessment (which will become increasingly likely as the state pension increases, and the personal allowance remains frozen).  

Pension Protection Fund / Financial Assistance Scheme

The government will introduce payment of inflation increases on pre-97 pensions to PPF and Financial Assistance Scheme (FAS) members of up to 2.5 per cent. This would apply to those members whose original schemes provided for indexation on pre-97 pensions. The move would broadly align pre-97 indexation rules with those already in place for post-97 pensions for PPF and FAS members.

Investments

Individual Savings Accounts (ISAs)

From April 2027, changes will be made to the ISA allowance so that only the over 65s will be able to place the full £20,000 into Cash ISAs. Those under 65 are capped at £12,000 into Cash ISAs with the balance having to be placed in other ISA types if they wish to make use of the full allowance.

 The annual subscription limits all remain at their current levels in 2026/27, i.e.

• £20,000 ISA
• £4,000 Lifetime ISA
• £9,000 Junior ISA (and Child Trust Fund)

Lifetime ISA

Consultation to take place early next year on replacing the Lifetime ISA (LISA) with a new product for first-time buyers.

Enterprise Investment Scheme and Venture Capital Trust 

Changes to be introduced in Finance Bill 2025-26 to take effect from 6 April 2026:  

• The Income Tax relief that can be claimed by an individual investing in Venture Capital Trust (VCT) to reduce to 20% from the current rate of 30%
• The gross assets requirement that a company must not exceed for the Enterprise Investment Scheme (EIS) and VCT to increase to £30 million (from £15 million) immediately before the issue of the shares or securities, and £35 million (from £16 million) immediately after the issue
• The annual investment limit that companies can raise to increase to £10 million (from £5 million) and for knowledge-intensive companies to £20 million (from £10 million)The company’s lifetime investment limit to increase to £24 million (from £12 million) and for knowledge-intensive companies to £40 million (from £20 million)

The increases to the annual, lifetime and gross asset limits apply only to qualifying companies that are not registered in Northern Ireland trading in goods or the generation, transmission, distribution, supply, wholesale trade or cross-border exchange of electricity. These companies will remain eligible for the current scheme limits.

EIS and VCTs are higher risk investments and 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 advice.

Enterprise Management Incentive (EMI) scheme

The measure will amend provisions for some of the limits relating to the EMI scheme. For eligible companies, the changes that will apply to EMI contracts granted on or after 6 April 2026 are the limit on:

• Company options will be increased from £3 million to £6 million
• Gross assets will be increased from £30 million to £120 million
• The number of employees will be increased from 250 employees to 500 employees

Taxation

Income tax

Income tax bands in England, Wales and N. Ireland have been frozen for a further three tax years to April 2031 (had already been frozen to April 2028).

All income tax rates and bands remain at their current levels in 2026/27 apart from as outlined below.  

Changes to tax rates for property, savings & dividend income

• Tax on dividend income will increase by 2 percentage points. The ordinary rate will rise from 8.75% to 10.75%, and the upper rate from 33.75% to 35.75% from April 2026. The additional rate will remain unchanged at 39.35%. The £500 dividend allowance remains in place.  
• Tax on savings income will increase by 2 percentage points across all bands. The basic rate will rise from 20% to 22%, the higher rate from 40% to 42%, and the additional rate from 45% to 47% from April 2027. The starting rate band and personal savings allowance remain unchanged.
• The government is creating separate tax rates for property income (any income from letting land and buildings). From April 2027, the property basic rate will be 22%, the property higher rate will be 42% and the property additional rate will be 47%. Finance cost relief will be provided at the separate property basic rate (22%). The £1,000 property allowance and Rent a Room Scheme remain in place.

The way individuals report and pay tax on property, savings and dividend income will remain the same – it is only the rates of tax charged that will change. The income tax ordering rules will be changed from April 2027 so that the Personal Allowance will be deducted against employment, trading or pension income first.

The changes to property income rates will apply in England, Wales and Northern Ireland. The government will engage with the devolved governments of Scotland and Wales to provide them with the ability to set property income rates in line with their current income tax powers in their fiscal frameworks. The changes to dividend and savings income rates will apply UK-wide as these rates are reserved.

