Research suggests that many retirees aren’t taking professional advice and are potentially making financial decisions they’ll regret in the future.

According to the Financial Conduct Authority (FCA) (22 September 2025), in 2024/25, less than a third of people accessing their pension for the first time took regulated financial advice.

In addition, an FTAdviser article (5 March 2026) noted that a previous survey found that many retirees will deplete their pension by their late seventies if they maintain their current withdrawal rate, leaving the average person with a nine-year shortfall. 1 in 7 already regret how much they’ve withdrawn.

Pension Freedoms provide retirees with greater flexibility but also risk

Pension Freedoms were introduced in 2015 and changed how you could access your defined contribution pension.

With a defined contribution pension, you and your employer both contribute to a pot, which is usually invested. When you retire, you use this pot to create an income. Under Pension Freedoms, you have several options, which can provide retirees with the flexibility to create an income that suits them.

However, you’re also responsible for ensuring your pension provides an income for the rest of your life. As a result, there’s a risk that you could spend too much too soon, or that a poor financial decision has a long-lasting impact.

6 steps that could help you manage pension withdrawals in retirement

1.Consider your life expectancy

The research reported by the FTAdviser suggests the average person could deplete their pension nine years before the average life expectancy, which could leave them in a financially vulnerable position.

According to the Office for National Statistics, the average 65-year-old woman has a life expectancy of 88. For men of the same age, it’s 85.

Yet, using the average figure when assessing your pension withdrawals could still leave a gap, as many people exceed this. For example, 1 in 4 65-year-old women will celebrate their 95th birthday, and 1 in 4 65-year-old men will reach 92.

2.Calculate the effects of inflation

One of the challenges of retirement planning is that you need to consider how your expenses will change over several decades. One of the factors that will affect your outgoings is inflation.

The Bank of England inflation calculator shows that an annual retirement income of £30,000 in 2015 would need to have grown to more than £41,000 by the end of 2025 simply to maintain your spending power.

As retirements are likely to span several decades, failing to factor in inflation when creating a withdrawal strategy could leave you struggling financially day to day or at risk of depleting your pension too soon.

3.Understand your guaranteed income

Having a guaranteed income that could cover your essential outgoings could offer peace of mind.

Most retirees will receive a reliable income for life from the government once they reach the State Pension Age. In addition, you may use your pension to purchase an annuity, which would provide a regular income for the rest of your life.

The amount you receive from an annuity will depend on the rates you are offered, which may be affected by your personal circumstances and external factors. You might also select an annuity where the income rises in line with inflation to preserve your spending power or provide an income for your partner if you pass away first.

You can use some or all of your pension to purchase an annuity to suit your needs. The decision is often irreversible, so it’s important to assess if an annuity is right for you first.

4.Assess your drawdown strategy

One way you might access your pension is known as flexi-access drawdown. This allows you to withdraw money from your pension and adjust the amount to suit your needs.

For many retirees, their income needs will change. So, this option can be valuable, and it’s important to calculate what your sustainable spending rate is to avoid running out of money.

Working with your financial planner to create a cashflow model could help you visualise how long your pension would last, depending on different withdrawal rates, including if your income needs rise and fall. It’s important to note that while a cashflow model can be useful when making financial decisions, the outcome isn’t guaranteed.

5. Make potential risks part of your retirement plan

You can’t always prevent events from affecting your finances, but you might be able to take steps so you’re in a better position to manage them.

For example, maintaining an emergency fund in retirement could help you cover unexpected costs, such as property repairs, or you might draw income from it during a period of market volatility if your pension remains invested.

6.Schedule regular reviews with your financial planner

Finally, scheduling regular reviews with your financial planner could provide you with an opportunity to ask questions and assess whether your withdrawals remain sustainable. By checking your pension throughout retirement, you might be in a better position to spot potential risks to your financial security.

If you’d like to arrange a meeting to talk about your pension and retirement, please get in touch.

Call our team: 01244 347 583 |  info@innesreid.co.uk | Send a message

Subscribe for more, tax, retirement and pensions practical guidance. Get helpful insights from us once a fortnight – subscribe to our latest insights and follow us on Facebook, Instagram or LinkedIn

More on tax and pensions

Guide download – Everything you need to know about the State Pension

How much should you contribute to your pension?

Is the default pension fund right for you?

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate cashflow modelling.

The post Managing your pension withdrawals to protect your retirement lifestyle appeared first on Innes Reid.

A cashflow model could help you visualise changes to your wealth

A cashflow model is a powerful tool that financial planners can use to show how your wealth might change over the long term in various scenarios.

To start, you’ll input essential information, such as the value of your assets, your income, and how you use your money each month. Then you can make certain assumptions, such as the rate of inflation, potential investment returns, or your expected retirement date, to see how your wealth might change over the years.

It’s important to note that the results of a cashflow model cannot be guaranteed, as they rely on the data added and assumptions that might prove inaccurate. However, they can provide a valuable way to visualise your long-term wealth and assess the effect of your decisions.

You could use a cashflow model to stress-test your finances

One of the reasons cashflow modelling is useful is that once it’s set up, you can adjust the assumptions to model different scenarios.

If you’re concerned about financial shocks, you can effectively use it to stress-test your finances and as an early warning system. Identifying potential gaps sooner could mean you’re in a position to close them.

As a result, cashflow modelling could help you manage worrisome “what if?” questions.

Imagine you’re the main income earner for your household and you’re worried that your family wouldn’t be able to cope if you were unable to work.

You can use a cashflow model to stress-test your finances and show how long they would last without an income. For example, you might assess how quickly your emergency fund would be depleted.

Armed with this information, you might be able to address potential weak spots in your finances.

In this case, if you found your emergency fund would only cover essential bills for two months, you might start by saving more to build it up. In addition, you may consider taking out appropriate financial protection that would provide an income if you couldn’t work due to an accident or illness, to further improve your financial resilience.

There are many other types of financial shocks where a cashflow model could be useful too, from a period of downturn leading to falling investment values to a large, unexpected household bill, such as needing to replace your home’s roof.

A cashflow model can help you assess the effects of a shock after it’s happened

If you experience a financial shock that you hadn’t previously considered, a cashflow model could still be useful.

It can be difficult to assess the long-term effect of a shock. By adding it to your cashflow model, you may be able to understand whether your goals remain on track and whether any adjustments are necessary.

Imagine you’d previously planned to retire at 65 and calculated that you’d have enough to take a sustainable income that would afford you the lifestyle you’ve been looking forward to.

However, ill health means you now need to bring forward your retirement by three years. This might not be something you’ve considered before. You’re now unsure whether you’ll be financially secure later in life or if you need to reduce your outgoings in retirement.

Updating your cashflow model following this life event could enable you to assess the long-term effects. It could give you the confidence to make decisions, even when life is unpredictable.

We could help you improve your financial resilience

If you’d like to understand if you’re vulnerable to financial shocks and how you might improve your resilience to them, please get in touch.

Speak to our team about a free one-hour consultation with an independent financial planner. It’s an opportunity to speak with an adviser about your personal circumstances and decide if financial planning is right for you.

Call our team: 01244 347 583 | Send an email: info@innesreid.co.uk | Send a message

SUBSCRIBE for more investment, retirement and pension practical guidance once a fortnight – subscribe to our latest insights

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

The Financial Conduct Authority does not regulate cashflow modelling.

The post How cashflow modelling can act as an early warning system for financial shocks appeared first on Innes Reid.

Making strategic use of your allowances before the deadline could reduce your tax bill, protect your wealth, and strengthen your long-term financial plan.

Here are the key opportunities to consider before 5 April 2026.

1. ISA Allowance – £20,000

You can contribute up to £20,000 across your ISAs in 2025/26.

ISAs remain one of the most tax-efficient wrappers available:

• No Income Tax on interest
• No Capital Gains Tax on investment growth
• No further tax on withdrawals

There are several types available, including Cash ISAs, Stocks and Shares ISAs, Lifetime ISAs, and Innovative Finance ISAs.

From April 2027, changes will limit how much under-65s can contribute to Cash ISAs. Planning ahead may help you maximise flexibility while current rules apply.

2. Junior ISA Allowance – £9,000

If you’re saving for a child or grandchild, you can contribute £9,000 per child in 2025/26.

Growth is free from Income Tax and Capital Gains Tax, and funds become accessible when the child turns 18.

If your child has a Child Trust Fund, you may wish to review whether transferring to a Junior ISA would be beneficial.

3. Dividend Allowance – £500

If you receive dividends outside of an ISA, you can earn £500 tax-free in 2025/26.

Dividend tax rates are set to rise from April 2026 for basic and higher-rate taxpayers. This makes reviewing dividend strategy particularly important before the tax year ends.

4. Capital Gains Tax Annual Exempt Amount – £3,000

When selling investments outside tax-efficient wrappers, you can realise gains of up to £3,000 before CGT applies.

The allowance cannot be carried forward. Strategic disposals before 5 April may reduce future tax liabilities.

Current CGT rates are:

• 18% (lower rate)
• 24% (higher rate)

5. Marriage Allowance – Transfer £1,260

If one spouse or civil partner earns below the Personal Allowance (£12,570), they may transfer £1,260 of unused allowance to their partner.

This could reduce your tax bill by up to £252 in 2025/26.

You can also backdate claims for up to four years — but the deadline to claim for 2021/22 is 5 April 2026.

6. Pension Annual Allowance – £60,000

The pension Annual Allowance for 2025/26 is £60,000.

Contributions benefit from tax relief, and you may be able to carry forward unused allowance from the previous three tax years.

However, higher earners and those who have flexibly accessed pensions may face reduced allowances.

With pensions offering powerful tax advantages, reviewing contributions before year-end can be highly valuable.

7. Inheritance Tax Annual Exemption – £3,000

You can gift £3,000 per tax year without it forming part of your estate for Inheritance Tax purposes.

Couples may gift £6,000, and if last year’s exemption was unused, potentially £12,000.

Early estate planning can significantly reduce a future Inheritance Tax liability.

Why planning now matters

Many allowances are “use it or lose it.” With tax thresholds frozen and some tax rates increasing, proactive planning is more important than ever.

