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current withdrawal rate, leaving the average person with a nine-year shortfall. 1 in 7 already regret how much they’ve withdrawn.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

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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.

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

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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.

Losing track of your pensions can be costly. Across the 3.3 million pension pots considered lost, the average fund value is £9,470 – rising to £13,620 for those aged 55 to 75.

By consolidating multiple workplace and private pensions into fewer schemes – or even just one – you could make it easier to track and manage your retirement savings. Additionally, bringing multiple pots together may help you grow your funds more efficiently and reduce your administration fees.

Generally, you can consolidate any defined contribution (DC) schemes, regardless of whether they are workplace or private pensions. However, pension consolidation may not always be appropriate, with a variety of fees, rules, and the potential loss of benefits to consider.

Read on to discover three reasons why pension consolidation could boost your retirement income, and when consolidation might not be appropriate.

1. It’s often easier to manage your pensions and calculate whether you’re on track

By bringing more of your pension pots together under one provider with a single set of rules, features, and benefits, you may be able to simplify your pension management.

According to an August 2022 study from Standard Life, the average person in the UK changes jobs every five years. As a result, people often accumulate multiple workplace pensions throughout their working life – making it easy to lose track over the years.

With fewer pension providers, policy details, and fund values to keep track of, you can reduce the administrative burden of managing multiple pensions. This helps you maintain a clear view of your total retirement funds and monitor how well your investments are performing, while reducing the risk of losing money in forgotten pots.

With a greater understanding of how much you currently have, you can more easily determine how much you need to grow your funds to achieve your retirement goals.

2. Your money could have higher growth potential if it’s all invested in one place

Generally, investment options vary from one pension to another. While some older pensions may be limited to investment funds managed by the provider, others could offer a wider choice and more flexibility for you to decide where your pension is invested.

Some schemes may perform better than others, delivering a higher rate of return on your pension savings. Additionally, having a larger pot may present more investment opportunities, with some requiring a minimum investment size.

Plus, since your investment returns compound over time, consolidating your pensions could enable them to grow more quickly.

Indeed, by moving more of your funds into a pension that offers potentially higher returns, you could accelerate your pension’s growth. According to HM Treasury in May 2025, the average earner could boost their retirement savings by £6,000 through consolidating their funds.

3. You might pay reduced fees

When you have several pension pots, you could unnecessarily pay duplicate fees. Each scheme generally comes with varying administrative charges, ranging from less than 0.5% to more than 1% of your fund. Typically, older pensions are likely to have higher fees.

While individual fees may sometimes appear nominal, the amount you’re charged is likely to grow as time passes and your fund value increases. Considering you could be paying such fees across multiple schemes and over several years, the total charges paid over your lifetime can be significant.

However, some schemes may also charge an exit fee. For pensions set up before 31 March 2017, you could be charged up to 10% of your fund. If you set up your scheme after this date, or are aged 55 or over, exit fees are capped at 1%.

As a result, consolidating your pension pots can boost your retirement savings by reducing your costs. However, choosing which plan to transfer your funds into requires careful consideration.

The benefits of pension consolidation depend on your circumstances

Consolidation isn’t appropriate for everyone. In some cases, partial consolidation can be a good option, whereby you bring some of your funds together while leaving other pots separate. For some people, consolidation might not be necessary at all.

Smaller pension pots

If you have pots worth less than £10,000 and plan to withdraw from them before retirement, it could be worth leaving them separate from your other funds because of the “small pots exemption”.

As of 2025/26, you can generally draw down up to three of these pots in your lifetime without triggering the Money Purchase Annual Allowance (MPAA). This allowance permanently reduces the amount you can pay into your pension tax-efficiently from £60,000 to £10,000 a year.

Defined benefit schemes

If you have a defined benefit (DB) pension, consolidation is unlikely to be a sensible option. Unlike DC schemes, DB pensions generally offer a guaranteed retirement income based on your salary and years of service with your employer.

In fact, you may be required to seek advice from a qualified financial adviser before transferring funds out of a DB scheme that contains over £30,000.

Your current workplace pension

If you and your employer are still contributing to a workplace pension, it may be worth keeping that scheme open. By closing it to consolidate with other funds, you’ll likely surrender your employer contributions, which may prove significant over time.

Protecting scheme benefits

In some cases, your pension schemes may offer valuable guarantees or benefits that are more common with older schemes, such as:

• Guaranteed annuity rates
• The ability to access your funds before age 55, although this is rare
• Flexible ways to take retirement or death benefits.

If it’s not possible to consolidate your other pensions into your preferred scheme – for example, if your employer is contributing to a different pot – it might be worth leaving your funds where they are.

It’s often worth seeking advice before consolidating

While pension consolidation may deliver a range of administrative and financial benefits, creating a strategy for bringing multiple pots together can be complex.

There are a variety of rules, fees, benefits, investment opportunities, and personal factors to consider before consolidating. In fact, in September 2025 IFA Magazine reported that poorly informed pension transfers made in the year to 30 June 2025 may have cost savers £1.7 billion.

By seeking guidance from a qualified financial planner, you could help determine the most effective consolidation strategy for your needs and circumstances. Get in touch to learn more about how we can support you in boosting your retirement funds.

Talk to us

Talk to our team today about pension consolidation. 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 your circumstances and a welcome reassurance moving forward.