Tax and NI thresholds

• No increases to the headline rates of income tax (see above regarding future rates for savings/dividend/property income), National Insurance contributions (NICs) or VAT
• Income tax thresholds and the equivalent NICs thresholds for employees and self-employed frozen at current levels for a further three years from April 2028 to April 2031
• NI Secondary Threshold frozen at its current level from April 2028 to April 2031
• Plan 2 student loan repayment threshold will be frozen at its 2026/27 level for three years from April 2027

National Living Wage

National Living Wage will increase by 4.1% to £12.71 per hour for eligible workers aged 21 and over.  

Capital gains tax

The annual exemption remains at £3,000 (a maximum of £1,500 for discretionary/interest in possession trusts – shared between all settlor’s trusts subject to a minimum of £300 per trust).

CGT rates remain as they currently are:

• 18% for any taxable gain that doesn’t fall above the basic rate band when added to income and 24% on any gain (or part of gain) that falls above the basic rate band when added to income
• Unused personal allowance can’t be used for capital gains
• Discretionary/interest in possession trustees and personal representatives pay at the higher rates (24%)

Inheritance tax  

In an improvement to the Business and Agricultural Relief changes from next April, the £1 million limit on 100% Business and Agricultural Relief will be transferable between spouses if unused on first death (including where first death was before 6 April 2026).

Capping inheritance tax trust charges for former non-UK domicile residents - this measure introduces a cap on relevant property inheritance tax charges for trusts which held excluded property at 30 October 2024. The relevant property charges are capped at £5 million over each 10 year cycle.

Anti-avoidance measures for non-long-term UK residents and trusts - this measure will look-through non-UK companies or similar bodies to treat UK agricultural land and buildings as situated in the UK for inheritance tax purposes. It also provides that where a settlor ceases to be a long-term UK resident, there will be an Inheritance Tax charge if there is a later change in situs of their trust assets.

Also, Inheritance Tax charity exemption will be restricted to gifts made directly to UK charities and registered clubs and excluded from gifts to trusts which are not registered as UK charities or clubs.

IHT thresholds to be fixed at their current levels for one further tax year to April 2031, as shown below:  

• Nil-Rate Band (NRB) at £325,000
• Residence Nil-Rate Band (RNRB) at £175,000
• RNRB taper, starting at £2 million
• combined £1 million allowance for 100% APR and Business Property Relief (BPR) relief

Previously announced changes:  

The government is implementing previously announced reforms to taxes on wealth and assets including:

• From 6 April 2026, the CGT rate for Business Asset Disposal Relief and Investors’ Relief will increase to match the main lower rate at 18%
• From 6 April 2026, the government will reform agricultural property relief and business property relief
• From 6 April 2026, the government will introduce a revised tax regime for carried interest which sits wholly within the income tax framework
• From 6 April 2027, the government is removing the opportunity for individuals to use pensions as a vehicle for IHT planning by bringing unspent pots into the scope of IHT

Internationally mobile individuals

The government is to make changes to the way internationally mobile individuals are taxed, closing loopholes and capping relevant property trust charges payable by certain trusts. Further details are to follow.

New mileage tax on electric cars

A new 3p charge per mile on electric cars.

Universal credit

The two-child benefit cap is to be abolished from April 2026.

Employee ownership trusts (EOT)

The 100% relief from capital gains tax on businesses sold to Employee Ownership Trusts will be reduced to 50%.

High value council tax surcharge HVCTS (‘Mansion tax’)

From April 2028, a council tax surcharge will apply to properties worth more than £2m in 2026. This will be £2,500 for properties worth £2m-£2.5m rising in bands to a maximum of £7,500 for homes valued at over £5m. Charges will increase in line with CPI inflation each year from 2029 onwards. Homeowners, rather than occupiers, will be liable to the surcharge and will continue to pay their existing Council Tax alongside the surcharge.  

GOV.UK : High Value Council Tax Surcharge

Stamp duty

From 27 November 2025, there is an exemption from the 0.5% Stamp Duty Reserve Tax (SDRT) charge on agreements to transfer securities of a company whose shares are newly listed on a UK regulated market.

The exemption will apply for a 3-year period from the listing of the company’s shares.  