Rather than rushing at the end of the tax year, building a structured financial plan can help you:

• Reduce unnecessary tax
• Improve long-term investment growth
• Protect your estate
• Align allowances with your goals

Download the full guide

This article highlights just some of the tax opportunities available before the end of the 2025/26 tax year.

To explore all 7 key allowances in detail, including important rule changes and planning considerations, download our full guide:

“7 Key Allowances You Might Want to Use Before the End of the 2025/26 Tax Year.”

If you would like personalised advice on how these allowances fit into your financial plan, please contact Innes Reid.

Talk to us

If you are new to financial planning and have any questions about your tax allowances do not hesitate to contact our team. We provide a free initial meeting worth up to £300 with one of our trusted, independent financial planners.

Call our team: 01244 347 583 | Send an email: info@innesreid.co.uk | Send a message

Subscribe for investment, retirement and pensions practical information. Receive useful financial planning insights from us once a fortnight – subscribe to our latest insights

Please note: This article is for general information only and does not constitute financial
advice, which should be based on your individual circumstances. The information is
aimed at individuals only.

All information is based on our current understanding of legislation and correct at the
time of writing (January 2026), and is subject to change in the future.
The Financial Conduct Authority does not regulate tax planning.

The post 7 Allowances to Use Before 5 April 2026 appeared first on Innes Reid.

Striking the right balance with pension contributions is important. Contribute too little, and you could leave yourself short in retirement. If you contribute as much as possible to your pension now, you might miss other goals or place pressure on your day-to-day budget.

So, asking “how much should I be paying into my pension each year?” is sensible.

You might have read answers to this question that apply a general rule to everybody, such as a certain percentage of your income or a target amount you should have at a particular age.

However, the reality is that there isn’t a simple answer that can be applied to everyone. A range of factors, from your current age to your desired retirement lifestyle, will affect how much you need in retirement.

Here’s a step-by-step guide on how to calculate what you may want to add to your pension.

1. Review your current pension and other assets

If you’re already contributing to a pension, or have in the past, gather your statements so you can understand your current position. The savings you’ve already made will act as a foundation for your future contributions.

Don’t forget to check for lost pensions. According to Pensions UK (24 October 2024), as much as £31.1 billion is sitting in unclaimed pension pots across the UK. Take some time to check if you’ve got any gaps – you might find a lost pot that could boost your retirement.

In addition to your pension, you may have other assets you plan to use to fund retirement, such as savings or investments held outside a pension, which you may want to include in this step.

2. Decide when you’d like to retire

When you want to retire will have a direct effect on how much you’ll need to save. If you hope to retire early, keep in mind that you’ll need to create an income for longer, and you may not receive any State Pension until you’ve been retired for some time.

3. Set out your desired retirement lifestyle

To accurately set a pension target, you need to understand what kind of lifestyle you hope to enjoy in retirement. If you’re envisioning plenty of luxury holidays, a new car every few years, and trips with friends, you’ll need to save more than if you’re happy with a more moderate lifestyle.

With a lifestyle set out, you can start to consider how much you’ll need as a regular income to maintain it. Remember to factor in unexpected costs and the effect inflation is likely to have on your cost of living.

With an estimated required annual income, you can work out how much you’ll need in your pension by considering how long you’ll spend in retirement.

It’s wise to look beyond the average life expectancy, as doing so could leave you facing financial difficulty if you live for longer. The Office for National Statistics life expectancy calculator (14 February 2025) suggests a woman aged 65 has an average life expectancy of 88. However, there’s also a 1 in 4 chance she’ll celebrate her 94th birthday.

4. Review how your pension will grow

The good news is you don’t need to contribute the total amount you need to secure your desired lifestyle.

First, your pension contributions benefit from tax relief at your marginal rate of Income Tax.

Assuming you don’t exceed the pension Annual Allowance (£60,000 in 2025/26 or 100% of your annual income, whichever is lower), you’d only need to contribute £80 to increase your pension by £100 as a basic-rate taxpayer. If you’re a higher- or additional-rate taxpayer, the amount you’d need to contribute would fall to £60 and £55 respectively.

Second, your pension is usually invested with the aim of delivering long-term growth.

As you’ll often be investing through a pension for decades, the compounding effect of investment returns can help your pension grow significantly over time.

However, it’s important to note that investment returns cannot be guaranteed.

5. Assess how much your pension contributions need to be

With all this information, you can work backwards to calculate how much you’d need to add to your pension each year to achieve your desired lifestyle.

Using a cashflow model as part of your financial plan can help you bring all this data together and visualise how your wealth might change. For example, you might model how your pension would grow if you increased your contributions by 2% compared to 4%.

You can also model other scenarios, such as the age you’ll retire and changing your income needs.

Regular pension reviews can help make sure you’re on track. The outcomes of a cashflow model cannot be guaranteed, but it can be useful when you’re trying to answer the question “how much should I contribute to my pension?” and others like it.

Calculate your retirement wealth today

Use a wealth calculator to give you a quick, personalised snapshot of where you are currently and whether you’re heading toward the lifestyle you want.

Try the wealth calculator for a clearer view of your retirement progress. Answer four simple questions:

👉 Tap here for a personal retirement calculation.

Work with us to create a retirement plan

Calculating how much you should contribute to your pension each year is just one part of your retirement plan. You might also need to know how the money will be invested when it’s in your pension, or how to access the savings when you’re ready to create an income.

We can work with you to create a complete retirement plan to prepare for the next chapter of your life.

Arrange a free consultation

We provide a free one-hour consultation with an independent financial planner. Its a great opportunity for you to have a personal conversation. You may come away with a clearer understanding of how much you should contribute to your pension to achieve the retirement you want.

Call our team: 01244 347 583 |  info@innesreid.co.uk | Send a message

Subscribe for more retirement and pensions practical guidance. Get great insights from us once a fortnight – subscribe to our latest insights and follow us on Facebook, Instagram or LinkedIn

More on retirement and pensions:

• How to create a guaranteed income in retirement
• Is the default pension right for you?
• Pension consolidation to maximise you retirement savings

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate cashflow modelling.

The post How much should you contribute to your pension? appeared first on Innes Reid.

There are several ways you might create a guaranteed income in retirement – here are three common options.

1. State Pension

While the State Pension often isn’t enough to cover all of your retirement spending, it can provide a reliable base income.

The new full State Pension pays an income of £230.25 a week in 2025/26. To qualify for the full amount, you’ll need to have 35 qualifying years on your National Insurance record. If you have fewer years, you’ll usually receive a portion of the full amount.

You can use the government’s State Pension forecast tool to understand how much you could receive and when you can claim it.

As well as providing a regular income from State Pension Age until you pass away, the State Pension is valuable because, under the triple lock, it’s guaranteed to rise by at least 2.5% each tax year. This annual increase helps maintain your spending power in retirement.

2. Defined Benefit Pension

If you have a defined benefit (DB) pension, also known as a final salary pension, it will provide you with a guaranteed income from the scheme’s pension age until you die.

The way your income is calculated varies between schemes, but it’s often linked to your average salary and how long you’ve been contributing to the pension. Usually, the income is linked to inflation, so the amount you receive will increase annually.

Compared to other pension schemes, DB pensions are often generous, and the guaranteed income they provide could put your mind at ease if you’re worried about financial security in retirement.

In addition, DB pensions may offer other valuable benefits. For example, some schemes will continue to provide a guaranteed income to your spouse or civil partner if you pass away first.

3. Annuity

If you have a defined contribution (DC) pension, you’ll have a pot of money you can use to create an income once you reach 55 (rising to 57 in 2028).

There are several ways you might access the money held in a DC pension, including purchasing an annuity if you value a guaranteed income.

Once purchased, an annuity will provide an income for the rest of your life. The income it provides will depend on annuity rates at the time of purchase. Rates can vary significantly between providers, so shopping around could help you get the most out of your money.

You can select an inflation-linked annuity so that your income rises each year, or a joint annuity, which would continue to pay a reliable income to your partner if you pass away first.

Income flexibility may suit your retirement lifestyle

We can work with you to create a retirement plan that’s tailored to your financial circumstances and lifestyle goals. Whether a guaranteed income is a priority or you’d prefer flexibility, please contact us to arrange a meeting with one of our financial planners.

Talk to our team today to arrange your free one-hour consultation. Its a great opportunity for you to have a personal conversation face-to-face or online with a financial planner. You may come away with a clearer understanding of your circumstances and a welcome reassurance moving forward.

Call our team: 01244 347 583 | Send an email: info@innesreid.co.uk | Send a message

We hope you enjoyed this article. For more, subscribe to our latest insights and follow us on Facebook, Instagram or LinkedIn

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The post How to create a guaranteed income in retirement appeared first on Innes Reid.

Creating goals on your own can be challenging, especially if they bring together several different parts of your financial plan or have a long-term time frame. If you’re overly ambitious, it can be disheartening if you don’t reach the target you’ve set. On the other hand, if you’re too cautious, you could miss out on opportunities.

Here are seven ways a financial plan could help you set realistic goals in 2026.

1. A financial plan can help you assess your starting point

A valuable aspect of a financial plan is understanding your current financial position. To assess what’s possible, you first need to know where you are.

A financial plan might involve reviewing your assets and budget so you’re in a better position to identify where changes could be made.

For example, if your goal is to retire in 10 years, you may benefit from increasing your pension contributions. By understanding where your money is going, you might find that you could reduce your day-to-day spending or divert some of your savings to your pension.

2. Your goals are at the centre of your financial plan

While managing your finances often conjures thoughts of figures and calculations, what’s really at the centre is your goals.

Working with a financial planner can create a space to explore what matters to you. Some goals might already be clearly defined, such as supporting children when they want to get on the property ladder or retiring by a set date.

However, other goals might become apparent through discussions with your financial planner, such as being in a position to overcome a financial shock or achieve peace of mind.

3. A financial plan can translate goals into numbers

Once your goals are set out, it’s time to consider what you’ll need to achieve them.

If you set a vague goal, such as “retire comfortably”, it can be difficult to assess if you’re on track.