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

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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.

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.

Workplace pensions are regulated by The Pensions Regulator.

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.

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 tax planning.

The post How Pension Consolidation Can Maximise Your Retirement Savings appeared first on Innes Reid.

Reassuringly, the major headline from this year’s springtime fiscal event is that Reeves made few announcements that are likely to affect you and your personal finances directly. Although, it did reveal that none of the changes made in the Autumn Budget would be overturned. However, one significant change has been made to the High Income Child Benefit Charge, which could affect you or your family.

The chancellor did announce that, due to global uncertainty and after the economy declined in January, the Office for Budget Responsibility (OBR) has downgraded its 2025 forecast for UK growth from 2% in October 2024 to 1% as of March 2025. She also noted the OBR’s long-term forecast, indicating that growth would increase for each year remaining in this parliament.

In addition to growth figures, the chancellor’s Statement introduced a range of measures designed to increase economic activity in the UK, as well as cost-saving initiatives, predominantly at state level, to reduce government debt.

Read on for your summary of the chancellor’s 2025 Spring Statement.

Personal tax thresholds and allowances are set to remain unchanged 

Those who were concerned the chancellor would announce sweeping changes that might affect their personal finances will be breathing a sigh of relief as many worries didn’t materialise.

Personal tax

Reeves stuck to a pre-Spring Statement commitment to not increase personal taxes.

So, Income Tax thresholds and rates will remain unchanged, and thresholds are frozen until April 2028. As a result, your Income Tax liability is likely to rise in real terms.

Similarly, the rates and thresholds for paying Capital Gains Tax (CGT) and Dividend Tax will remain the same.

Individual Savings Accounts (ISAs) 

Before the Spring Statement, the government was reportedly considering reducing the amount you can tax-efficiently place in a Cash ISA each tax year to £4,000 in a bid to encourage greater investment.

The good news is the ISA subscription limit will remain at the current level (£20,000) in the 2025/26 tax year. The ISA subscription limit is frozen until 2030.

The Junior ISA (JISA) allowance will remain at £9,000 in 2025/26.

However, the government did note it will continue reviewing ISA reform options to improve the balance between cash and equities to earn better returns for savers, boost the culture of retail investment, and support its growth mission.

Pensions

Last year, the government announced a new Pension Schemes Bill, which will legislate several areas of pension policy. However, further reforms weren’t announced in the Spring Statement.

The Annual Allowance will remain at £60,000 in 2025/26. Your Annual Allowance may be lower if your income exceeds certain thresholds or you have already flexibly accessed your pension.

As usual, there was also speculation that the amount you could withdraw from your pension tax-free would be reduced, but this has remained unchanged. So, when you reach the normal minimum pension age (55, rising to 57 in 2028), you may withdraw up to 25% of your pension (up to a maximum of £268,275) before paying Income Tax.

State Pension

As expected, there were no announcements relating to the State Pension or the triple lock, which guarantees the State Pension will increase every tax year by either the rate of inflation, average earnings growth, or 2.5%, whichever is higher.

As a result, the full new State Pension will pay a weekly income of £230.25 in 2025/26.

High Income Child Benefit Charge reforms will come into place this summer

Although the chancellor did not explicitly announce the change, the Spring Statement document revealed that those who pay the High Income Child Benefit Charge will be able to do so through PAYE from summer 2025.

As it stands, those who pay the charge need to register for self-assessment to do so, even if they do not otherwise need to self-assess. But this year, the government is making it easier for families to pay the charge without needing to submit a tax return.

Inflation is forecast to meet the Bank of England’s 2% target by 2027

After reaching a 40-year high of 11.1% in October 2022, inflation, as measured by the Consumer Prices Index (CPI), has gradually fallen, bringing it closer to the Bank of England’s (BoE) target of 2%.

The chancellor announced in her Statement that in the 12 months to February 2025, inflation rose by 2.8%, down from 3% in January. Now that inflation is better under control, the BoE has cut its base rate three times since the general election, bringing the rate down from 5.25% to 4.5%. These cuts mean borrowers will likely pay less while savers may see their interest payments fall.

It was then announced that, according to the OBR’s forecast, inflation will average:

• 2% in 2025
• 1% in 2026
• 2% in 2027, 2028, and 2029 – the BoE’s target rate.

The key fiscal announcements from the 2025 Spring Statement

The chancellor’s speech largely revolved around changes to government spending and investment. Some of the key measures and announcements included in the Statement were to:

• Increase defence spending to 2.5% of GDP by 2027, including providing an additional £2.2 billion to the Ministry of Defence next year
• Rebalance payment levels in Universal Credit to incentivise people into work, and review the assessment for Personal Independence Payments, with the OBR stating these changes will save £4.8 billion from the welfare budget in 2029/30
• Crack down on promoters of tax avoidance schemes, as initially announced in the Autumn Budget in October 2024
• Invest £2 billion in social and affordable housing, so housebuilding reaches a 40-year high that helps put the government on track to reach its target of building 1.5 million homes by the end of this parliament
• Introduce a £3.25 billion Transformation Fund to streamline public services using technology and Artificial Intelligence, making the government “leaner and more efficient”. Additionally, government departments will reduce their administrative budgets by 15% by the end of the decade.