Tax Support for Entrepreneurs

A Call for Evidence has been published seeking views on the effectiveness of existing tax incentives, and the wider tax system, for business founders and scaling firms, and how the UK can better support these companies to start, scale and stay in the UK. The Call for Evidence will close on 28 February.

If you’d like to know how the budget may impact your financial plans, why not get in touch and speak to one of our advisers today for a free initial consultation. 

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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 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. 

Rachel Reeves’s long-awaited budget arrived earlier than expected, as it was published by the Office for Budget Responsibility an hour before it was supposed to be delivered in Parliament, leading to unprecedented scenes in the House of Commons.

The key changes were:

•  Frozen tax bandings 

  Having already been frozen from 2021until 2028, there were rumours of an extension until 2030, but in fact the freeze was extended for three further years to 2031.  The impact of this over a decade will be significant as was explored in this recent article from The Times to which The Private Office were pleased to contribute. 

•  A 2% increase on Dividend, Savings and Rental Income Tax

  Dividend tax rates will increase from 8.75% and 33.75% to 10.75% and 35.75% respectively for basic and higher rate taxpayers with effect from April 2026.  Additional rate dividend tax will remain unchanged at 39.35%

  Savings and Property income tax will increase from 20%, 40% and 45% to 22%, 42% and 47% for basic, higher and additional rate taxpayers with effect from April 2027.

• The Cash ISA allowance will be limited to £12,000 with effect from April 2027 for under 65s 

  This had been widely rumoured, but investors will be pleased to see the Stocks & Shares ISA remaining at £20,000 and for the over 65s they can still use the cash ISA allowance in full.

• Salary sacrifice on pension contributions

  With effect from April 2029, there will be a limit of £2,000 p.a. for pension contributions being paid directly into workers’ pensions, thereby saving national insurance being paid on the income. However, investors will be pleased to see tax relief on pension contributions remaining unchanged.

• A mansion Tax on homes worth over £2,000,000 

  This will be set at a rate of £2,500 for homes valued at over £2m, rising to £7,500 for homes valued at over £5m and will come into effect in 2028 .

• Agricultural and Business Property Relief threshold of £1m can be transferred between spouses if unused on death

  This will have been welcomed by Business Owners and Farmers as assets will no longer need to be passed to children on first death to take advantage of the additional Agricultural and Business Property relief, though many may have already changed their Wills to reflect the previous rules so further planning may now be required.

• Failed pre-1997 pensions that have entered the Pension Protection Fund (PPF)

  Individuals will benefit from indexation in a boost for those who lost out when their scheme failed.

•  Infected Blood Compensation Scheme 

  The government has confirmed that compensation will be relieved from Inheritance Tax. This has caused a great deal of distress over the years to a number of families so this will be a welcome change.

• Tax relief on Venture Capital Trust (VCT) investments reduced from 30% to 20% from April 2026  

  The government says this will better balance the amount of upfront tax relief offered compared to EIS investments, where dividend relief is not available. 

TPO Partner, David Dodgson, appeared on BBC Money Box Live on budget day, sharing his thoughts on the Chancellor's statement.

Listen now on BBC Sounds

As well as the above changes, it is important to acknowledge the following areas that did not change despite strong rumours prior to the budget:

• Income Tax rates
• Pension contribution tax relief
• Pension tax free cash
• Capital Gains Tax rates

At the time of writing, Bond markets appear to have digested the budget relatively well, with Gilt rates remaining broadly unchanged.

In summary, after months of speculation, many of the rumoured changes did not materialise, but the combination of further frozen income tax bandings, increases to dividend, saving and property income tax and reduced cash ISA allowances, will make planning more important than ever.  Many of the upcoming changes will take effect at different times, so there will be opportunities to limit the impact of the changes through careful planning over the coming years.  Pensions remain attractive from a tax relief perspective and Stocks and Shares ISAs remain a tax efficient way of saving.  

If you’d like to discuss the impact of the budget on your finances, why not get in touch to speak to one of our advisers. We’re offering everyone with £100,000 in savings, investments or pension a free financial review worth £500. 

Arrange your free initial consultation

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.

Continued enthusiasm around Artificial Intelligence (AI), coupled with news of a trade agreement between the US and China under which the US reduced tariffs and Beijing eased restrictions on rare earth exports, helped drive global equities higher for the second consecutive month in October. 

