Following the latest Bank of England base rate cut on 8th May of 0.25%, to 4.25%, many households and investors are wondering what the implications might be for their financial plans. And if the forecasts are to be believed, it won’t be the last one. While that might sound like good news for borrowers, it’s not such a rosy picture for savers. And for those with investments, pensions or mortgages, now could be the right time to give your finances a once-over. 

Arrange your free initial consultation

Good news for borrowers – not so great for savers 

For savers, the prospect of a lower base rate is generally unwelcome. Interest paid on savings accounts typically tracks the base rate to some extent, and we had already seen a downturn in fixed-term savings rates, in anticipation of the base rate decision. Variable rates are likely to follow suit now the rate cut has happened.  

Providers often anticipate base rate cuts and adjust their offerings accordingly, meaning the window to secure attractive rates may be closing. So if you’ve been toying with the idea of locking in a fixed rate, you may want to get on with it. There’s a decent chance that what’s on offer now won’t be around much longer, and holding off could mean settling for less.   

Take a look at our Best Buy tables to see the best rates available.

Investors: time to get your money working again? 

Over the last couple of years, rising interest rates made cash a pretty comfortable place to sit. But if those rates are now heading south, we expect more people to look again at the stock market, to stay ahead of inflation and keep their money working harder.  

From a broader investment standpoint, lower interest rates can be a boost to asset prices as borrowing becomes cheaper, for individuals and businesses, and the returns from cash become less attractive. That often supports growth in certain sectors and can offer opportunities for investors who know where to look.

For those who don’t know where to look, the investment experts at TPO can help. We take this kind of market insight into account when reviewing and managing client portfolios - helping investors stay aligned with their goals, even as economic conditions shift.

That said, keeping enough cash on hand for short-term needs is still vital - maintaining a sensible cash buffer remains important to provide flexibility and peace of mind during periods of market volatility. It means you’re not forced to sell investments during market dips.

Thinking about an annuity? Timing matters 

If you’re nearing retirement and considering buying an annuity, the base rate change is something to pay close attention to. Falling interest rates tend to drag annuity rates down with them, meaning the income you can secure for life may end up being lower than it was just a few weeks ago. And with annuities enjoying something of a resurgence recently, it’s not just about whether you buy one – it’s also about when you do and how you go about it. The key here is not to take the first offer from your pension provider. There are often better deals available elsewhere, particularly for those with any health issues - even minor ones can make a difference.  

Deciding whether an annuity is the right option is not always straightforward, and making well-informed choices in retirement is essential. This is an area where professional advice can be invaluable. 

Mortgage holders could benefit - but make the most of it 

Mortgage holders may view a base rate cut more favourably. Those on variable rate deals or trackers will likely see their monthly payments fall, while those due to remortgage could benefit from lower rates than might otherwise have been available.  

But don’t just enjoy the lower cost and leave it at that. If your mortgage is more affordable, why not consider overpaying a little each month (if your lender allows) or using the extra cash to top up your pension or ISA? It’s all about making your money stretch further while the opportunity’s there, to make your future financial position healthier.  

For many, the value of impartial, expert advice cannot be overstated. Whether you are planning for retirement, managing investments or looking to optimise your savings, a tailored financial plan can offer both clarity and confidence.  

If you’re unsure how the recent base rate decision might affect your financial plans, or if you simply want to make sure you’re on the right path, now may be the ideal time to get in touch. 

Arrange your free initial consultation

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

Investment returns are not guaranteed, and you may get back less than you originally invested. Past performance is not a guide to future returns.

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

Question: As I was a bit late getting organised, I put £20,000 into an easy-access cash ISA at the end of the last tax year in a last-minute effort to use up my allowance, but now I’d like to move it to a fixed-rate ISA. Are there any restrictions on transferring it so soon? And will the transfer affect this year’s ISA allowance?

It was a smart move to make use of your ISA allowance before the end of the last tax year—especially with increasing speculation that the current £20,000 cash ISA limit could be reduced in the near future. Every year, many people miss out simply by not acting in time, so even a last-minute deposit means you’ve managed to make the most of your tax-free savings allowance.

Choosing an easy access ISA was a sensible decision too. It gives you the flexibility to pause and reflect on how and when you might need access to that money - perfect for reassessing your financial goals without locking anything in immediately.

Now to your question - yes, you absolutely can move funds from an easy access ISA to another ISA, even if you just opened it. There’s no minimum time you need to hold the funds before transferring. You can choose to transfer the full amount or just a portion, either to a new provider or within the same one, especially if they’re offering a competitive fixed rate that fits your needs. But it’s always wise to shop around to get the best returns. You can find our best buy tables here.

Just one crucial reminder: always transfer using your new provider’s official ISA transfer process. Withdrawing the money yourself and redepositing it could strip away the tax-free status and use up part or all of the new year’s ISA allowance.

For those who have already opened the current year’s cash ISA, following the ISA rule changes introduced in April 2024, you now have even greater flexibility when it comes to transferring. Unlike before, when only full transfers of the current year’s ISA were allowed, you can now make partial transfers too - giving you more control over how you manage your savings.