2024 Autumn Budget changes remain intact

In October 2024, the chancellor announced a series of tax-raising measures during the Autumn Budget, some of which could have affected your personal finances. These included:

• Inheritance Tax (IHT) will be levied on unused pension benefits from April 2027.
• Agricultural Property Relief and Business Property Relief will be reduced from April 2026.
• CGT rates for non-property gains were raised in line with property rates with immediate effect, and Business Asset Disposal Relief and Investors’ Relief were both reduced.
• Employer National Insurance contributions (NICs) will rise from April 2025, from 13.8% to 15%, and the threshold at which employers start paying NICs will also fall.
• Income Tax thresholds will remain frozen until 2028.
• The IHT nil-rate bands will remain fixed for a further two years, until 2030.
• VAT was levied on fee-paying schools, effective from 1 January 2025.
• The non-dom tax regime is set to be abolished from April 2025.
• The Stamp Duty Land Tax surcharge on second home purchases rose from 3% to 5% from 31 October 2024.
• Corporation Tax is now capped at 25% for the duration of the parliament.

While many hoped the chancellor would row back on some or all of these measures, all remain intact.

Get in touch

If you are new to financial planning and have any questions after reading about the Spring Statement do not hesitate to contact our team. We provide a free initial meeting worth up to £300 with one of our trusted, independent advisers.

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

Please note

All information is from the Spring Statement documents on this page.

The content of this Spring Statement 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 Your Spring Statement update – the key news from the chancellor’s speech appeared first on Innes Reid.

Mark Reidford APFS, Founder and Managing Director

Over the last few months, we will have all seen the tough economic headlines and as a result we will have witnessed the impact of stock market volatility on our pensions and investments; it has been a tricky 2022 so far.  So in terms of Pensions and Investments – what can we expect in the coming months?

It is natural to feel nervous or worried when national or global events have a direct influence on our wealth. However, market volatility is part and parcel of investing and this period was very much anticipated. For regular readers of my blogs you will remember within our June 2021 newsletter I stated; “the next 12 to 24 months are going to be fascinating to watch unfold and we fully expect a bumpy ride”.

Twelve months ago we recognised money printing and lockdown savings were combining with pent-up demand, requiring consumers to pay more for goods and services. In addition, many companies also needed to restock but supply had been constrained in areas, triggering price spikes as economies re-opened.

At the time of writing in June 2021 there was clear evidence that inflation was rising and the key questions for investors was whether inflation would be transitory or structural and what action was necessary to deal with it?

Any debate around whether inflation is structural or transitory seems to have disappeared: The war in Ukraine was the turning point in terms of embedding inflation expectations and the debate has now been parked. Aside from the dreadful human suffering, the invasion has created significant shock waves throughout global markets and unleashed commodity price chaos pushing up the price of raw materials produced by the two countries. From crude oil to wheat and from nickel to neon, costs have spiked and stayed highly volatile as supply worries continue creating more inflationary pressures.

Central Banks have an unenviable task similar to trying to “nail jelly”.

Central Banks have an unenviable task similar to trying to “nail jelly”. At the start of May 2022, the Bank of England found itself in the unusual position of raising interest rates to dampen down the economy whilst at the same time warning of a recession later this year.

Clearly the Bank of England governor Andrew Bailey was preparing us for difficult times ahead (‘a bumpy ride’) when he recently told a Treasury Select Committee that the current environment “is the biggest test of the monetary policy framework that we have had in 25 years”.

We see several issues that could cause problems on the economic road ahead. Not least among these are rising prices, geopolitical uncertainty, market volatility, business confidence fragility, together with supply chain worries and a policy tightrope walk for central banks.

When building our client’s individual financial plan, we factor in all sorts of unknown variables. These will include periods of investment uncertainty, inflation and, of course, changes to your own circumstances.

If your long-term goals haven’t changed since the start of the year, it is unlikely your plan will need to change either.

Your goals might be 5,10, 20 or even 30 years in the future, so the performance of stock markets in 2022 is, in the overall scheme of things, not going to make an enormous difference to you meeting your financial goals.

Remember: your plan already assumes that there will be tricky periods in the markets!

Remember: your plan already assumes that there will be tricky periods in the markets!

With all the doom and gloom I still see a number of positives i.e. employment data released in May 2022 showed that, for the first time since records began, there were more job vacancies than unemployed people in the UK.

UK house prices have continued to rise strongly throughout this year, increasing by 5.6% in the first six months and driven by elevated levels of demand. We are of the opinion that, while transactions and thus price growth will continue into 2022, it will be tempered by the exceptional growth we have seen this year – especially if interest rates continue to rise as expected. This will lead to a ‘soft landing’ rather than a dramatic price correction over a short period of time.

What we particularly like is the expectation that during 2022, the Midlands and the North of England will show the strongest price growth, mainly driven by their greater capacity for growth.

What we particularly like is the expectation that during 2022, the MIdlands and the North of England will show the strongest price growth, mainly driven by their greater capacity for growth.

Stock markets will have a lot of bad news to digest over the next few months and households have not yet felt the full force of inflation, nor have businesses. Market valuations have come down a long way, and we fully expect they still have further to go.

The positive we see here is the key support equities have in their favour is the cost of holding cash. While you may not “lose” money by keeping your wealth in cash savings, you are almost certainly eroding its value in real terms. In a high inflation world, it looks like the riskiest choice of all.