A financial plan can help you get to grips with the numbers. So, your goal might become “to secure a retirement income of £40,000 a year”. You can then take it a step further to calculate what the size of your pension pot will need to be at retirement, and how you might need to alter current contributions.

4. A financial plan can help you balance multiple goals

Most people don’t have just one financial goal. It’s common to have several, often competing, priorities.

You might be paying off your mortgage, saving for retirement, putting money aside for your children, and hoping to go on holiday at the same time. A financial plan can bring together these different goals, so you’re able to strike the right balance between short- and long-term objectives.

5. Creating a cashflow model can help you visualise your changing wealth

One challenge of creating an effective financial plan is that you’ll usually need to consider how your finances will change over decades. It can be difficult to assess how the decisions you make today could have a positive or negative impact in the future.

A cashflow model is a tool that allows you to visualise how your wealth might change in different scenarios. For instance, you might use the model to see how adding different amounts to your investment portfolio each month will change your ability to reach your goals.

6. Working with a financial planner allows you to consider factors outside of your control

It’s not just the factors you can control that will affect the outcome of your financial plan. Sometimes, external influences, like the rate of inflation or stock market performance, might have an impact.

While you can’t know for sure what outside factors will occur, you can use a cashflow model to test different scenarios. For example, when investing, you might model several different average annual rates of return to assess what they’d mean for your goals.

This allows you to consider how your finances would cope in different scenarios, and you may be able to take steps to help ensure your goals stay on track.

7. A financial plan can create accountability

Every year, thousands of people make and break a new year’s resolution. According to a YouGov poll (17 December 2025), only 38% of people who made resolutions at the start of 2025 had kept all of them.

Working with a financial planner means you’ll have regular meetings and someone who can hold you accountable. With a clear strategy to follow, you’ll know when you’re straying from the path that could turn your realistic goals into reality. As a result, you might be less likely to break the commitments you’ve made.

Talk to us about your goals for 2026

If your goals have changed or you’d like a review to understand whether you’re on track, please get in touch to arrange a meeting.

Talk to our team today to arrange your free one-hour consultation. Its a great opportunity for you to have a personal conversation face-to-face or online with a financial planner. You may come away with a clearer understanding of your circumstances and a welcome reassurance moving forward with some realistic goals in place.

Call our team: 01244 347 583 | Send an email: info@innesreid.co.uk | Send a message

We hope you enjoyed this article. For more, be sure to subscribe to our latest insights and follow us on Facebook, Instagram or LinkedIn

Access our latest blogs:

Is the default pension fund right for you?

How pension consolidation can maximise your retirement savings.

How to access your pension.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

The Financial Conduct Authority does not regulate cashflow modelling.

The post 7 ways financial planning helps set realistic goals appeared first on Innes Reid.

Last year, in her maiden Budget, the Chancellor sought to balance the public finances with tax rises to cover a reported £22 billion black hole.

This year, Reeves arguably faced an even more difficult landscape. In turn, she has announced an estimated £26 billion of tax rises by 2029/30.

The Chancellor had to start her speech, however, by acknowledging the “deeply disappointing” and “serious error” of the Budget announcements being released early by the Office for Budget Responsibility (OBR).

It’s also notable how many predictions ultimately proved to be wide of the mark.

Now that we know exactly what’s included, it is important to understand the Autumn Budget changes and how they could affect you.

The headlines regarding GDP, national debt, and inflation

The Chancellor says the government’s plans will reduce borrowing more over the rest of this parliament than any country in the G7.

GDP is expected to grow by 1.5% in 2025, higher than the OBR’s 1% forecast from earlier this year. In subsequent years, the estimations are as follows:

• In 2026, the economy is forecast to grow by 1.4%, below the previous forecast of 1.9%.
• In 2027, GDP is forecast to expand by 1.6%, falling short of March’s estimate of 1.8%.
• In 2028, GDP is estimated to rise by 1.5%. In March of this year, the OBR said this figure would be 1.7%.
• In 2029, the economy will expand by 1.5%, again falling short of the previous estimate of 1.8%.

Due to weaker underlying productivity growth, the OBR estimates that tax receipts will be £16 billion lower in 2029/30 than initially forecast in March 2025.

Average inflation is expected to fall over the next three years.

• In 2025: 3.5%, an increase of 0.2% from the OBR’s original forecast.
• In 2026: 2.5%, up from the OBR’s 2.1% forecast from March.
• In 2027: 2%.

National debt will stand at £2.6 trillion this year. £1 in every £10 the government spends is on debt interest.

Tax threshold freezes extended until 2031

The Labour manifesto promised not to increase Income Tax or National Insurance (NI), and despite pre-Budget speculation, the government has kept to that promise in this Autumn Budget.

However, the Chancellor did announce that the Income Tax thresholds will remain frozen for a further three years beyond the previous 2028 freeze, staying where they are until April 2031. This move will raise £8 billion for the government. Similarly, the Inheritance Tax (IHT) threshold freeze is extended from 2030 to 2031.

While this will not increase your Income Tax or IHT bills directly, this fiscal drag means more of your income and wealth may be exposed to tax over time.

The government is also upholding its commitment to bringing pension pots into the scope of IHT from April 2027, and reforms to relief for business and agricultural assets from April 2026.

The tax rates on dividends, savings, and property income will rise by two percentage points 

Tax rates are set to rise for dividends, savings, and property income.

• Dividends: From April 2026, ordinary and upper rates of tax on dividend income will rise by two percentage points to 10.75% and 35.75% respectively. There is no change to the additional rate, which will remain at 39.35%.

• Property and savings: From April 2027, the rate of tax on property and savings income will increase by two percentage points across all tax bands to 22%, 42%, and 47% respectively.

The government confirmed that, even after these reforms, 90% of taxpayers will still pay no tax on their savings. However, these changes are set to impact business owners and landlords.

The Chancellor says these increases will raise £2.2 billion in 2029/30.

The ISA allowance will be reformed for under-65s, and some allowances have been frozen

The Chancellor announced that from April 2027, the Individual Savings Account (ISA) allowance will change for under-65s.

As it stands, adults can contribute £20,000 across their ISAs, including Cash ISAs and Stocks and Shares ISAs, each tax year.

From April 2027, £8,000 of this allowance will be reserved exclusively for investments, leaving an available £12,000 that savers can pay into their non-investment accounts, such as Cash ISAs.

Savers over the age of 65 will continue to be able to save up to £20,000 in a Cash ISA each year.

The allowances for Junior ISAs and Lifetime ISAs are frozen until April 2031 at £9,000 and £4,000 a year, respectively.

Salary sacrifice on pension contributions to be capped at £2,000

The Chancellor put a cap on NI-efficient pension contributions made under salary sacrifice.

Salary sacrifice schemes cost the government £2.8 billion in 2016/17, but this figure was set to triple to £8 billion by 2030/31.

The government will charge employer and employee National Insurance contributions (NICs) on pension contributions above £2,000 a year made via salary sacrifice. This will take effect from 6 April 2029.

The Chancellor says that many of those on low and middle incomes will be able to continue using salary sacrifice as normal, while high earners can expect to pay increased NI.

New “mansion tax” on high-value properties

The Chancellor announced the much-speculated “mansion tax” that will affect the top 1% of properties.

The new property surcharge will be paid alongside Council Tax.

There will be four price bands starting with £2,500 for a property valued between £2 million and £2.5 million. For properties valued more than £5 million, the levy will be £7,500.

The measure is estimated to raise £400 million by 2031.

Welfare reforms expected to increase by 2029/30

The BBC reported that changes to the government’s previously announced winter fuel payments and health-related benefits will cost £7 billion in 2029/30.

In addition, Reeves revealed she would remove the two-child benefit cap. This will cost £3 billion by 2029/30.

State Pension: Removal of overseas access to Class 2 National Insurance contributions and committing to the triple lock 

As a result of a loophole in the Class 2 voluntary NICs regime, overseas individuals with a limited connection to the UK can build a State Pension entitlement through cheaper rates.

The government is looking to end this by removing access to the cheapest Class 2 NICs for these individuals. Additionally, it will increase the initial residency or contribution requirements for those living outside the UK.

The Chancellor also confirmed the government’s commitment to the triple lock. From April 2026, this will increase the basic and new State Pension by 4.8%, offering up to an additional £575 per year to pensioners, depending on their entitlement.

A range of significant changes for business owners

In addition to the Dividend Tax increase, the Chancellor announced a range of changes that could affect business owners, including:

• Increases to both the National Living Wage (NLW) and National Minimum Wage (NMW). From 1 April 2026, the NLW paid to workers aged 21 and over will rise by 4.1%, from £12.21 to £12.71 an hour, increasing annual income by approximately £900 a year for full-time employees. For those aged 18 to 20, the NMW will rise by 8.5% from £10 to £10.85 an hour, equivalent to around £1,500 a year if working full-time. For 16- and 17-year-olds, and those on apprenticeships, the NMW will rise by 6%, going from £7.55 to £8 an hour.
• Listing Relief from Stamp Duty Reserve Tax for some businesses. The Chancellor said this will “make it easier for entrepreneurs to start, scale, and stay in the UK”.
• Reduced Capital Gains Tax (CGT) relief for Employee Ownership Trusts (EOTs). When a business is sold to an EOT, CGT relief will fall from 100% to 50% starting from November 2025. This will raise £0.9 billion from 2027/28 onwards.
• Fully funded apprenticeships for under-25s. This will make them effectively free for small- and medium-sized businesses (SMEs) from April 2026.
• Lower business rates for more than 750,000 retail, hospitality, and leisure properties. That move will be funded through higher rates on properties worth £500,000 or more, such as warehouses used by online retail.
• Customs duty will apply to parcels of any value from March 2029 at the latest. There is an existing exemption for parcels worth less than £135, favouring large-scale importers.