Importantly, as you managed to open and deposit cash into your ISA ahead of the end of the tax year on 5th April 2025, you can still deposit up to £20,000 until 5th April 2026, as well as transferring last year’s easy access ISA.

That said, it’s worth getting a move on - both with transferring your existing ISA and opening a new one. There’s a lot of talk in the markets about possible interest rate cuts in the near future. If you’re considering locking into a fixed rate, now might be the time to act before the most attractive deals disappear. Fixing your rate now could help protect your savings from potential rate drops, giving you the chance to enjoy inflation-beating, tax-free interest over the term.

And remember, using your new ISA allowance sooner rather than later means you start earning tax-free interest earlier, which could make a meaningful difference over time. 

Ask me a question

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. 

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

It’s been a turbulent time for global markets, with headlines dominated once again by political uncertainty in the United States. As Donald Trump edged back into the spotlight, the resulting volatility in global markets created concern for investors everywhere, including those with UK pensions, and this concern shows little sign of abating anytime soon.

While what happens in US politics may seem far removed from your pension pot, global markets are of course interconnected. A shake-up in the US with the war on tariffs, whether economic or political, has rippled across global stock markets, including those that your pension may be invested in. It’s little wonder that those who are retired, nearing retirement, or even still building a retirement savings pot, are concerned, so it's worth understanding what market volatility could mean for you and what you can do to protect your long-term financial stability.

Arrange your free initial consultation

For those recently retired: keeping your drawdown plan sustainable

If you’ve retired in the past five years and are relying on drawdown of your pension to provide income, stock market turbulence could present real challenges. When investment values fall and you’re withdrawing from your pension at the same time, you may be forced to sell more units to generate the same level of income. This can quickly erode the long-term sustainability of your pension fund, particularly if markets take time to recover.

One of the most practical ways to guard against this is to ensure you have a cash buffer in place. Rather than drawing from your pension when markets are down, using cash savings to cover income needs can help protect the value of your pension and give your investments time to recover. This is known as sequencing risk.  We generally recommend clients hold between three to five years’ worth of “uncovered expenditure” in cash. This refers to the gap between your annual spending and any secure income you may receive from sources like the State Pension or annuities. Having this buffer not only preserves your pension during downturns but also gives you peace of mind and flexibility in uncertain times.

For those on the cusp of retirement: review, don’t react

If you're planning to retire in the next year or so, recent market instability can be especially unsettling. You might be questioning whether your savings will stretch far enough or even wondering if you need to delay your retirement. These concerns are completely valid, but the most important thing to avoid is making knee-jerk decisions based on short-term market moves.

Rather than reacting emotionally, take this opportunity to review your retirement plan. Assess whether your goals remain achievable given the current market backdrop. We use cashflow modelling to help clients understand how their financial future might look under different economic scenarios. This kind of planning is useful not only during turbulent periods, but also when other life circumstances change, such as spending needs or health considerations.

Continuing to contribute to your pension, if possible, remains a smart move. Despite market dips, pensions are still one of the most tax-efficient ways to save. Higher-rate taxpayers, for example, benefit significantly from tax relief, which helps boost long-term returns. Ongoing contributions also allow you to benefit from pound-cost averaging, helping you buy investments at lower prices when markets fall. Over time, this can enhance the overall value of your pension pot.

It’s also a good idea to review your pension’s investment strategy to ensure it aligns with your changing timeline and appetite for risk. For some, this may mean reducing exposure to riskier assets. For others, especially those with longer-term plans, staying invested in growth assets may still make sense. Either way, professional financial advice can help clarify your options and ensure any changes are based on sound financial reasoning, not short-term fear.

For those around 10 years away: stay focused on the long game

If you’re still a decade or more away from retirement, your pension remains in the accumulation phase, and time is very much on your side. While short-term market downturns can feel unnerving, they’re less likely to have a lasting impact on your long-term retirement goals. The key message for this group is simple: avoid panicking and stay invested.

That said, now is a good time to check the specifics of how your pension is managed, especially if you’re in a lifestyle fund. These funds typically begin to switch from equities to lower-risk assets like bonds in the 10 to 15 years before your target retirement date. While the principle is sound, the automatic nature of this switching process can be problematic if it coincides with a market dip. You could end up selling equities at a loss – not because it’s the right financial decision, but because that’s how the fund is structured.

Understanding when your lifestyle fund begins this transition, and whether the retirement age it targets aligns with your actual retirement plans, is essential. If there’s a mismatch, it may be time to take control and ensure the fund’s timeline matches your own. The same goes for those using Self-Invested Personal Pensions (Sipps), where greater flexibility means greater responsibility. Now could be a good time to reassess your asset mix and make sure it remains appropriate for your long-term goals.

Even though this group is less immediately exposed to market volatility, making the right decisions now can make a big difference in the future. Whether it’s tweaking your investment strategy, increasing contributions, or just ensuring your retirement date is correctly reflected in your fund choices, these actions can help keep your pension on track.

Why advice matters more than ever

Political and economic uncertainty is nothing new, but periods of heightened instability, such as the one we’re currently witnessing, highlight just how important it is to have a robust financial plan in place. Regardless of where you are on your retirement journey, taking a step back to review your situation, rather than rushing into changes, is key.