Given that cash has become more expensive than ever before because of the drag of inflation, we believe there will be money looking for a home. This may support markets even if the environment continues to look weak.

Finally, 30 plus years of investing tells me periods like the one we are currently experiencing provide good investment opportunities. Buying in a falling market can offer benefits when markets recover which, history tells us, they almost always do.

Remember what Warren Buffett says; “Be fearful when others are greedy, and greedy when others are fearful.”

It is times like these that confidence should be taken from the fact Innes Reid are here if you need to talk to gain reassurance that you are still on track or if you plans and goals need to be reviewed.

Always remember we are here to help

If you have any questions about the current uncertainty or you would like to review your Innes Reid portfolio, please do not hesitate to contact your adviser. If you have not worked with us before, come and see us to learn more about how we do things.

Call 01244 347 583 or email enquiries@innesreid.co.uk

This article is not personal advice. If you are unsure what is right for you, please seek personal financial advice.

Please note the value of your investment 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.

The post Pensions and Investments – What can we expect in the coming months? appeared first on Innes Reid.

The amount you need to retire depends on many factors including what age you’d like to retire, what income you’ll need and any assets you may have. You may plan to reduce your spending or you may want to maintain a certain standard of living you have become accustomed too. Whatever your personal aspirations for retirement, determining the best route to achieve your goal takes careful, early planning. Speaking to an expert can give you that piece of mind and make you feel confident you will be financially able and ready.

Try our Wealth Calculator to see how, if or when you can retire>>

There are many financial plans to make your pension work harder and it is the role of our Independent Financial Advisers to determine the best route for your personal circumstances.

Taking the time to engage with a trusted adviser will enable you to shape your income profile and assess your current assets and earnings. Our tailored advice and expert knowledge can make the difference between choosing to retire early or acknowledging you may need to work longer or part time – something 27% of retirees in 2021 intend to do.

Personal advice inevitably helps you to understand how to achieve your aspirations and spend it wisely to reduce those worries of not having enough. We’re experienced in supporting real people with real concerns and providing personal, tailored advice to put your mind at ease especially after a difficult year.

> Meet The Langhorns – they needed help maximising their pensions ready for retirement.

If you’re thinking about plans for the future make sure you have a pension to get you there successfully. For clear advice that’s personal Innes Reid can help, our team will:

• Make sure your investments are ready for when you do choose to retire.
• Review your current pension plans and help you find any that you have lost.
• Help you navigate the complex tax rules and avoid mistakes.
• Shop around for the right deal so you have full confidence in your retirement plans.

Start your retirement planning journey today by speaking with an Independent Financial Adviser at Innes Reid. Your first consultation is free and with no obligation.
Contact us on Tel: 01244 347583 or by email on info@innesreid.co.uk

Don’t leave your future to chance. The risk of leaving your pension too late is a real one.  This article isn’t personal advice.

The post The risk of leaving your pension too late appeared first on Innes Reid.

1. Determine where you are and where you want to be financially

Like many people, you may have made new year resolutions to manage your money more effectively and save more towards your future, but where do you start?

Ask yourself the following questions:

• • How can I reduce my outgoings or increase my income to save more?
  • How well are my existing investments and pensions are performing?
  • What are my investments and pensions are currently worth?
  • What I am invested in?
  • Am I confident that my pension is on target to provide my desired income in retirement?
  • Are my finances as tax efficient as possible?
  • Do I have a Financial Plan?

Rather than focusing just on saving, think about the lifestyle and goals you want to achieve in the future. Visualise yourself enjoying these things as a result of your efforts now!

TIP: Do three things this year to support your future, such as having a pension review, increasing your monthly pension contribution and setting a motivational retirement goal.

2. Plan for the medium to long-term

As we go through the different phases of life, our priorities change.

A Financial Plan highlights key stages in your life where you may want to generate more income or dip into your savings to achieve your goals. Think of it like a timeline into your future.

Ask yourself:

• At what age do I want to retire?
• When do I want to be debt or mortgage free?
• What do I want my retirement to look like?
• Do I aspire to privately educate my children or grandchildren?
• Do I want to provide my family with an inheritance?

Your Financial Plan can help you to think about the timescales you have to achieve your goals and what you need to do now to be ready.

TIP: Note down your medium and long-term financial goals and look at the timeframe you have to achieve them. Start saving today!

3. Be smarter with your money

Managing your investments wisely can make an enormous difference, which is why so many people turn to a financial adviser for help.

There are many ways to make your money work harder and to reduce tax implications. It is the role of a financial adviser to know and comply with financial regulations and to determine the best route for the client. The financial plan they create will take into consideration the client’s personal circumstances and will aim to help them to achieve their financial goals within the determined timescales.

Investments should be reviewed and managed regularly to see if they are still performing. Spreading your money across different assets and markets, known as diversifying, is very important and can minimise risk.

Time is also a huge factor in saving and investing. As your savings and the interest earned on them is compounded over time, the multiplication effect can significantly increase the actual sum invested. Remember that your investments can go down as well as up.

TIP: Get expert advice – speak to a financial adviser about your unique requirements. Don’t leave your future to chance. This article isn’t personal advice.

Start your journey today by speaking with an Independent Financial Adviser at Innes Reid. The first consultation is free with no obligation. Contact us on Tel: 01244 347583 or by email on info@innesreid.co.uk.