Other announcements that may affect you

• Household energy bills will fall. Reeves is scrapping the Energy Company Obligation (ECO) scheme, saying that on average, families will save £150 a year in 2026.
• A new tax on electric vehicles. The Electric Vehicle Excise Duty (eVED) will come into effect in 2028 and equal 3p per mile for battery electric cars and 1.5p per mile for plug-in hybrids. The rate per mile will increase annually in line with the CPI.
• Fuel duty will be frozen until September 2026. In addition, a new “fuel finder” will help drivers find the cheapest fuel, saving the average household £40 a year.
• Reducing the levy threshold on soft drinks. From 1 January 2028, the sugar tax will also be applied to milk-based drinks, including bottled milkshakes and lattes.
• A spousal exemption for agricultural and business asset IHT relief. Unused combined business and agricultural asset IHT relief will become transferable between spouses and civil partners.
• Tobacco Duty and Alcohol Duty will both be uprated. Tobacco Duty will be uprated as announced last year, and Alcohol Duty will now rise with inflation.
• Rising taxes on online gambling. From April 2026, Remote Gaming Duty will increase by 21% to 40%. A new Remote Betting Rate set at 25% will be introduced from April 2027, though horse race betting will be exempt from the changes.

Other key thresholds that remain the same

More broadly, the Chancellor made no mention of other key thresholds that will remain the same. These include:

• The pension Annual Allowance
• Stamp Duty Land Tax for residential properties
• The headline rates of Income Tax, NI, and VAT, as outlined in the government’s election manifesto.

Talk to us.

If you have any questions regarding the Autumn Budget and how it may affect your financial plan, please get in touch. We provide a free one-hour consultation with an independent financial planner.

Call our team: 01244 347 583 | Send an email: info@innesreid.co.uk | Send a message

We hope you enjoyed this article. For more, subscribe to our latest insights and follow us on Facebook, Instagram or LinkedIn

Please note

All information is from the Budget documents on this page.

The content of this Autumn Budget summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.

While we believe this interpretation to be correct, it cannot be guaranteed, and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.

The post Autumn Budget 2025 update appeared first on Innes Reid.

When setting out your goals as part of your financial plan, your family might feature in them. Perhaps you want your retirement income to be enough so that you can treat them to an annual family weekend away? Or you might want to gift a deposit that will help each of your grandchildren get on the property ladder?

By incorporating family goals into your financial plan, you can take steps to turn them into a reality.

If you’re hesitant to offer support because you’re worried about how it will affect your long-term finances, using a cashflow model could be valuable.

Download your guide to cash flow modelling here: How financial planning could help you answer essential “what if” questions.

A cashflow model can give you an idea of how your wealth might change based on the decisions you make. It may ease your worries and give you the confidence you need to expand your financial plan to include your loved ones.

There are several ways you might support loved ones as part of your financial plan.

Providing gifts to support your loved ones’ finances now

You may want to support your loved ones immediately. Whether through providing gifts or covering regular expenses on their behalf, it’s an option that your family might welcome, particularly if they’re struggling to manage their short-term expenses.

One of the benefits of gifting during your lifetime is that it could reduce your estate’s Inheritance Tax (IHT) liability.

In 2025/26, the nil-rate band is £325,000. If the entire value of your estate is below this threshold, no IHT will be payable. Many people can also make use of the residence nil-rate band, which is £175,000 in 2025/26, if they leave their main home to direct descendants.

If the value of your estate exceeds these thresholds, IHT may be due.

Some gifts are immediately outside of your estate when calculating IHT. As a result, if you want to support loved ones now, you may want to consider using these gifting allowances:

• Up to £3,000 each tax year, known as your “annual exemption”
• Up to £250 to each person, so long as they have not benefited from another allowance
• £1,000 as a wedding gift, rising to £2,500 and £5,000 for grandchildren or great-grandchildren and children respectively.

Another exemption which could be useful if you want to support loved ones now is regular payments made to another person. You might use this allowance to:

• Pay rent for your child
• Give financial support to cover living costs
• Pay into a savings account for your grandchild.

Payments must be regular and funded from your monthly income after living costs. If you use this allowance to reduce an IHT bill, it’s a good idea to keep a record of the payments.

A financial plan can help you assess how gifts might affect your long-term wealth. So, when you gift a generous sum or commit to regular support, you can do so with confidence.

Offering gifts that support your family’s long-term goals

Another option is to set money aside for your family to support their long-term goals.

For instance, you might focus on building a nest egg for your grandchildren to help them through university, buy their first car, or travel the world.

Incorporating this into your plan helps identify the best way to save, depending on your goals and the beneficiary’s circumstances.

When saving for a child to provide a financial helping hand when they reach adulthood, you might choose a Junior ISA, which they gain access to when they turn 18. Whereas if you were helping your child increase their retirement fund, you might make contributions directly into their pension.

Incorporating these gifts into your financial plan can also help make them part of your regular outgoings and provide reassurance that you’re still on track to meet your other goals.

Leaving an inheritance

Receiving an inheritance could change your loved ones’ financial situation and mean they’re more secure.

If leaving assets behind for your family is important to you, it can be a central part of your financial plan. You might earmark a portion of your wealth to leave in your will or set aside particular assets for someone.

We can help you understand how much you could leave behind for loved ones, and how to do it tax-efficiently.

Contact us

A good financial plan helps you reach your goals, including those that involve your family, and we can help you. Whether you want to involve your loved ones in planning or build a nest egg to support them long-term, please get in touch.

Talk to our team today to arrange your free one-hour consultation. Its a great opportunity for you to have a personal conversation face-to-face or online with a financial planner. You may come away with a clearer understanding of your circumstances and a welcome reassurance moving forward.

Call our team: 01244 347 583 | Send an email: info@innesreid.co.uk | Send a message

We hope you enjoyed this article. For more, be sure to subscribe to our latest insights and follow us on Facebook, Instagram or LinkedIn

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate cashflow modelling, Inheritance Tax planning, or estate planning.

The post How the benefits of your financial plan go beyond you to your family appeared first on Innes Reid.

An estate plan sets out how your assets will be managed during your lifetime and distributed after your death. It might include writing a will or creating a trust to provide for young children.

As estate planning can be emotional, it’s not surprising that behavioural biases could affect how you approach the task. So, here are three ways biases might affect your estate plan.

1. Putting off your estate plan due to emotions or overconfidence

Trying to avoid confronting difficult emotions means some people put off estate planning altogether.

A February 2025 survey carried out by JMW Solicitors found that 77% of people believe having a will is important. Yet, 58% don’t have a valid will, and avoiding the sometimes difficult conversations that might form part of estate planning could be a reason why.

Overconfidence may also be a reason for not creating an estate plan. For example, you might believe you’re “too young” to worry about writing a will or that you’re healthy now, so you can leave the task for the future. However, life is unpredictable and it’s impossible to know what’s around the corner.

Putting off estate planning because it’s difficult or you assume you don’t need one yet could leave your family in a vulnerable position should the unexpected happen.

While estate planning can be daunting at first, view it as a step that allows you to take control of your legacy. Once the task is complete, you may find it reassuring to know you’ve set out your wishes.

2. Under or overvaluing assets could have implications for your estate plan

A common financial bias that affects investors is tying the value of certain assets to a particular piece of information. For example, you might view shares as being worth £100 because that’s what you initially paid for them, even if the value has changed.

Under or overvaluing your assets could have implications for your estate plan.

You might want to split your estate evenly between your children while giving them specific assets. However, if you don’t have accurate information when doing this, they could end up with very different proportions of your wealth, which might lead to disputes.

Alternatively, if you undervalue assets, you might not realise your estate could be subject to Inheritance Tax (IHT). For instance, if you’ve “anchored” the value of your home to the price you paid for it 20 years ago, your estate could unexpectedly be liable for IHT due to rising property prices.

Regular financial reviews with your financial planner can help you track the value of your assets, and how they could rise or fall in the future.

3. Loss aversion could mean you are reluctant to pass on assets

Loss aversion suggests that you feel the pain of a loss twice as strongly as the pleasure of an equivalent gain. This bias can lead to people avoiding taking action, even when it would make sense.

As part of your financial plan, you might want to gift assets to your beneficiaries now instead of leaving them an inheritance. It’s an option that could provide much-needed financial support to your loved ones, such as covering university fees or helping them renovate their home.

Gifting during your lifetime can be rewarding, but loss aversion might also mean you’re reluctant to part with assets.

A reason for this is that you might worry about an unexpected event creating a financial shortfall in the future. So, you choose to hold on to the assets.

A financial plan could help you see the effect of gifting during your lifetime, including whether you could still overcome a financial shock. Discussing your gifting plans could give you the confidence to pass on assets and ease your worries.

Contact us to talk about your estate plan

Working with a professional who understands your circumstances and goals can make estate planning easier. We’ll be on hand to offer support and guidance from the outset.

Please contact us to arrange a meeting to discuss your estate plan.

Talk to our team today to arrange your free one-hour consultation. Its a great opportunity for you to have a personal conversation face-to-face or online with a financial planner. You may come away with a clearer understanding of your circumstances and a welcome reassurance moving forward.

Call our team: 01244 347 583 | Send an email: info@innesreid.co.uk | Send a message

More on Inheritance Tax…

Passing on your wealth to loved ones could transform their lives and mean they have more opportunities in the future. Find out How to prepare your loved ones for the “great wealth transfer”.

There are a series of straightforward measures you can make use of to reduce your IHT liability. One of these, which is often overlooked, is known as “gifting from surplus income”. Find out more.

We hope you enjoyed this article. For more, be sure to subscribe to our latest insights or follow us on Facebook, Instagram or LinkedIn

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate estate planning, will writing, or trusts.

The post 3 ways behavioural bias could affect your approach to estate planning appeared first on Innes Reid.

In simple terms, diversification means spreading your investments across a variety of opportunities.

As all investments carry some form of risk, the key reason for diversifying is so the risk you’re taking is spread out and there’s less chance of the value of your investment portfolio falling.

You can think of diversifying like building a well-balanced meal. While they might be good for you, a plate of green beans isn’t going to be healthy in the long run or very satisfying. Instead, you might want to add protein, dairy, carbohydrates, and other types of vegetables to create balance.

So, while investing in a single company might be a good opportunity on its own, when you look at your wider strategy it’s often a good idea to add other elements by diversifying.

How diversification works in practice 

So, now you know what diversification means, but how does it work in practice? The Financial Conduct Authority explains how diversification works with three scenarios.