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Equity Markets

Developed market equities led the gains, with US stocks rising 4.9% in sterling terms as large-cap companies once again outperformed mid-caps. This highlights the growing concentration and dependence on a handful of AI-related companies, with the index up 11% year to date, but a more modest 3% when those firms are excluded (see Figure 1).

Figure 1. US Equities vs US Equity ex AI companies (Source: Pacific Asset Management, October 2025).

Outside the US, Japan was the standout performer, with equities rallying over 5% as the market benefited from enthusiasm around AI and the appointment of Sanae Takaichi - the country’s first female prime minister. Her policy stance, aligned with Abenomics (named after former Japanese Prime Minister, Shinzo Abe), led investors to price in further fiscal expansion and a weaker yen, which supported Japan’s exporters. Meanwhile, UK equities rose 3.7%, aided by a softer sterling that boosted overseas earnings for exporters, whilst commodity and mining stocks advanced on the back of higher commodity prices, particularly in precious metals.

Figure 2. Regional equity returns (Source: Pacific Asset Management, October 2025).

Fixed Income

In fixed income markets, developed market government bonds posted positive returns. 
UK gilts led the gains, returning nearly 3% last month, as September’s inflation figure of 3.8% came in below market expectations of 4%, prompting investors to bring forward interest rate cut expectations. This view was further reinforced by speculation around the upcoming Budget, with the UK Treasury expected to raise additional revenue through tax increases, which is likely to weigh on growth prospects and consumer sentiment. 

In the US, Treasuries posted positive returns last month, supported by concerns over the government shutdown and the collapse of First Brands and TriColor. The Federal Reserve cut interest rates by 0.25%, bringing rates to their lowest level in three years, which initially boosted the market. However, some of these gains were pared back following Chair Powell’s more hawkish rhetoric, which cast doubt on a December rate cut. The decision also saw duelling dissents for the first time since 2019, with Federal Reserve officials Stephen Miran advocating a further cut and Jeffrey Schmid voting to keep rates unchanged.

Corporate Bonds

Turning to corporate bonds, spreads in both Investment Grade and High Yield bonds widened modestly, but with all-in yields remaining high, returns were still positive. Technical conditions also remain supportive, highlighted by Meta’s $30 bn debt issuance the largest since 2023 which was massively oversubscribed, attracting over $125 bn in investor orders.

Looking ahead, debt issuance from technology companies is expected to pick-up. Morgan Stanley estimates that of the $3tn planned for data centre investment through 2028, roughly half will be financed via debt.

Figure 3. Fixed Income returns (Source: Pacific Asset Management, October 2025).

Commodities

Given the positive backdrop in October, it was unsurprising to see a pullback in gold, with the safe-haven asset falling 7% towards the end of the month, despite climbing above $4,000 per ounce for the first time. For an asset that has risen over 45% year-to-date, a single-digit pullback is within normal expectations. We continue to believe that the factors that drove gold higher - increased uncertainty, a shift away from the dollar, and central bank purchases remain firmly in play.

Gold miners, while leveraged to the gold price, are now much better-run companies than in previous cycles. Improved capital allocation, a controlled cost base, and rising revenues following higher gold prices have strengthened their balance sheets, making them more resilient and better positioned to deliver sustainable shareholder returns even amid short-term volatility in the gold price.

Summary

The theme of AI-driven capital expenditure is expected to continue and accelerate into 2026, keeping investors focused on both the opportunities and the surrounding hype. One debate that is likely to continue is whether the tech-led ‘Magnificent 7’can maintain their ‘magnificent’ status if significant portions of their vast cash reserves are devoted to AI investment, potentially weighing on margins and testing the premium investors have historically been willing to pay.

In this environment, we continue to advise that diversification remains an investor’s best tool not only for risk management, which is crucial, but also to capture opportunities arising from the widening gap between valuations and underlying fundamentals.

If you have any questions or concerns about your investments or your future plans, don’t hesitate to get in touch with your TPO Adviser or contact us centrally through our website.

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This information in this article is correct as at 14/11/2025.

This market update is for general information only, 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 originally invested; past performance is not a guide to future returns.