The post What are your New Year Financial Resolutions for 2021? appeared first on Innes Reid.

A pension remains the most tax-efficient way to save and provide an income for later life.

The gender pensions gap is the percentage difference in pension income for women compared to men, once they reach pensionable age. By the age of 60, the average woman’s pension is £51,100 compared to the average man’s pension being £156,500. That’s over a £100,000 gap, according to research from Now Pensions.

A 2018 study by Prospect showed that women on average have £7,000 a year less pension than men – and the Office for National Statistics figures show that the majority of the poorest pensioners are women.

How does the gender pensions gap happen?

During their 20s, men and women have relatively the same size pension pot, assuming equal work hours, pay and employers’ contributions. The change begins to happen around people’s 30s-40s.

In the natural course of a woman’s life, one or more of these events often happen:

• Having a child/children, resulting in taking maternity leave and career breaks;
• Returning to work part time to facilitate childcare and to minimise the cost of full time childcare for the family, therefore earning less;
• Returning after several years off to raise the children and not being able to get a job on the same level as before;
• Having multiple jobs (so they can work flexibly) which may add up to a full time wage, but do not individually qualify for a workplace pension scheme;
• Getting divorced, losing access to their spouse’s pension before reaching their own retirement;
• Becoming a single parent, often with the majority of the childcare and/or bills;
• Becoming a carer for a parent or relative – again becoming part time or taking a lower paid job to give flexible working;
• Living longer than men statistically, so a woman’s pension needs to stretch further.

Although these events can also impact men, statistically it is the woman who changes her career and therefore her pension contributions, to prioritise the family, causing the gender pensions gap.

What can the Government do?

The gender pensions gap is not just about mothers.

Many in the industry have been lobbying for the Government to remove the £10,000 annual earning threshold. Only workers earning more than £10,000 per year and aged between 22 and State Pension age, will be automatically enrolled into a workplace pension by their employers. If a worker earns between £6,240 and £10,000, they won’t be automatically enrolled in, but can ask to join. If they earn less than £6,240 per year, they are not eligible to join the workplace scheme at all.

If the £10,000 barrier was eliminated, an additional 1.9 million extra people, many of whom are women, could be eligible for a workplace pension.

So, people in a part time role or on a low income may not be receiving the employer contributions a workplace pension brings – or even have a pension at all. Compounded over time and with associated interest, these contributions make a huge difference to a pension pot at retirement.

A change in social policy by the Government on pensions in this way could bring inclusion for those on lower wages. It would also minimise their need to support people in later life, whose workplace pensions are not sufficient to see them through their twilight years – perhaps enabling them to pay for care and reduce the number of women reducing their working hours to care for them. The change would certainly help to close the gender pensions gap.

What can employers do?

Be flexible

The COVID-19 lockdown has shown employers that flexible and at-home working is possible in many industries. If they continue to offer this to staff, it may enable many women to return to full time hours whilst still supporting their families. The 9-5 does not necessarily need to be done between the hours of 9-5 or in the office!

A return to full-time hours for women would increase their income and therefore their pension with a double-whammy: they’ll pay a larger contribution through a higher percentage from their full-time wage plus receive a percentage increase from their employer.

Encouragement and advice

Employers could encourage staff to save into their pension at an early age and to engage more with their workplace pension. They could also encourage women choosing to have children to meet with an Adviser before they begin maternity leave, to discuss how taking additional time off or a return on part time hours or a career break will impact on their pension. This would help to reduce the gender pensions gap.

Analysis from Now Pensions on the gender pensions gap suggests that for members earning an average salary, based on mean salaries derived from the Office for National Statistics (ONS), pension savings will grow to £50,514 for men and £40,332 for women over the next 40 years, assuming a 3% investment growth.

Yet if a five-year career break, taken between the ages of 28 and 33, is applied to this estimation, women’s retirement savings fall to £33,986.02; this is 33% less than the average amount saved by men.

What about the self-employed?

According to Statista there are around 4.8 million self-employed people in the UK in 2019, accounting for 15% of the UK workforce. 1.66 million of these are self-employed women. Yet just 31% of the self-employed are saving into a pension.

Many women choose self-employment after having children as an enabler to flexible working, which may not have been available in a previous career.

Those who are self-employed or directors of a limited company may be paying themselves a low salary and topping it up with dividends, or have a fluctuating salary. If they do not employ staff, they will not be required to set up a workplace pension scheme, meaning their own pension may be forgotten in the drive to meet business needs.

Self-employed people can pay into a personal pension and gain tax advantages, but this contribution is an amount of their choosing instead of a set percentage of a wage. It is often what is left after business costs, rather than being a calculated amount to meet a target for their future needs.

Speak to a Financial Adviser about the most tax effective way of paying into a pension as a business owner.

What can women (and men) do?

The employed

Find out about your company’s maternity, paternity and shared parental leave policies. If the woman is eligible to receive maternity pay during her leave, she will also continue receiving regular pension contributions from your employer. She must however, remain in the workplace pension scheme, continue with payments and not opt-out during this time.

Be more engaged

Gen up on your pension! Download your pension’s app or check their website every month or so. Find out what your pension/s are worth. Make a plan with a Financial Adviser so you know the figure you are aiming for in retirement. Remember, that investments can go down as well as up. A pension is a long-term strategy and fluctuations in the economy and your investments are to be expected.