1. No diversification

With this option, you’d invest all your money into one company’s shares. You might come to this decision based on some research you’ve done or a tip someone has given you.

Your investment performance completely relies on how that one company has performed. So, it could go very well – or very badly.

As a company’s shares change significantly in price depending on a range of factors, such as sales performance or how legislation may affect operations, you might experience large swings and volatility. There would be a greater risk of losing some or even all of your money.

2. Some diversification

If you consider diversification to some extent, you might invest in a range of UK companies. This way, your investment performance isn’t tied to a single company. Instead, the risk is spread across a group of companies.

Ideally, you’d invest in companies that operate in different sectors. So, if one sector experiences struggles, the gains in another could balance it out.

While this option provides more stability than the first, there could still be factors that affect a large portion of your portfolio. For instance, as all the companies are based in the UK, an economic downturn is likely to affect many of your holdings.

3. Full diversification

Finally, if your portfolio is fully diversified, you’d invest in a range of assets and markets.

So, you’d continue to invest in UK companies by purchasing shares, but you might also hold some of your money in cash or invest in bonds. In addition, you might invest in markets outside of the UK, such as Europe and the US, or even further afield in developing markets.

This approach means your investment portfolio is spread across several different types of investments. You’re not putting all your eggs in one basket and the long-term performance is likely to be smoother as a result.

Investment funds could provide a way to ensure your portfolio is diversified

Managing a diversified portfolio can be time-consuming and complex – it’s likely to mean a lot of initial and ongoing research into different companies, economies, and markets.

So, funds can provide a way for the average investor to diversify their portfolio.

A fund would pool your money with that of other investors and invest it in a range of assets that meet its criteria. This way, investment risk is spread across different sectors and geographical regions without you needing to make decisions about each individual investment.

There is a huge range of funds to choose from, including various risk profiles. Understanding what level of risk is appropriate for your goals or circumstances is crucial, whether you choose to invest in a fund or buy individual company shares.

As part of your financial plan, we can help you understand what level of risk might be right for you.

Contact us to talk about creating a diversified investment portfolio

An investment strategy that includes diversification can manage risk and make your investment performance smoother. If you’d like to talk about your investment portfolio and how to ensure it meets your needs, please get in touch.

Call our team: 01244 347 583 | Send an email: info@innesreid.co.uk | Send a message

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

The post What does “diversified” mean when you’re investing appeared first on Innes Reid.

It’s an exciting time, but it’s also important to evaluate your decisions and consider how they could affect your long-term plans. Indeed, spending too much too soon could lead to a shortfall later in life.

Usually, you can access your pension from age 55 (rising to 57 in 2028). For many people, this milestone will come before their planned retirement date.

Yet, January 2025 research from Legal & General suggests 1 in 5 people access their pension at 55.

32% of those withdrawing from their pension at 55 said it was to cover essential expenses. However, 46% simply said they did so “because they could”.

Worryingly, 27% of UK adults aged over 50 make decisions about their pension without seeking any advice or guidance. It could mean a significant proportion of those accessing their pension as soon as possible don’t fully understand the long-term implications it could have.

If you’re thinking about withdrawing money from your pension, here are three potential risks to consider first.

 1. It could increase your risk of running out of money later in life

Pensions are often among the largest assets people own. So, it’s not surprising that some look at the value and believe they have enough to splurge.

Yet, it’s important to consider why you’ve saved into a pension – to create financial security once you give up work.

If you start accessing your pension at 55, you could be at greater risk of facing a shortfall later in life as it’s likely to need to last several decades. Indeed, according to the Office for National Statistics, the average 55-year-old woman will live until they’re 87. For a man of the same age, life expectancy is 85.

Even if you don’t plan to take a regular income from your pension straightaway, withdrawing a lump sum can have a significant effect on the value of your retirement savings.

Your pension is normally invested with the aim of delivering long-term growth. Taking a lump sum could mean investment returns are lower than expected, which, in turn, may lead to a lower income when you retire.

That’s not to say you shouldn’t access your pension at 55, whether you want to use the money to travel or start reducing your working hours. However, understanding the potential long-term implications of doing so and how it might affect your retirement lifestyle is important.

2. You may face an unexpected tax bill

You can usually withdraw up to 25% of your pension without facing a tax bill, either as a lump sum or spread across multiple withdrawals.

However, if you exceed the 25% tax-free portion, your pension withdrawals may become liable for Income Tax. According to the Legal & General study, around a third of those accessing their pension at 55 are withdrawing more than 25%.

The withdrawal above the tax-free amount would be added to your other sources of income when calculating your Income Tax liability. So, you might want to consider whether it would push you into a higher tax bracket and increase your overall tax bill.

It’s also worth noting that if you receive means-tested benefits, taking a lump sum or income from your pension could affect your entitlement – something a quarter of people didn’t realise.

3. It could limit how much you can tax-efficiently save in your pension

Accessing your pension might reduce how much you can tax-efficiently contribute to your pension each tax year.

In 2024/25, the pension Annual Allowance is £60,000. This is the amount you can personally contribute while retaining tax relief benefits. However, you can only claim tax relief on up to 100% of your annual earnings.

You can normally withdraw your tax-free lump sum from your pension without affecting the Annual Allowance, but if you take a flexible income, you might trigger the Money Purchase Annual Allowance (MPAA).

The MPAA is just £10,000 in 2024/25. As a result, it can significantly reduce how much you’re able to tax-efficiently add to your pension and it might negatively affect your retirement income.

Financial planning could help you understand the effect of accessing your pension at 55

One of the challenges of understanding whether accessing your pension sooner is the right decision for you is that you often need to consider the long-term effects.

Financial planning could help you see how accessing your pension at 55 might affect your long-term finances and review other options as part of a wider financial plan. If you withdraw some of your pension now, it could help you feel more confident, or you might decide an alternative option makes more sense for you.

If you’d like to access your pension, we’re here to help you calculate the potential long-term consequences and more. Please get in touch to arrange a meeting.

Call our team: 01244 347 583 | Send an email: info@innesreid.co.uk | Send a message

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

Your pension income could also be affected by the interest rates 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 in the future.

The post The potential perils of accessing your pension at 55 appeared first on Innes Reid.

Here are five ways a financial plan could improve your wellbeing and confidence when you retire.

1. Financial confidence could ease concerns when you retire

One of the key concerns that weighs on those nearing retirement is a financial one. According to This is Money in January 2025, more than half of over-55s fear they’ll run out of money later in life. Just a quarter of people believe they have enough to see them through retirement.

Worrying about running out of money could mean you’re not able to fully relax and enjoy your retirement. A financial plan could help you understand how you might create a sustainable income that will last a lifetime.

So, taking control of your finances before you give up work could improve your overall wellbeing and mean you feel far more prepared emotionally for taking the next step.

2. It provides a chance to consider what you’re looking forward to

A financial plan doesn’t just focus on your assets, but what you want to get out of life. A retirement plan is the perfect opportunity to consider what you’re looking forward to in retirement and address any apprehensions you might have.

You might start by setting out what your ideal week in retirement would look like – are you keen to see your family and friends more now you’re not working, or would you like to join a class to develop a hobby?

While you’re doing this, you might discover concerns as well. For example, some retirees may worry about feeling lonely if they enjoy the social aspect of work. As a result, they might ensure their retirement income provides enough disposable income to regularly go out with loved ones or try an activity that allows them to meet new people.

3. Financial security could mean you’re able to enjoy big-ticket expenses

It’s not just the day-to-day retirement lifestyle you might be looking forward to, there might be one-off experiences or purchases that you’d like to spend some of your money on.

If you love to explore new places, you might dream about taking an extended holiday to exotic locations now you’re no longer tied to work. Or, if you’re a keen gardener, you might want to explore purchasing an extra plot of land to turn into an outdoor oasis.

Whatever your big-ticket plans, incorporating them into your financial plan could help you understand what’s possible and get you excited for the future.

4. A financial plan could address retirement trepidations

Worrying about your future could dampen retirement celebrations. So, addressing these concerns and understanding how you might create a safety net could take a weight off your shoulders.

As you near retirement, you might worry about how your partner would cope financially if you passed away first, or how you’d fund care services if you needed support.

While a financial plan can’t prevent some things from happening, it could allow you to identify areas of concern and take steps to reduce the effect they could have. So, in the above cases, you might purchase a joint annuity with your pension so you know your partner would continue to receive a reliable income if you passed away and set aside some money to act as a care fund.

5. Working with a financial planner could allow you to take a hands-off approach

Managing your finances in retirement can be very different to handling your household budget when you are working. You might not receive a regular, reliable income, and, for retirees, the change can be difficult to manage or they simply want to take a hands-off approach.

Working with a financial planner means you can rely on someone else to handle your finances on your behalf and inform you if changes are needed.

It could lead to a happier retirement that allows you to focus on living the retirement lifestyle you’ve been looking forward to.

Contact us to talk about how to achieve your desired retirement lifestyle

If you’re nearing retirement, get in touch to talk about what you’re looking forward to and concerns you might have. We could work with you to create a financial plan that gives you confidence and means you’re able to focus on what’s really important – enjoying the next chapter of your life.

Call our team: 01244 347 583 | Send an email: info@innesreid.co.uk | Send a message

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The post 5 ways financial planning could help you emotionally prepare for retirement appeared first on Innes Reid.

1. ISA allowance

ISAs provide a popular way to tax-efficiently save and invest. Indeed, the latest government figures show in 2022/23, 12.4 million ISAs were subscribed to with around £71.6 billion being collectively added to accounts.

For the 2024/25 tax year, you can add up to £20,000 to ISAs. If you hold money in a Cash ISA, the interest you receive wouldn’t be liable for Income Tax. Similarly, if you invest through a Stocks and Shares ISA, any returns generated aren’t liable for Capital Gains Tax (CGT).

If you don’t use your ISA allowance before the tax year ends, you’ll lose it. So, it could be worthwhile reviewing your saving and investing goals now.

Before you place money into an ISA, it’s often a good idea to consider your goal. For short-term goals, a Cash ISA might be suitable for your needs. On the other hand, if you’re putting money away for a goal that’s more than five years away, you may want to consider if you could benefit from investing.