For many, the support of a professional financial planner can make all the difference. We can help you assess your position, model different retirement outcomes, and ensure you’re making informed decisions that protect and grow your wealth over time. At a time when the headlines can feel overwhelming, having expert guidance tailored to your circumstances can provide much-needed clarity and confidence.

If you’re unsure how recent market movements might affect your retirement plans, or if you simply want to make sure you’re on the right path, now may be the ideal time to get in touch.

Arrange your free initial consultation

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

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available.  Your pension income could also be affected by the interest rates at the time you take your benefits

Past performance is not a guide to future returns.

The Financial Conduct Authority (FCA) does not regulate tax advice and cashflow modelling.

You may have to pay income tax on investment income generated from your UK investments. The tax rate on your investment income will vary depending on the type of income you receive and the type of investment product you receive it from. Investment income, when liable to income tax, will count towards your total UK income when calculating your income tax liability in a given tax year. Examples of investment income include dividends or interest payments received from investments.

Arrange your free initial consultation

You may also be liable to tax on capital gains you make on your investments, i.e. the difference between the price you sell an investment for above the price paid for that investment. Any capital gain that breaches your annual exemption (currently £3000) may be liable to Capital Gains Tax (CGT). CGT is payable on stocks and shares, which can either be held directly or within an unwrapped portfolio, sometimes referred to as a General Investment Account (GIA) or Share Account.

Although most people may not think of their pension as an investment, pension funds have the ability to be invested in the stock market the same way as any other investment. Pensions are a tax-efficient way of saving for retirement as the money within your pension grows free of any income tax on income and CGT on capital gains. However, it is worth noting that any income you take from your pension (in excess of the 25% tax-free amount – subject to protection and limits) will be taxed at the marginal rate of income tax.

When do you pay tax on investments?

Tax on investments applies when income or gains exceed the tax-free or tax-free deferred allowances set by HMRC. You will generally have to pay tax on investment income (such as dividends or interest) if it exceeds the relevant personal, savings, or dividend allowances. Similarly, capital gains tax is payable when profits from the sale of certain investments exceed the annual CGT allowance.

Taxes on investments are assessed each tax year (6th April to 5th April the following year). If your investment income or capital gains exceed the relevant thresholds, you may need to report them through Self-Assessment and pay any tax owed by 31st January following the end of the tax year.

How much is tax on investment income and gains?

Tax on investment income and capital gains come at different rates, depending on the type of income you receive and the type of capital gains made. Most rates of tax on investment income and capital gains are dependent on the individual’s marginal rate of income tax. Your marginal rate of income tax is the tax rate you would pay on your next pound of income. An individual’s marginal rate of income tax can be calculated by adding together all relevant total UK earnings for a tax year and then seeing which tax bracket they fit into.

Dividend income (in excess of the tax-free allowance) is taxed at the dividend rate of income tax. This is 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers, and 39.35% for additional rate taxpayers.

Typically, all other sources of investment income, including interest payments, are taxed at the same rates as earned income. These rates are 20% for a basic rate taxpayer, 40% for a higher rate taxpayer, and 45% for an additional rate taxpayer.

The rate of CGT for capital gains on investments is 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers.

For basic rate taxpayers, if the gain, when added on top of all other sources of income, pushes you into the higher rate band, the part that falls within the higher rate band will be subject to the higher rate of CGT. These rates are also applicable for capital gains on residential property. CGT is typically not payable on any increase in value of your main residence from the point of purchase until when sold.

How to reduce taxes on investment income and gains

There are various allowances that allow you to receive investment income and make capital gains on your investments without paying tax of any kind. Above these ‘thresholds’ you will pay the tax rates outlined above on investment income and capital gains. 

• Capital Gains Tax allowance: An individual can make £3,000 worth of capital gains within a tax year without paying any CGT. If total capital gains equate to more than this allowance, you pay CGT on the difference between the total gain value and the allowance. If you generate a capital loss in any given tax year (i.e. investments are sold for less than they are bought for), you can use these losses to offset potential gains in future tax years provided the loss has been registered within 4 years.
• Personal allowance: the personal allowance is how much income from all sources one can receive in a tax year before they are subject to income tax. Currently the personal allowance is £12,570 per tax year. 
• Starting rate for savings: If your taxable non-savings income is below £17,570 for the tax year, you may also receive up to £5,000 of interest from investments and not have to pay tax on it. This allowance is reduced by £1 for every £1 of non-savings income above the personal allowance. 
• Personal savings allowance: this is an annual tax-free allowance that protects interest payments from tax. The allowance you get depends on what rate of tax you pay. Basic rate taxpayers have an allowance of £1,000 and higher rate taxpayers have an allowance of £500. Additional rate taxpayers do not receive an allowance. 
• Dividend allowance:  the dividend allowance allows you to receive dividends of £500 per tax year before you start paying tax. Above the allowance, the dividend rates of income tax, highlighted above, apply to any dividend income.  

Tax-free savings and investments

There are several tax-efficient savings and investment options available to help minimize tax liabilities on income and capital gains.