Marriage dissolution

If you are considering, or have had, a separation or divorce, it is worth consulting a Financial Adviser to see how your pension and other finances have been impacted so you can plan for your new future.

The pension arrangements of one, or both parties, can be one of the largest financial assets of a marriage and are taken into account as part of any financial divorce settlement or the dissolving of a civil partnership.

On divorce, it is important to understand that there are no ‘automatic’ benefits or entitlements to pension sharing, so don’t assume pension values will be split in half.

State Pension Forecast

The gov.uk website can give tell you what your state pension will be and explain your National Insurance contributions.

Take control of your pension and future with retirement modelling

Ask a Financial Adviser to review what you are paying in to your pension and compare to what it is it likely to be worth in retirement and how much income it will provide. Many people pay a token amount in without any idea of how much they want to or need to end up with, to get a decent standard of living and pay for all the things they are planning for retirement.

Also read: Pension Glossary – learn the lingo

If you would like a consultation with one of our Independent Financial Advisers about your pension, retirement plans or your general finances, please contact us by email: info@innesreid.co.uk or on our normal number: 01244 347 583 during office hours.

First consultations are free and appointments can be made outside of working hours, face to face or over zoom.

The post The shocking gender pensions gap impacting women appeared first on Innes Reid.

First he was accused of breaking a Tory manifesto pledge, then Prime Minister Theresa May said a Bill on the changes would not be introduced until the autumn, and now he has dramatically announced he is abandoning the plans!

He said: “It is very important both to me and to the Prime Minister that we are compliant not just with the letter, but also the spirit of the commitments that were made.

“In the light of what has emerged as a clear view among colleagues and a significant section of the public, I have decided not to proceed with the Class 4 NIC measure set out in the Budget.”

With all the fuss generated by the NICs, perhaps other issues raised in the Budget have been harder to get to grips with.

Here are a few Budget items to consider when you are thinking about your pensions and investments.

Inheritance Tax

It was confirmed that the new Residence Nil Rate Band will come into effect from April 2017. It starts off at £100,000 for 2017/18 rising to £175,000 by 2020/21. This will work in tandem with the existing £325,000 threshold for paying Inheritance Tax

It means by 2020 a couple could pass on £1million to their children and grandchildren free of Inheritance Tax. But, of course, there are rules and regulations to consider in conjunction with this so consult your financial adviser.

Interest on Collective Tax Investments

It was also confirmed that with effect from 2017/18 interest on Collective Investments is to be paid gross to the individual investor with no basic rate tax deduction.  Not paying tax at source on your investments is a bonus, but less so if you are drawn into a self assessment return.

Careful planning is required to ensure your investments are working tax efficiently so contact us for a free consultation.

Dividend Allowance

The tax free £5,000 a year Dividend Allowance introduced in 2016/2017 will continue in 2017/18. But in an unexpected move, the Chancellor announced this would reduce to £2,000 in 2018/19 in a measure targeted primarily at businesses, but also affecting investors in stocks and shares.

There are so many tax allowances currently affecting your savings (savings allowance, dividend allowance, starting rate band and so on), the tax system has never been so complicated. Having so many allowances also brings opportunities to save tax and boost investment returns so expert advice has never been more important.

Clients should consider the implications of this with their financial adviser to check their investments are working efficiently with these changes.

Pensions

The main changes in pensions came in the Money Purchase Annual Allowance which will reduce from its current level of £10,000 to £4,000 from 6^th April 2017. The MPPA applies to individuals who access their pension benefits flexibly whilst they are continuing to work.

But despite this, pensions have never been more tax efficient, so taking advice on how to get the best out of it is essential to ensure the best returns.

And with the existing £150 income tax and national insurance relief for employer-arranged financial advice increasing to £500 from April 2017, there has never been a better time to seek advice.

For help with your pensions and investments and any queries on issues raised by the Budget, call the experts at Innes Reid on 01244 347583 or email info@innesried.co.uk

The post Spring Budget: There were some colourful moments! appeared first on Innes Reid.

Pensions remain the most tax efficient way to save for your retirement. Here is a list of 10 reasons why we think you should pay into your pension before April!

1. Tax relief at the highest rates

• Tax relief at the highest rates may not be around forever.
• Additional and higher rate taxpayers should contribute to maximise tax relief at 45%, 40% or even 60% while they have the opportunity.
• Carry forward can allow contributions in excess of the current annual allowance.

2. Avoid the annual allowance cut for higher earners by using carry forward

• High earners face a cut in the amount of tax-efficient pension saving they can enjoy this tax year. The standard £40,000 annual allowance could drop to £10,000.
• It is possible to reinstate their full £40,000 allowance by making use of carry forward.

3. Last chance for a £50k carry forward

• This tax year is the last opportunity to carry forward unused annual allowance from 2013/14 when it was still £50,000. If it isn’t used, the additional allowance will be lost.
• The maximum carry forward of unused allowances for the current year is £130,000.

4. Boost SIPP funds now before accessing flexibility

• Anyone looking to take advantage of the new income flexibility for the first time should consider boosting their pension fund before April, potentially sweeping up the full £40,000 from this year plus any unused allowance carried forward from the last three years.
• Once pensions are accessed, the Money Purchase Annual Allowance (MPAA) will mean the opportunity to continue funding will be restricted. The MPAA is currently £10k but is set to fall to £4k a year in April – with no carry forward.