In addition, if you’re aged between 18 and 39, you could open a Lifetime ISA (LISA). In the 2024/25 tax year, you can add up to £4,000 to a LISA and receive a 25% government bonus. The £4,000 LISA allowance counts towards your overall £20,000 ISA allowance.

However, if you withdraw money from a LISA before the age of 60 for a purpose other than buying your first home, you’d pay a 25% penalty. As a result, a LISA is often most suitable for those saving to get on the property ladder.

2. Dividend Allowance

If you’re a business owner or hold shares in some companies, you might receive dividends.

You don’t pay tax on dividends that fall within your Personal Allowance, which is £12,570 in 2024/25. In addition, you can receive up to £500 in dividends before Dividend Tax is due under your Dividend Allowance. So, dividends could offer a valuable way to boost your income without increasing your tax liability.

You cannot carry forward unused Dividend Allowance.

Even if your dividends could exceed the allowance, the tax rate you pay could be lower than receiving a comparable amount that was liable for Income Tax. The rate of Dividend Tax you pay depends on your Income Tax band. In 2024/25, the rates are:

• Basic rate: 8.75%
• Higher rate: 33.75%
• Additional rate: 39.35%

So, making dividends part of your financial plan could reduce your overall tax bill even if you’re liable for Dividend Tax.

3. Capital Gains Tax Annual Exempt Amount

Chancellor Rachel Reeves made several changes to CGT in the Autumn Budget, including increasing the main rates. Consequently, you could find your tax liability is higher than expected when you make a profit when you dispose of some assets.

Indeed, the Office for Budget Responsibility estimates CGT could raise £15.2 billion in 2024/25, which may then increase to £23.5 billion in 2028/29.

From 30 October 2024, the standard rates of CGT are:

• 24% if you’re a higher- or additional-rate taxpayer
• 18% if you’re a basic-rate taxpayer and the gains fall within the basic-rate Income Tax band.

Importantly, the Annual Exempt Amount means you can make profits of up to £3,000 in 2024/25 before CGT is due. So, if you plan to dispose of assets, timing the decision to make use of this exemption could be valuable.

You cannot carry forward the Annual Exempt Amount into the new tax year if you don’t use it.

4. Pension Annual Allowance

Pensions provide a tax-efficient way to save for your retirement as contributions benefit from tax relief and the interest or investment returns generated are tax-free.

In 2024/25, the Pension Annual Allowance is £60,000 – this is the amount you can tax-efficiently add to your pension in a single tax year, so you might also need to consider employer contributions and those made by other third parties. However, you can only claim tax relief on up to 100% of your annual earnings, or £2,880 if you’re a non-taxpayer.

There are two reasons why your Annual Allowance may be lower.

• If your adjusted income is more than £260,000 and your threshold income is more than £200,000, the allowance will taper. For every £2 your income exceeds the adjusted income threshold, your Annual Allowance will fall by £1. The tapering stops at £360,000, so everyone retains an allowance of £10,000.
• If you’ve already flexibly accessed your pension, the Money Purchase Annual Allowance may affect you. This reduces the amount you can tax-efficiently add to your pension to £10,000.

You can carry your Annual Allowance forward for up to three tax years. So, you have until 5 April 2025 to use any unused allowance from 2021/22.

5. Inheritance Tax annual exemption

Government figures suggest Inheritance Tax (IHT) bills are on the rise. Indeed, IHT tax receipts between April 2024 and October 2024 were £5 billion – around £500 million higher than the same period last year.

If your estate could be liable for IHT when you die, passing on wealth during your lifetime could be a valuable way to reduce a potential bill.

However, not all gifts are considered immediately outside of your estate for IHT purposes. Some may be included in your estate for up to seven years, which are known as “potentially exempt transfers”.

So, using allowances and exemptions that enable you to pass gifts to your loved ones without worrying about IHT might be an important part of your estate plan.

In 2024/25, the annual exemption means you can pass on £3,000 without worrying about IHT. You can carry forward your annual gifting exemption from the previous tax year, so you could gift up to £6,000 in a single tax year and have it fall immediately outside your estate.

There are often other allowances or ways you could reduce your estate’s potential IHT bill. Please contact us to talk about steps you may take.

Get in touch to discuss 5 useful allowances and exemptions that will reset at the end of the tax year

If you’d like to talk about which allowances and exemptions you may want to use to reduce your tax bill in 2024/25, please get in touch. We’ll work with you to help you understand which steps could be right for your circumstances and aspirations.

Call our team: 01244 347 583 | Send an email: info@innesreid.co.uk | Send a message

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate tax planning, Inheritance Tax planning, or estate planning.

The post 5 useful allowances and exemptions that will reset at the end of the tax year appeared first on Innes Reid.

No. 1
31st January – Self-assessment tax deadline

People who have to file self-assessment tax returns must do so by 31st January. It’s also the deadline to pay any tax owed from that return.

Self-employed workers are also required to pay a payment on account – this is an advance payment towards your next tax bill, based on your previous tax liabilities. The first payment must be made by 31st January.

No. 2
31st January – Capital Gains Tax deadline

The deadline for filing Capital Gains Tax payments on any assets sold in 2021/2022. The Capital Gains Tax (CGT) allowance for the current tax year (2022/23) is £12,300. This means that when you sell investments, you can enjoy gains up to £12,300 before you pay CGT.

But following the chancellor’s announcement in the Autumn Statement, from 6 April 2023, the CGT allowance will be more than halved to £6,000, before it halves again in 2024/25 to just £3,000 a year. The current rates for CGT are 10% for basic-rate taxpayers and 20% if you pay the higher or additional rate (18% and 28% for residential-property sales).

No. 3
15th March – The Spring Budget

Every year we have at least one big Budget statement delivered by the chancellor, when they run through the financial forecasts for the year ahead as well as any proposed changes to the tax system. The Budget will be delivered on the 15th March.

No. 4
31st March – End of Help to Buy

The Help to Buy scheme involves property buyers gaining an equity loan to supplement their deposit when purchasing a new-build property. Buyers had to apply for that loan by 31st October, but have until 31st March 2023 to complete the purchase of the property.

No. 5
5th April – End of the tax year

The 2022-2023 tax year ends on 5th April, so if you’re planning to utilise your entire annual ISA allowance, the full £20,000 will need to have been paid into your accounts by this date.

Anyone wanting to pay extra into their pension should also try and do this before 5th April. Most people can contribute up to £40,000 to their pension pot each tax year and benefit from tax relief. However, those with an annual income – including salary, and income from savings and investments – of more than £200,000, or those who earn less than £40,000 a year, have a lower pension allowance.

No. 6
6th April – New tax year: pensions and benefits

The start of the next tax year is 6th April, and this is a date when increases to various state benefits and tax reliefs will kick in. For example, the state pension and pension credit will both rise by 10.1% while universal credit will increase by the same percentage.

No. 7
6th April – New tax year: tax changes

In his inaugural Autumn Budget, chancellor Jeremy Hunt made several tax changes, which will hit high earners and investors. He reduced the threshold at which the top 45p rate of income tax becomes payable from £150,000 to £125,140. This will take effect from 6th April, 2023. Hunt is also planning to eliminate the dividend tax-free allowance, which currently stands at £2,000 a year.

This will fall to £1,000 on 6th April, and then £500 for the 2024-2025 tax year. The tax rates on dividend income remain unchanged. Meanwhile, the threshold for paying capital gains tax will be more than halved from £12,300 to £6,000 for the 2023-2024 tax year. It will be cut again to £3,000 in the 2024-2025 tax year.

No. 8
5th October – Deadline to register for self-assessment

If you are new to self-assessment, this is the deadline to register with HMRC. This applies if you’ are self-employed or a sole trader, not self-employed, or registering a partner or partnership.

No. 9
31st October – Postal self-assessment deadline

Some taxpayers opt to file their self-assessment by post rather than online. If you choose to do this, you have an earlier deadline of 31st October.

No. 10
November – Autumn Statement

Effectively a mini-Budget, the Autumn Statement is another big statement from the chancellor. It is usually delivered in November. With the pressures from rises in inflation, tax, and household outgoings, the coming year could prove a rocky road for investors and borrowers alike.

Talk to us about your plans for the future

If you have any questions about how financial planning can benefit your ambitions for the future please get in touch. We provide a free, no obligation initial meeting, its also a great opportunity for you to understand if financial planning is right for you.

Call 01244 347 583 or email info@innesreid.co.uk to speak to our team today.

10 key dates you need to be aware of for your finances in 2023 – PLEASE NOTE: This article is not personal advice. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.

While we believe this interpretation to be correct, it cannot be guaranteed and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.

Source: Money Week

The post 10 key dates you need to be aware of for your finances in 2023 appeared first on Innes Reid.

For those of you who have read my previous year-end messages you will know that I don’t like to look backwards as I think it is much more interesting and useful to look at what might happen rather than what already has!

I am going to have to break from the norm as I need to provide a degree of commentary on 2022 for no other reason than to set the scene for 2023.

2022 was quite a year for the global economy.

But there again so were 2020 and 2021; the COVID years!

Inflation was spiking almost everywhere and central banks had to admit that it would not be  “transitory” but one that would potentially worsen and linger. Central Banks started raising interest rates in an aggressive manner to stand any chance of subduing the perils of inflation. But that, heightened another risk; recession, and that was considered to be more of a danger than inflation.

Then the Russians invaded Ukraine bringing about awful social and humanitarian strife. It also turbo charged the economic issues at hand; supply chain shortages worsened, energy and food prices jumped and inflation surged.

It was around this time that central banks realised inflation was close to being embedded and changed their view to be that inflation was the greater risk, not recession. In essence a long period of high inflation would do more medium and long-term damage than recession.

“There is only really one blunt tool to tackle inflation and that is to put interest rates up, which is what has happened, on a record-breaking scale.”

As a result, there has been nowhere to hide for investors and in fact, 2022 was one of only three years in the past century where equities and bonds fell at the same time, the other two years being 1931 and 1969. Bonds are usually considered to be lower risk than equities therefore their decline in value has been particularly painful for investors with a lower risk approach as they may well have lost more money than those with a higher risk profile.