Cash ISAs

A Cash ISA (Individual Savings Account) allows you to save money without paying tax on the interest earned. You can contribute up to £20,000 per tax year into a Cash ISA or split the allowance between the multiple ISAs that are available, and all interest is tax-free. This is a good option for those looking to save without risk, as Cash ISAs work similarly to traditional savings accounts.

Stocks & Shares ISAs

A Stocks & Shares ISA enables you to invest in a range of assets such as shares, bonds, and funds without paying tax on dividends, interest, or capital gains. Just like Cash ISAs, you can invest up to £20,000 per tax year, or split the allowance between the multiple ISAs available, and any gains made within the ISA remain tax-free.

Saving into a Pension

Contributions into a pension scheme receive tax relief (provided the relevant conditions are met), making pensions one of the most tax-efficient ways to save for the future. Pension contributions receive tax relief at the individual's highest rate of income tax, and the funds grow free from both income tax and CGT. Upon retirement, typically 25% of the pension pot can usually be withdrawn tax-free, with the remainder subject to income tax when drawn.

How much tax you pay depends on your earnings   
The amount of tax you pay depends on your total income for the year, which includes earnings from employment, pensions, benefits, savings, investments and any applicable reliefs or exemptions.

Tax on Interest: 

If you earn up to £17,570

To determine your tax-free allowance:  

Start with your Personal Allowance, which is £12,570.

£15,640 if you are claiming the Blind Person’s Allowance.

Add up to £6,000 – this covers the maximum amount of the Starting Rate Band for savings and the Personal Savings Allowance (PSA).

Subtract any non-savings income, such as wages or pension.

To put this into practice, see the two examples below based on the standard £12,570 Personal Allowance:

Someone with a £7,000 salary can earn £11,570 in tax-free savings interest (£18,570 minus £7,000).

Someone with a £15,000 salary can earn £3,570 in tax-free savings interest (£18,570 minus £15,000).

If you earn £17,571 to £100,000

For those earning between £17,571 and £100,000, your Personal Savings Allowance (PSA) determines how much savings interest you can earn tax-free.

Tax-Free Allowances based on Earnings:

If you earn £17,570 to £50,270

You can earn up to £1,000 in savings interest tax-free.

Any interest above this amount is taxed at 20% (the basic rate).

If you earn £50,271 to £100,000

You can earn up to £500 in savings interest tax-free.

Any interest above this is taxed at 40% (the higher rate).

If you earn £100,001 to £125,140

For those earning between £100,001 and £125,140, your Personal Allowance goes down by £1 for every £2 that your adjusted net income is above £100,000.

Tax-Free Allowances based on Earnings

If you earn £100,001 and £125,140

You can earn up to £500 in savings interest tax-free.

Any interest above this is taxed at 40% (the higher rate).

If You Earn Over £125,140

Once your annual income exceeds £125,140, you lose the Personal Savings Allowance and Personal Allowance entirely. All interest earned on savings will be taxed at the additional rate of 45%.

Tax on Dividends:  

Most of your investment income is taxed at the same rate as your other income and counts towards your Personal Allowance. However, there is a separate tax-free allowance if you own shares or dividend-paying OEIC/unit trust funds.

For the upcoming 2025/26 tax year, you can earn up to £500 in dividends without paying tax. This is the Dividend Allowance, and unlike tax on interest, the dividend allowance is available to anyone no matter their level of income. 

How to report investment income and capital gains on tax return

You must complete and submit a Self-Assessment tax return to HMRC if you have received investment income or made capital gains above your tax-free allowances in any given tax year. Note, there are other options for reporting investment income if it does not exceed £10,000 for a tax year and you wouldn't ordinarily complete a tax return—for more information, read the following information around Tax on dividends and Applying tax-free interest on savings.

To complete a Self-Assessment tax return to report investment income or capital gains, you should do so after the tax year ends on 5th April. You then have until midnight on 31st January following the tax year end to file your Self-Assessment tax return online. If you do not usually send a tax return, you need to register by 5th October following the tax year in which you received investment income or made capital gains.

How can we help?  

Our tax planning services include certain products, allowances and guidelines to ensure your money is working its hardest and the tax you pay is minimised where possible. 
Our advisers stay on top of all changes to tax legislation within the UK and notify clients as to how and why changes may affect their financial situation. 
To find out more about how we can help or for a free initial consultation why not get in touch. 

Arrange your free initial consultation

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

This article is for information only and does not constitute individual advice.

A pension is a long-term investment not normally accessible until age 55 (rising to 57 from April 2028). The value of your investments (and income from them) can go down as well as up, so you may get back less then your originally invested.

Your pension income could also be affected by the interest rate at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change. 

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.

You should seek advice to understand your options at retirement.

The Chancellor previously confirmed that she only wanted to make major tax and spending announcements once a year, with this being in the Autumn Budget.  Therefore, no tax changes were expected and none were delivered.

The headline from the speech was that the Office for Budget Responsibility (OBR) has halved its 2025 growth estimate for the UK from 2% to 1% in 2025, but it has upgraded its longer term forecasts from 2026 onwards.