5. Recover personal allowances

• Pension contributions reduce an individual’s taxable income.
• For a higher rate taxpayer ,with taxable income of between £100,000 and £122,000, a personal contribution that reduces taxable income to £100,000 would achieve an effective rate of tax relief at 60%.
• For higher incomes, or larger contributions, the effective rate will fall somewhere between 40% and 60%.

6. Avoid the child benefit tax charge

• A pension contribution can preserve the value of child benefit, rather than being lost to the child benefit tax charge.
• The child benefit, worth over £2,500 to a family with three children, is cancelled out by the tax charge if the taxable income of the highest earner exceeds £60,000. There’s no tax charge if the highest earner has income of £50,000 or less. A pension contribution reduces ‘income’ for this purpose, the tax charge can be avoided.
• The combination of higher rate tax relief on the contribution plus the child benefit tax charge saved, can lead to effective rates of tax relief as high as 65% for a family with three children.

 7. Sacrifice bonus for an employer pension contribution

• Sacrificing a bonus for an employer pension contribution before the tax year end can bring several positive outcomes.
• The employer and employee NI savings could also boost pension funding.

8. Providing for loved ones

• The new death benefit rules make pensions extremely tax efficient for passing on wealth to family members – typically no IHT payable and free of tax for deaths before age 75.
• You may want to consider moving savings which would otherwise be subject to IHT into your pension to shelter them from IHT and benefit from tax free investment returns.

9. Dividend changes and business owners 

• Directors of small and medium sized companies could be facing an increased tax bill following changes to the taxation of dividends.
• A pension contribution could be the best way of cutting their overall tax bill.
• If the director is over 55 they now have full unrestricted access to their pension savings.
• There’s no NI on an employer pension contributions and they are an allowable deduction against corporation tax.
• By making an employer pension contribution, this ensures that the tax that would have otherwise gone to HMRC boosts the director’s retirement savings.

 10. Pay employer contributions before corporation tax relief drops

• Corporation tax rates are set to fall from 20% to 19% from the financial year starting April 2017 with a further planned cut to 17% to effect from April 2020.
• Companies may want to consider bringing forward pension funding plans to benefit from tax relief at the higher rate.

Don’t delay and don’t lose out. Call the pensions experts at Innes Reid on 01244 347583 or email info@innesreid.co.uk.

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Income Tax

• Personal allowance will increase to £11,500 in 2017/18.
• Higher rate tax threshold will rise to £45,000 in 2017/18.
• Income tax rates, 0% starting rate on savings income up to £5,000, and additional rate threshold all remain unchanged for 2017/18.
• The government remains committed to delivering a personal allowance of £12,500 and higher rate tax threshold of £50,000 by the end of the current parliament.

Capital Gains Tax (CGT)

There was no mention of any change to either the rates of CGT or the £11,100 annual exempt amount.

Inheritance Tax (IHT)

We already know that the nil rate band is frozen at £325,000 until April 2021 and that the residence nil rate band being introduced for 2017/18 will start at £100,000, rising in equal instalments to reach £175,000 in 2020/21.

From Royal Assent of the Finance Bill 2017/18, IHT relief for donations to political parties will be extended to parties with representatives in the devolved legislatures, as well as parties that have acquired representatives through by-elections.

Corporation Tax

The intention to reduce the rate of corporation tax to 17% by 2020 has been reaffirmed.

Pensions

• Pension scams – a consultation will soon be published on options to tackle pension scams, including banning cold calling, giving firms greater powers to block suspicious transfers and making it harder for scammers to abuse rules that apply to SSASs (a type of company pension)..
• Salary sacrifice – pension contributions can continue to be made via salary sacrifice arrangements but this had already been confirmed as part of the consultation process in August 2016.
• The Money Purchase Annual Allowance (MPAA) is the limit on new pension contributions for individuals who have flexibly accessed pension benefits since April 2015. The limit is currently £10,000 and the plan is to reduce this to £4,000 from April 2017. We will be contacting any clients affected by this change if it is confirmed.

ISAs

• The 2017/18 annual subscription limit for ISAs will rise to £20,000 as announced at Budget 2016.
• Junior ISAs and Child Trust Funds annual subscription limits will see a CPI linked rise to £4,128 in 2017/18.

Investment bonds and life policies

• Further to the Budget 2016 announcement and following consultation, the government will legislate in Finance Bill 2017 regarding the disproportionate tax charges that arise in certain circumstances from life insurance policy part-surrenders and part-assignments. This will allow applications to be made to HM Revenue and Customs (HMRC) to have the charge recalculated on a just and reasonable basis. The changes will take effect from 6 April 2017. In our view, the disproportionate tax charges can be avoided simply by seeking advice from Innes Reid.
• As announced at Budget 2016 and following consultation, the government will legislate in Finance Bill 2017 to create a power to amend by regulations the list of assets that life insurance policyholders can invest in without triggering tax anti-avoidance rules. The changes, which again we await details of, will take effect on Royal Assent of Finance Bill 2017.