Then in September the whole world was looking at the UK, our politics, economy and bond market.

The unstable political backdrop was thrown into chaos and driven by what was described as a “mini” budget. Its ramifications were anything but mini! Thankfully, action was taken quickly, and the situation stabilised. Although we are not out of those woods yet.

With the economic outlook in mind, 2023 will, no doubt, be quite a year as well.

The word that is getting used more than most to describe the outlook for economies and markets in 2023 is “uncertain”, I am not 100% sure but I think that is as good a word as any. Obviously, we never know what is going to happen, but we can have a view on what we think might happen; so, let’s have a go at that.

Innes Reid portfolios are truly diverse and they embrace the global market. And with this in mind let’s take a quick look at what we can expect;

US

• The US is the world’s largest and most important economy, it is a key driver of what happens elsewhere and it appears, for now to be in pretty good shape. There is hope that inflation may have peaked, that we can look forward to a slowing pace of interest rate increases, with the peak currently expected to be in the second quarter of 2023, and that the economy may only go into a mild recession; that would be considered as a great outcome.

China

• Next up; China. COVID induced lockdowns, a highly stressed property sector and tightening regulations may cause the economy to slow at concerning pace, which is not good news. Indeed, the current social unrest can only exacerbate the problems. It has become fashionable to see China as a country in trouble. Do not underestimate its impact. In the wake of the Global Financial Crisis, it was the extensive stimulus (mainly fiscal) from the Chinese government that pulled the whole global economy out of recession.

Eurozone

• In the Eurozone, the outlook has improved as it now appears energy rationing will not be required and forced shutdowns of energy-intensive industries are unlikely. That said, a recession still appears unavoidable. In addition, more European Central Bank (ECB) tightening seems likely given the labour market pressures – unemployment rate is the lowest since the start of the common currency.

UK

• In the UK, a prolonged recession appears likely, as monetary tightening, fiscal tightening, the energy price shock and supply-side constraints from Brexit combine to create a challenging outlook. GDP (gross domestic product) has yet to regain pre-COVID-19 lockdown levels, but labour-supply shortages have driven the unemployment rate to the lowest level since 1973.

Japan

• In Japan, the country is set for a year of softer economic growth in 2023. Domestic demand is weakening and there is slowing demand for Japanese exports. Unlike the rest of the world, Japan is still operating below capacity, which means it doesn’t face the risk of monetary overtightening.

Can 2023 be a better year for financial markets?

“The backdrop is not great, caution is the watchword, uncertainty abounds.”

It’s been a tough 3 years globally for society and the economy. In economic terms 2023 will be tough as well. In the months to come we will need a positive jolt of some description, whether that be confirmation of inflation peaking or central banks no longer hiking rates or, indeed, a resolution to the tragic war in Ukraine, and – of course – a milder-than anticipated recession.

Even with the decline already seen in the price of both equities and bonds, we still anticipate 2023 will be another difficult year, though as we go through the year, the situation should improve and the outlook may get better as well.

My thoughts above are predicated on avoiding spiralling wage inflation and geo-political matters in Ukraine and China not escalating and caveated by the fact that I may well be wrong!

As always, if you have any questions about your own personal finances do not hesitate to get in contact with your adviser. Alternatively if you are new to financial planning and would like a free, no obligation consultation simple get in touch using the form below or call 01244 347 583 to speak to our team.

The outlook for financial markets 2023 – This article is not personal advice. If you are unsure what is right for you, please seek personal financial advice.

Source: Financial Express

The post The outlook for financial markets in 2023 appeared first on Innes Reid.

What are Premium Bonds?

Premium Bonds are offered by NS&I (National Savings and Investments). NS&I is a simple solution for your cash in the short term. Note you may not receive the highest returns though the monies will be backed by the HM Treasury, so all the money you place with NS&I is 100% secure plus you can retain immediate access to the cash.

While they offer a fun alternative to an easy access savings account, the odds of winning anything substantial are actually quite low. Your cash won’t grow while it’s deposited, but you could win a £1 million jackpot. Or you could win nothing at all. On this basis, rather than offering a guaranteed interest rate, you have the opportunity to win tax-free cash prizes of between £25 and £1 million every month.

Crucially, the odds of winning the Premium Bonds £1million jackpot are around 19 million to one – it should be noted, you have more chance of winning the National Lottery at around 10 million to one. 

NS&I boosts Premium Bonds prize rate to 3%

NS&I have bolstered the Premium Bonds prize pot by £80million. From January 2023 the annual Premium Bond prize rate will increase from 2.2% to 3% – the third rise in just a year – taking the prize fund to just under £300million in January. However, the odds of each £1 Premium Bond number winning remains at 24,000 to one, as NS&I is offering more higher-value and medium-value prizes rather than increasing the number of smaller prizes.

• Number of £100,000 prizes will rise from 18 to 56
• The £50,000 prizes from 35 to 112,
• The £25,000 prizes from 72 to 223.
• The number of £10,000 and £5,000 prizes will also increase.

The question is, are Premium Bonds offering a good deal for the average saver?

Premium Bonds are positioning themselves as the ultimate game of chance – with your money back if you lose. However, it is important to be aware of what is involved when you buy Premium Bonds as part of your financial planning.

The odds of winning are still the same despite the January prize increase and because the Bonds do not earn interest, your stake may be increasingly eroded by inflation.

By putting your wealth into Premium Bonds, if you do not win you are giving up any interest you might have earned on your money elsewhere. It is important to make informed decisions based on your own personal finances before entering into Premium Bonds.

Some savers use Premium Bonds for specific reasons, such as to put money away for a specific purpose to be called upon in the short term or to pay a large bill or simply as an emergency fund. On this basis saving in Premium Bonds for a relatively short period can boost the chance of a win without evaporating your buying power.

Increased interest rates

As an alternative to Premium Bonds you could consider an NS&I Direct Saver account or Income Bonds with the added bonus NS&I has also increased interest rates across these products. More than 570,000 customers holding Direct Saver accounts and Income Bonds will benefit from an increase in the interest rate, with both products now paying 2.3%, up from 1.8%.

The Direct Saver rate is at its highest level since the account was launched in March 2010, while the Income Bonds rate is the highest it has been since February 2009.

Need to know more about NS&I products?

If you’d like to know more about the advantages and disadvantages of NS&I products for your own personal circumstances speak to your adviser today.

If you are new to personal financial advice call our team to arrange a free meeting with no obligation to work with us afterwards.

Simply complete the short contact form below or call our team on: 01244 347583 or email: info@innesreid.co.uk

The truth about Premium Bonds – This article is not personal advice. If you are unsure what is right for you, please seek personal financial advice.

Source: Citywire, Times Money

The post The truth about Premium Bonds appeared first on Innes Reid.

Read our latest insight to find out more about the key changes affecting pensions, personal taxes, investments and property.

How does the Autumn Statement affect my Pension?

The State Pension “triple lock with be honoured. Under the “triple lock”, the State Pension increases each year by the higher of:

• Inflation, as measured by the Consumer Price Index (CPI) in September (of the previous year)
• The average increase in wages across the UK
• or 2.5%.

Those in retirement can expect a boost of just over 10% to their State Pension from April 2023. For someone on the full, new State Pension, that will represent an additional payment of more than £900 a year. Pension Credit will also rise by 10.1% in April 2023 and benefits will be uprated by inflation, too.

For more information about how the Autumn Statement affects your pension and retirement planning please get in touch.

How does the Autumn statement affect tax allowances?

The chancellor announced reductions to Capital Gains and Dividend Tax.

Capital Gains Tax
The Capital Gains Tax (CGT) annual exempt amount will fall from £12,300 to £6,000 in April 2023, and to £3,000 in April 2024. This means that you will only be able to make profits of £6,000 on non-ISA investments – such as company shares or second homes – in the 2023/24 tax year before CGT becomes due.

Dividend Tax
The Dividend Allowance – the amount you can earn from dividends before Dividend Tax is paid – will be reduced from £2,000 to £1,000 in April 2023, and then to £500 in April 2024.
If you receive any income from dividends, it’s likely that you will pay more tax on these dividends from April 2023 onwards.

If you are unsure or  have further questions about how these changes will affect your personal investments please get in touch. Our wealth management advisers will be able to advise you on your individual circumstances.

How does the Autumn Statement affect Inheritance Tax?

The Inheritance Tax (IHT) nil-rate band has been at its current level of £325,000 since April 2009. The additional residence nil-rate band is set at £175,000 and normally applies if you leave your home to a child or grandchild. The threshold will now remain at these levels until at least 2028.

Qualifying estates can continue to pass on up to £500,000 and the qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1 million without an IHT liability.

As house prices and asset values rise, it is likely that more and more estates will face an IHT bill over the next five years. If you have concerns about your wealth and taking financial care of your family. We have specialist Trust and tax knowledge to guide you through this complex area of Inheritance Tax and gifting to ensure you have full confidence that your loved ones will benefit from your legacy. Please get in touch if you have any questions.

How will the Autumn Statement affect my Income Tax?

Hunt reduced the threshold at which individuals pay additional-rate Income Tax. Which means higher earners will pay 45% tax on more of their earnings.

The 45% rate will now apply for earnings above £125,140 rather than the previous level of £150,000. It means if you earn £150,000 or more, you will pay just over £1,200 more in Income Tax each year.

Income Tax Personal Allowance frozen – the amount an individual can typically earn before paying Income Tax – at the current level of £12,570 until 2028. Additionally frozen, the higher-rate threshold at £50,270 and the National Insurance thresholds at their current level to 2028.

Tax planning only ever gets more complicated and that is why we are here to help. Please do not hesitate to contact us to arrange a free, no obligation meetings to talk through your personal circumstances with an independent adviser.

Need to ask a question?

If you have any questions about how the autumn statement will affect you and your personal or business finances, please get in touch. We provide a free, no obligation consultation to enable you to gain confidence in your financial planning. Call 01244 347 583 or email enquiries@innesreid.co.uk to book your meeting.

Autumn Statement – How does it affect you? This article is not personal advice. If you are unsure what is right for you, please seek personal financial advice. This article is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.  Please obtain professional advice before entering into or altering any new arrangement.