Alongside this, previously announced cuts to Welfare and Overseas Aid payments, Increases in Defence spending and Planning Reforms were confirmed.

In terms of signposting future changes that could be announced:

• The government confirmed it is looking at options to reform ISAs to “get the balance right between cash and equities to earn better returns for savers” which could indicate limited cash ISA allowances relative to Stocks and Shares ISA allowances.
• The government will also be holding a series of roundtables with key stakeholders over April as it considers the role of tax reliefs for Enterprise Management Incentives Schemes, Enterprise Investment Schemes and Venture Capital Trusts.

After the pension changes over the last few years and, in particular, last year’s confusion as the new pension rules were ‘bedded in’ and legislation adjusted, it was a relief to have no further tinkering with pension rules.

We already know of course, of various areas of impending change, including the removal of the ‘domicile’ tax regime from 6 April this year, the Business Property Relief and Agricultural Property Relief changes from April 2026 and of course the Pensions and IHT changes from April 2027 – which we await further details on.

These areas and others, including the employer National Insurance increases, are covered off in our Autumn Statement 2024 summary.

There were some changes announced to Universal Credit from 2026 onwards and from this summer it will become possible for those newly liable for the High Income Child Benefit Charge to pay the tax through PAYE rather than via self-assessment.

If you’d like to discuss any of the announcements from the Spring Statement or Autumn Budget last October, and are concerned about how they will affect your financial plan, why not get in touch and speak to one of our expert advisers.

Arrange your free initial consultation

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.

The financial support provided by parents and grandparents has long played a role in family life, but in recent years, it has become a defining force in the broader economy. Dubbed the ‘Bank of Mum and Dad’, this intergenerational flow of wealth is increasingly crucial in helping younger people buy their first homes, fund their education, and establish financial security.

Arrange your free initial consultation

As house prices have surged far beyond wage growth, saving for a deposit has become an uphill battle for many. The average first-time buyer in the UK now needs around £60,000 for a deposit, a sum that would take years to accumulate without external support. Faced with this reality, nearly half of young homebuyers now rely on financial help from family to get onto the property ladder. This trend is even more pronounced in high-cost areas such as London and the South East, where deposits often exceed £100,000. Without parental contributions, home ownership is increasingly out of reach for those without inherited wealth.

A similar pattern is evident in higher education, where rising tuition fees and the high cost of living mean many students graduate with substantial debt. While some rely on student loans, others benefit from parents who cover their fees or living expenses outright. This financial head start can have long-term advantages, allowing some graduates to begin their careers unburdened by debt, while others face years of repayments that delay their ability to save, invest, or buy property.

What does this mean for society?

Beyond individual families, the ‘Bank of Mum and Dad’ has wider economic implications. As wealth is increasingly passed down through gifting, it alters patterns of financial security and social mobility. Those who receive help from their parents enjoy an advantage not only in property ownership but in long-term financial stability, while those without such support find it harder to build wealth. 
Research from the Institute for Fiscal Studies confirms that parental earnings are now a stronger predictor of young people’s future income than in previous generations, reinforcing economic divides.

The 7-year rule in inheritance tax

For wealthier families, gifting money to children can also serve a strategic purpose. Under current UK tax laws, financial gifts made more than seven years before the giver’s death typically fall outside of inheritance tax calculations. This means that parents and grandparents who transfer wealth earlier can help reduce the potential tax burden on their estate while providing meaningful support at a time when it is most needed. Given that inheritance tax is charged at 40% on estates above the £325,000 threshold known as the nil rate band (or £500,000 when passing a main residence to a direct descendant, known as the residence nil rate band), careful legacy planning can result in substantial savings.

However, parental generosity is not without its risks. As life expectancy increases and retirement lasts longer, many parents must balance their desire to support their children with their own financial security. Rising care costs and later-life expenses mean that some retirees could deplete their savings too quickly, potentially leaving them reliant on state support or requiring assistance from their own children in later years. A survey by Aegon suggests that over half of UK adults anticipate financially supporting their parents as they age, illustrating how wealth flows between generations in complex and often unpredictable ways.

The future of the ‘Bank of Mum and Dad’

Despite concerns about retirement preparedness, the influence of the ‘Bank of Mum and Dad’ is unlikely to diminish soon. Housebuilding targets remain unmet, real wages have not kept pace with property prices, and the need for financial support among younger generations shows no signs of easing. As a result, families will continue to navigate the challenges of intergenerational wealth transfers, seeking to strike a balance between supporting their children and securing their own financial futures.

For those considering passing on wealth, early planning is key. Seeking professional financial advice can help families structure gifts and inheritance in the most tax-efficient way, ensuring that wealth is preserved and maximised for future generations. As economic trends continue to shift, the role of the ‘Bank of Mum and Dad’ is, for the near future at least, here to stay.

If you’re looking for advice on the best way to support your loved ones, why not get in touch for a free initial consultation to see how we can help.

Arrange your free initial consultation

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 quiet squeeze on middle-class workers has pushed the number of higher-rate taxpayers past five million for the first time. Official figures show that an additional 680,000 people have been pulled into the 40 percent tax bracket compared to the previous tax year.

This milestone comes amid concerns that Rachel Reeves may extend the ongoing freeze on personal allowances and tax thresholds in her upcoming mini-Budget, despite pledging not to introduce further tax increases.

Many have called out this move as yet another example of ‘stealth tax’ - or to give it the formal name, ‘fiscal drag’.

The future of the freeze

The latest data for 2022/23 is just the beginning, with projections suggesting the total number of higher-rate taxpayers could climb to nine million by 2028, potentially reaching ten million by the end of the decade.
Income tax thresholds were originally frozen in 2021 by then-Chancellor Rishi Sunak to help repair public finances following the Covid-19 pandemic.

While the policy was initially set to last until 2026, Jeremy Hunt later extended it to 2028.
Normally, tax thresholds rise in line with inflation. However, when they remain fixed, rising salaries push more people into higher tax brackets—the phenomenon known as fiscal drag.

To make matters worse, those pulled into the 40% tax bracket are at risk of falling into the 60% tax trap.

What is the ‘60% tax trap’?

Since 2010, those earning more than £100,000 a year have had their personal allowance tapered away until it is completely eliminated for earnings over £125,124.

The ‘60% tax trap’ refers to the income band of £100,000 to £125,000 between which earners in England and Wales will effectively experience a 60% tax rate on their income. This is because for every £2 you earn over £100,000 each year, you lose £1 worth of your £12,570 tax-free personal allowance. Your tax rate only returns to the normal amount of 40% after the entirety of your personal allowance for that year has been deducted, which is at just over £125,000.

For example, an £100,000 earner who receives a bonus of £1000 will only receive £400 of his bonus. This works out as follows:
He immediately loses £400 to the standard 40% tax, leaving him £600.

As he loses £1 for every £2 earned over £100,000, his £1000 bonus translates to £500 deducted from his original tax-free personal allowance. This deduction of £500 is then retroactively taxed at his current standard rate of 40%, meaning he pays another £200.

After paying the original tax of £400 and then the subsequent tax of £200, he is left with only £400 of his original £1000 bonus, meaning he has effectively experienced a 60% tax rate.

How can I avoid falling into the tax trap?

Fortunately, the solution is fairly straightforward. By choosing to make pension contributions on any excess income you earn over £100,000, you can effectively prevent your taxable income from going above the £100,000 threshold and into the 60% tax trap.

Thanks to the Government ‘bonus’ that is paid into your pension whenever you make a contribution, by opting to pay excess income into your pension, you not only save your excess from being taxed 60%, but you also gain a little more than you put in.

HMRC does not consider the excess that you put into your pension as part of your taxable income and therefore will adjust your income back down to £100,000, saving you from the 60% tax trap while also paying you a little extra for putting some pension savings away. It’s a win-win for any serious saver.

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

Arrange a free initial consultation

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 or tax advice.

Sadly, divorce can happen at any age and although encouragingly divorce is on the decline for most, although divorces among the over 60s doubled between 1993 and 2019 according to figures from the Office for National Statistics (ONS). 

Clients that I speak to going through a divorce typically prefer a clean break and are considering their future living arrangements.

It is often the case that the marital home is by far the largest asset in any divorce financial settlement. It could be that the couple will decide to sell the property and split the proceeds and purchase their own properties. More often than not however, I find that one party wishes to remain in the marital home if this is possible.  

Can I use equity release to buy out my partner?

Releasing some equity from the marital home through an equity release arrangement can enable one of the divorcing party to continue living in the marital home and become the sole owner of the property, providing funds for the other party to pay towards or purchase outright a property for them to live in.

The moving party could also take out an equity release arrangement if needed, to bridge any shortfall between the monies released to them from the marital home to pay towards their own property and the purchase price of their new home.  This enables both parties to maintain their status as homeowners following divorce. 

The most popular type of equity release arrangement is a Lifetime Mortgage.  

What is a Lifetime Mortgage?

A Lifetime Mortgage, as the name suggests, is a mortgage that is taken out over your lifetime. It does not need to be repaid to the lender until either the death of the homeowner or if the homeowner were to move permanently into care when the property would typically be sold.  

The youngest age a homeowner can take out a Lifetime Mortgage is aged 55.

Lifetime Mortgages have fixed interest rates, which are fixed for the home-owners lifetime from outset.

There is no requirement to service the interest and make any capital repayments of the Lifetime Mortgage during your lifetime, although homeowners can do so if they wish and if it is affordable. Therefore, taking out of a Lifetime Mortgage need not negatively impact your cash flow at all.

There are no affordability checks undertaken by the lender when taking out a Lifetime Mortgage.  But the taking out of a Lifetime Mortgage could impact means-tested benefits being received, so these do need to be taken into consideration.

A Lifetime Mortgage is portable so if the divorcing parties who take one out decide to move in the future, they can transfer the borrowings onto their new property, subject to the new property being of sufficient value to support the borrowings and it meets the lender’s lending criteria.