Source: Gov.uk  Autumn Statement HM Treasury

The post Autumn Statement – How does it affect you? appeared first on Innes Reid.

In his Fiscal Statement, Kwasi Kwarteng introduced a number of tax cuts aimed at addressing the rising cost of living and delivering future growth.

In his ‘plan for growth’ he carried through on Liz Truss’s leadership pledge to reverse the National Insurance and dividend tax increases that were implemented to help fund social care reforms. And in a surprise move, he will remove the additional rate of income tax from April 2023 and bring forward the 1% cut to basic rate tax.

Income tax

• Earnings and savings- The additional rate of tax of 45% (39.35% for dividends) on income in excess of £150,000 is to be abolished from 6 April 2023. This means that all taxable income over £37,700 will be taxed at 40% (32.5% for dividends).

The cut to the basic rate of income tax will take place a year earlier than planned, also from April 2023. The rate for both non-savings and savings income will fall from 20% to 19% – a saving of up to £377 a year.

The Scottish Government intend to hold their own Mini Budget in the coming weeks and this will determine how these changes will apply to Scottish taxpayers.

• Dividends– The rate of tax on dividend income is to be cut by 1.25% from 6 April 2023. The rates will return to their pre-April 2022 levels of 7.5% (basic rate) and 32.5% (higher rate) on amounts in excess of the £2,000 dividend allowance. Following the removal of the additional rate, 32.5% will be the highest rate paid on dividends from next year.
• Allowances and thresholds– There were no fresh announcements relating to the personal allowance and basic rate band. These remain frozen at £12,570 and £37,700 respectively until 2025/26. This means that the higher rate tax threshold will remain at £50,270 for those entitled to a full personal allowance.
• Trusts – There was no announcement on how the removal of the additional rate of tax will impact trusts. Currently trustees pay tax on trust income and dividends at a rate equivalent to the additional rate (45% on income and 39.35% on dividends). Further clarification is awaited and may be included in the Autumn Statement or when draft legislation is published in the Finance Bill.

The trust standard rate band for the first £1,000 of income will fall from 20% to 19% from 6 April 2023.

• Gift Aid– although the basic rate falls to 19% from next year, there will be a four year transitional period for Gift Aid, maintaining income tax basic rate relief at 20% until April 2027.

Pensions

• There were no changes to pension tax relief or allowances in the Emergency Budget.
• The abolition of the additional rate tax band from 6 April 2023 will mean that the maximum level of tax relief on pensions will be at the higher rate of 40%.

Despite the reduction of basic rate income tax from 20% to 19% from 6 April 2023, pension schemes that operate the relief at source method for claiming tax relief (personal pensions, stakeholders, SIPPs) will still be able to claim 20% basic rate relief until April 2024.

National Insurance

• The increase to NI to help pay for social care reforms has been scrapped. The additional 1.25% which was added to the rates of NI for 2022/23 for employees, employers and the self-employed will be removed from November 2022.

The changes to the thresholds at which individuals (both employed and self-employed) start to pay NI, which were introduced in July 2022, will remain – i.e, they’re in line with the annual personal allowance of £12,570.

Capital Gains Tax

• No changes announced.

Previously announced – The annual exempt amount will remain frozen at £12,300 for individuals (and personal representatives) and to £6,150 for trustees of settlements, until 2025/26.

Inheritance tax

• No changes announced.

Previously announced – Both the nil rate band and residence nil rate band will remain fixed at £325,000 and £175,000 respectively until April 2026.

Corporation tax

• The planned rise to the rates of corporation tax from 19% to 25% from April 2023 will not go ahead. The rate of corporation tax will remain at 19% and the reintroduction of tapering relief for businesses with profits under £250,000 has also been scrapped.

Seed Enterprise Investment Schemes (SEIS)

• In a move to encourage entrepreneurism, the Chancellor is increasing the amount of funding that young start-up companies can raise through the SEIS. The amount that investors can subscribe into SEIS and enjoy the tax breaks on offer will double from £100,000 to £200,000 from April 2023.

IR35

• Previous reforms to ‘off-payroll’ working, also known as IR35, will be repealed as part of the Government’s plan to reduce complexity in the tax system.

From 6 April 2023, the responsibility for determining employment status and paying the right amount of tax and NI will again fall those contactors providing their services via an intermediary company, such as a personal services company.

This will take the burden away from the company engaging the services of a contractor, saving them time and money and allowing them to focus on growth.

The rules as to the employment status of a worker providing services through an intermediary have not changed, and the Chancellor promised that compliance would be kept under review.

Stamp Duty Land Tax

• As part of a package of measures designed to ‘get the housing market moving’, the SDLT threshold will be doubled so that no tax will be due on purchases of residential property up to £250,000 in England and Northern Ireland.

This relief is extended to first time buyers who will pay no tax on purchases less than £425,000 (up from £300,000) on properties up to a maximum value of £625,000.

These new thresholds will apply from today.

In Scotland Land and Buildings Transaction Tax (LBTT) and Wales Land Transaction Tax (LTT) is a matter for their respective Governments, but both will receive funding to use as they see fit.

Get in touch

If you have any questions about how the mini-Budget will affect you and your finances, please get in touch to book a meeting with Innes Reid.

All information is from the Growth Plan 2022 document.

The content of this “mini-Budget” summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.

While we believe this interpretation to be correct, it cannot be guaranteed and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.

The post Everything you need to know about the “mini Budget” appeared first on Innes Reid.

According to a survey conducted by Aviva, almost 6 in 10 people agree that the pandemic has made them question what’s important in life. Half have said it changed their priorities, while 53% of adults in the UK have suspended or cancelled a planned a life event, such as buying a new home, getting married or starting a new business.

The pandemic gave us all time to think about what’s important. 4 in 10 feel like they have less control, however, the same proportion feel like they can take more control of their priorities. Planning for your priorities will allow you to reach your goals whilst protecting what’s important to you. If you feel like you have less control, putting a plan in place is crucial to moving forward.

When it comes to finances 41% say life during Covid has encouraged them to build more long-term savings and plan for unforeseen events and significant life stages such as retirement plans.

As we look back over the past two years, how has the pandemic affected your goals and what you want to achieve? Family, travel or business? Building something that’s close to your heart takes preparation and commitment – financial planning can improve your roadmap to achieving those goals important to you and support any bumps in the road.

5 tips for planning for unforeseen events

We all know the unexpected does happen. While you may not be able to prevent the unexpected, there are steps you can take to reduce their long-term effect.

#1 Decide on your priorities

Thinking about what is most important to you can help give your decisions some direction. It means you’re in a position to build a plan that puts these priorities right at the centre and that can protect your goals.

#2 Create a financial safety net

The unexpected can have a significant effect on your finances. An unexpected bill or being unable to work due to illness can place strain on your day-to-day finances. Building a financial safety net is a reassurance to give you freedom, especially when things are out of your control. It’s something our Financial Advisers are passionate about. Whatever life throws at you, knowing you have a financial safety net, that is backed by expert advice, can be reassuring even in the toughest of times.

#3 Create a financial plan with the unexpected built in

What would happen if your investment didn’t perform as well as expected? Or how would you cope financially if you needed to take some time off work due to illness? When it comes to making your financial plan, take time to consider different scenarios, including those that don’t go according to your plan. That way, you can limit the impact it will have on your goals

#4 Keeping on track

Always schedule to review. This will give you the opportunity to identify potential issues before they occur it can also keep you on track and give you confidence your plan is working for you.

#5 Succeed with a financial adviser

As financial advisers, it’s our responsibility to bring confidence to your goals and help you to put in place a financial plan that not only supports your goals but protects them when the unexpected occurs. We’ll help you to understand potential risk and what to do to mitigate their effects.  On average, people who receive professional financial advice have an estimated £48.279 more in their pot compared to those in a similar income bracket who do not take advice.

Please contact our team to start your financial journey today and achieve your goals. Book your complimentary meeting to get started. Call our team on 01244 347583 to arrange a time that’s convenient to you.

This blog is for general information only and does not constitute advice.

Source: Aviva, Financial Times

The post 59% of people say the pandemic has made them question their priorities. Has it affected your plans? appeared first on Innes Reid.

We have put together some key tips to help you get started:

Review your everyday spending

• Review your car insurance – if you’re driving fewer miles these days because you’re working from home you may be able to get cheaper car insurance.
• Check your outgoings – Many online banking apps can offer you a breakdown of your spending. Take a moment to review your outgoings, small tweaks can add up to big savings.
• Compare utility prices – A simple check can reduce your monthly outgoings and changing provider is easy.
• Make a shopping list – We’re all guilty of grabbing the latest offers on the end of the aisles. Try to keep your shopping list and your budget. Giving into temptations each week can be costly.
• Review your credit cards – Consider consolidating your loans and credit cards to help reduce interest payment.
• Check your tax allowances – if you’re working from home don’t miss out on your tax relief. Check here>

Be pension proactive

• Get to grips with old pensions – Use the Pension Tracing service to track down any old pensions Visit the Pension Tracing Service here>
• Check your State Pension forecast on the HMRC website Check your State Pension here> and think about whether you should make voluntary National Insurance Contributions (NICs).

Get retirement ready

• Start thinking about when you would like to retire. Thinking about later life can be daunting, take steps to understand what you’d like to achieve in retirement first.
• How much will you need in your pension pot to achieve the lifestyle you imagine? Think about your current outgoings, will this change in retirement?
• Try our Wealth Calculator – this will instantly give you an idea of how much you need to save and when you can retire. Use our Wealth Calculator>
• Take advice – if you’re unsure about your retirement options talk to an expert. An Independent Financial Adviser will help you to navigate all your pensions and create a personal plan for your retirement. Contact our team to book a free consultation>

It’s never too late to start planning for your future. Get Tips for financial wellbeing and receive independent, impartial advice to achieve your goals.

If you’re ready to make your retirement something to look forward to, not something that keeps you up at night contact our team for a free consultation info@innesreid.co.uk or tel: 01244 347 583. 

This article isn’t personal advice.

The post Tips for financial wellbeing appeared first on Innes Reid.