Lifetime Mortgages nowadays have a lot more flexible features than in years gone by, when equity release received a lot of bad press.  An additional attractive feature is the No Negative Equity Guarantee.   This guarantee means that homeowners or their estates will never owe the lender more than the property is worth when it is sold.  Typically, there will be equity remaining in the property as the homeowners will continue to own 100% of the property so will benefit from any increases in its value.

It should also be considered if the homeowners qualify for a more conventional residential mortgage if affordable.

How a Lifetime Mortgage works in practice

I think it is always good to reference an actual client situation where a Lifetime Mortgage was used to achieve a clean break in a divorce.  I was asked to consider the financial position of a very nice gentleman,  aged 74, whose  marriage had irretrievably broken down.  The main asset of his marriage was the property worth £800,000, which was unencumbered.

His main objectives consisted of the following:

• Needed to fund a lump sum of £375,000 to pay his soon-to-be ex-wife as part of a divorce settlement agreed at a fixed for life interest rate.
• Wanted to preserve as much of his liquid capital as possible, but for this to be balanced against the interest rates applicable for a Lifetime Mortgage, which are higher for higher amounts of equity released.
• No plans to move but may look to downsize in around 5+ years.
• Wanted to continue to own his property in full and benefit from any increases in the value of his property.
• Wanted to have the ability to transfer the borrowings under the Lifetime Mortgage to a new property, if and when he moves in the future, and repay any balance the lender requires at the time, without any early repayment charges being imposed.
• Wanted to have the ability to make repayments of up to 10% of the amount borrowed through a Lifetime Mortgage when affordable, which most lenders allow without any early repayment charges being imposed. 

We were able to meet all of the gentleman’s above objectives by taking out a suitable Lifetime Mortgage.  His soon-to-be ex-wife was herself able to use the lump sum received to pay towards a property for her to live in.

The gentleman was relieved to be able to continue living in the property he loved and have sufficient cash flow coming in to provide him with a comfortable lifestyle as there isn’t the requirement to service the interest or repay any capital for the Lifetime Mortgage over his lifetime.

He was a chap who told me he swims a mile regularly a few times a week.  He and I have that in common though not sure I will be able to do that at age 74!

Can we help you? 

If you need help in exploring if equity release can facilitate a divorce settlement, please do get in touch.  As independent financial advisers, we will consider your whole financial situation to ensure you get the right outcomes. Why not give us a call for a free initial discussion today and see how we can help you.

Arrange your free initial consultation

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

Please note this is a lifetime mortgage to understand the features and risks, ask for a personalised illustration.

As the end of the tax year approaches, there is a limited window to take full advantage of available tax breaks, allowances, and financial planning opportunities. Acting now can help ensure you are making the most of your savings and investments.

10 Things to do before the end of the tax year

Arrange a free initial consultation

1. Use your ISA allowance

One of the most valuable allowances to utilise before the end of the tax year is the Individual Savings Account (ISA) allowance. ISAs allow you to save or invest up to £20,000 per year tax-free, and if you do not use your allowance before the tax year ends, you lose it. This means you cannot carry over any unused portion into the next tax year. If you have not yet maximised your ISA contributions, now is a good time to do so. 

2. Transfer your ISA?

While making use of your unused ISA allowance you could also consider whether your existing ISA arrangements continue to be appropriate. Transferring funds from a Cash ISA to a Stocks and Shares ISA does not count towards your annual ISA allowance. You may want to consider transferring your Cash ISAs to a Stocks and Shares ISA to potentially achieve better long-term growth. However, this depends on your personal financial goals and risk appetite. It’s important to fully understand the risks involved and seek independent financial advice if necessary before making any decisions.

3. Pension contributions

Pension contributions are another key area to review before the tax year ends. Making the most of pension tax relief can significantly enhance your retirement savings. Contributions to pensions receive tax relief at your marginal rate, meaning higher-rate and additional-rate taxpayers receive substantial benefits. If you have not yet used your full annual allowance of £60,000, you may also be able to carry forward unused allowances from the past three years – subject to your relevant earnings in those years and provided you were a member of a pension scheme during that time.  Checking your contributions now and making any additional payments before the deadline can help you maximise the tax advantages available.

4. Reduce your Capital Gains Tax

Capital Gains Tax (CGT) planning is also worth considering. Each individual has an annual CGT allowance, which for the 2024/25 tax year stands at £3,000. If you are planning to sell assets such as shares, property, or other investments, you may want to do so before the end of the tax year to take advantage of this exemption. Spreading the sale of assets over multiple tax years or transferring assets to a spouse or civil partner can also help reduce overall tax liability, provided it is a genuine gift. Reviewing your investment portfolio now could identify opportunities to realise gains while minimising tax exposure.

5. Charitable giving

Charitable giving is another area where tax efficiency can be maximised. Donations made through Gift Aid allow charities to reclaim basic-rate tax on your contributions, and higher-rate taxpayers can claim additional relief through their tax return. If you are considering making charitable donations, doing so before the tax year ends ensures that any applicable tax relief can be claimed in this tax period. This not only benefits the causes you support but also provides an opportunity to reduce your tax bill.

6. Business owners & Self-employed

For business owners and self-employed individuals, it is important to review income and expenses before the tax year closes. Ensuring all allowable expenses are claimed can reduce taxable profits and overall tax liability. Making pension contributions through a business can also provide tax-efficient savings while reducing the company’s taxable income. If your business has made a profit, considering investments in capital expenditure before the end of the tax year may allow you to take advantage of available tax reliefs. However, accountancy advice should be sought before going down this route.

7. Use personal allowances

Using personal allowances efficiently is another important step before the tax year ends. Every individual has a tax-free personal allowance, and for those who are married or in a civil partnership, the Marriage Allowance or transferring assets between spouses can help optimise tax efficiency. Reviewing how income and assets are structured within a household can help ensure that all available allowances are fully utilised.

8. Junior ISA allowance

If you have children, making use of the Junior ISA allowance is another way to maximise tax-efficient savings. You can contribute up to £9,000 per tax year into a Junior ISA, helping to build a long-term financial foundation for your child while benefiting from tax-free growth. Those considering financial gifts to children or grandchildren should also be aware of the annual gifting allowance of £3,000, which allows individuals to make tax-free gifts without being subject to inheritance tax.

9. Make the most of all allowances & reliefs

With the end of the tax year fast approaching, taking action now can ensure that you are making the most of the allowances and reliefs available to you. The tax system is complex, and missing out on valuable opportunities can mean paying more tax than necessary. A financial adviser can help navigate the various options, ensuring you make informed decisions tailored to your financial situation and long-term goals. Seeking professional advice can also provide peace of mind, ensuring you are fully compliant with tax regulations while optimising your financial position.

10. Take professional financial advice

Time is running out, but there is still an opportunity to make strategic financial decisions before the tax year ends. Reviewing your savings, pensions, investments, and allowances now will put you in a stronger position for the future. If you are unsure about the best course of action, consulting a financial expert can help you take full advantage of the tax-saving opportunities available before it is too late.

Arrange a free initial consultation

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

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

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

The latest figures from The Office for National Statistics (ONS) revealed Britain’s population could skyrocket in the next few years.

The figures, based on current and past trends, were used by the ONS for population projections. Over the decade from 2022, net migration is expected to add 4.9 million people to the UK’s population, taking the total from 67.6 million people in mid-2022 to 72.5 million people by mid-2032.

The data, released on Tuesday, assumes net migration will average around 340,000 a year from mid-2028, which is actually lower than current levels. With natural births and deaths currently cancelling each other out in the UK, this population growth will come almost entirely from migration.

Arrange a free initial consultation

James Robards, from the ONS, said: “The UK population is projected to grow by almost five million over the next decade. The driver of this growth is migration, with natural change – the difference between births and deaths – projected to be around zero.”
“Our latest projections also highlight an increasingly ageing population, with the number of people aged over 85 projected to nearly double to 3.3 million by 2047. This is in part because of the ageing of the baby boom generation, as well as general increases in life expectancy.”

An ageing population

As highlighted by Robards, the UK has what’s known as an ‘ageing population’, where a country has the number of older, often retired people, increasing relative to the number of younger, often working age people. The further this ratio increases, the greater the strain on the healthcare system and Government services like the state pension as the working population struggle to support the expanding older age groups.

While the increase in working age migrant workers will take some pressure off in the short-term, the gap continues to grow. That is why it is essential to not rely solely on your state pension, especially with the age of retirement continually being pushed higher in an attempt to take pressure off Government services.

Below are some of the different ‘levels’ of retirement, highlighting just how important it is to have a strong private pension if you want the maximum freedom after you retire. 

What is a ‘good’ retirement?

In the UK, retirement living standards are commonly categorised into three levels: Minimum, Moderate, and Comfortable. These benchmarks, developed by the Pensions and Lifetime Savings Association (PLSA), help individuals plan for retirement by outlining the annual income required for each lifestyle.

• Minimum Retirement Living Standard

This level covers essential needs, including housing, food, and utilities, with some allowance for social activities. As of 2024, a single person requires an annual income of £14,400 to achieve this standard. The full new State Pension provides £11,502 per year, leaving a shortfall of £2,898 to be covered by private pensions or other savings. 

• Moderate Retirement Living Standard

This standard allows for a more comfortable lifestyle, including a car, occasional holidays, and increased spending on leisure activities. A single person needs an annual income of £31,300 to maintain this lifestyle. After accounting for the full State Pension of £11,502, an additional £19,798 per year is needed from private pensions or savings. 

• Comfortable Retirement Living Standard

This level supports a more affluent lifestyle, with extended travel, higher quality food and clothing, and increased spending on hobbies. A single person requires an annual income of £43,300 for this standard. With the State Pension contributing £11,502, the remaining £31,798 must come from private pensions or other savings. 

It's important to note that these figures are based on the PLSA's Retirement Living Standards and are subject to change with inflation and personal circumstances. Additionally, the actual amount received from the State Pension depends on an individual's National Insurance contributions. Therefore, it's advisable to regularly review your retirement plans and consult with a financial adviser to ensure your savings align with your desired retirement lifestyle.

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

Arrange a free initial consultation

The Financial Conduct Authority (FCA) does not regulate tax and cash flow planning.

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