Other Measures

• NS&I Investment Bond – new three year savings bond to be launched to help savers who have struggled with low interest rates. The indicative rate is 2.2% but this is subject to change. Savers aged 16+ will be able to invest between £100 and £3,000 and the bond will be available for 12 months from Spring 2017.
• Salary sacrifice – following consultation (back in August 2016), the tax and employer NI advantages of salary sacrifice schemes will be removed from April 2017, except for arrangements relating to pensions (including advice), childcare, Cycle to Work, and ultra-low emission cars. This will mean that employees exchanging salary for benefits will pay the same tax as the vast majority of individuals who buy them out of their post-tax income. Arrangements in place before April 2017 will be protected until April 2018; and arrangements for cars, accommodation and school fees will be protected until April 2021.
• Insurance Premium Tax (IPT) will increase from 10% to 12% from 1 June 2017. IPT is a tax on insurers and it is up to them whether and how to pass on costs to customers.
• A ban on Letting Agent fees for tenants. This is intended to improve competition in the rental market and make fees for renters more transparent. There will be a consultation on this from the Department for Communities and Local Government (DCLG) before it is written into legislation.

Inevitably, the impact of some of these changes will gradually become clearer and further details of changes will be announced.  If you want to know more about how these changes might affect your own tax planning, please do not hesitate to contact your Innes Reid adviser on 01244 347583.

The post Autumn Statement 2016 appeared first on Innes Reid.

Every year the Government gives back billions to investors in pension tax relief. For example, a basic rate taxpayer can turn an £80 pension contribution into a £100 investment, and even better still, a 45% taxpayer can turn a £55 pension contribution into a £100 investment with the benefit of tax relief.

The investment growth is free of income tax and Capital Gains Tax, and there is a tax free element when you draw benefits. Your family can even inherit your unused pension without paying Inheritance Tax. No other investment grants the same tax benefits.

The antithesis of a pension investment is currently a buy-to-let investment, where the rules are designed to tax you at every turn.

Buy-to-let investments have suffered a marked slowdown in popularity as the rules have dramatically changed:

• A 3% surcharge on the current rate of stamp duty, announced in 2015, has hit anyone buying additional residential properties, including buy-to-let investors.

• The help that landlords currently receive via the tax relief they can claim on mortgage interest will also change from April 2017. At the moment they pay tax on their profits according to their income tax band. The relief will be whittled away until by 2020 it will be replaced with a 20 per cent tax credit against mortgage interest

• Also landlords can no long deduct 10 per cent of their rental profits for estimated ‘wear and tear’ – now they can only claim relief on costs they have incurred and will have to keep receipts to prove they have spent money on replacement items and repairs.

• Capital Gains Tax rates of 18% and 28% still apply to profits on buying and selling property, whereas tax rates for other assets such as shares has been reduced to 10% and 20%.

• As an extra worry, landlords will have to pay Capital Gains Tax on any profits within 30 days of selling a property from April 2019.

• Selling off properties does not come cheap – there are lots of fees and charges to consider, and it could take time. And even if you manage to find a buyer, they might not be prepared to pay the price you are looking for.

This could mean a sizeable hit in income for many buy-to-let investors.

Perhaps it is time to seek out someone speaking words of wisdom on alternative investment opportunities, including pensions.

If you are considering entering the buy-to-let market, speak to one of our specialist advisers for professional and impartial guidance on the alternative options available which could earn you a better return on your investment.

Call 01244 347583 for a free, initial consultation to discuss your options – we are available at times to suit you.

The post Is it time to say Let It Be to buy-to-let? appeared first on Innes Reid.

Just when you thought you were close to getting through the details amicably, along comes another complex matter: pensions.

Here we’ll look at the three main ways of dealing with pensions when a marriage comes to an end.

1) Pension offsetting

If you decide to go down the offsetting route, your pension benefit (and that of your spouse) is given a cash value. This is normally based on the cash equivalent transfer value, but might also take account of lost death benefits.

These values are then taken into account in the marital balance sheet when assets and liabilities are weighed up. You and your spouse keep your own pension benefits, with other marital assets being traded off against them to balance the divorce or dissolution settlement.

The spouse with the smaller pension is allocated more of the couple’s non-pension assets to balance the extra pension benefits belonging to the other party.

The good thing about offsetting is that it offers a clean break between the parties. It’s also cheap and straightforward to set up. There are, however, several drawbacks – not least the fact that one former spouse could be given the house but have no income to run it.

2) Pension earmarking

This involves part of a divorcee’s retirement benefits, and/or lump sum death benefits, to be paid to their former spouse or civil partner following retirement or death.

The earmarked benefits continue to belong to the divorcee, meaning he or she can normally control when any pension payments start.

You can transfer your pension benefits after you become subject to an earmarking order, but the trustees of the transferring scheme must inform the trustees of the receiving scheme.

If earmarked pension rights are transferred, the former spouse or civil partner must be told and given contact details for the new scheme. The process of earmarking will then begin again.

3) Pension sharing

Introduced in 1999, this involves pension rights being divided at the time of the divorce or dissolution. When a sharing order is made, part of your pension rights are awarded to your former spouse as a pension credit.

This provides them with pension benefits in their own right, with a corresponding pension debit being recorded against your benefits.

One of the biggest advantages is that each party has independent pension benefits in their own right, under their control. Neither party’s rights are affected by the other’s subsequent death or remarriage.

It’s worth bearing in mind, however, that in return for the pension share, your former spouse will receive less of your (the couple’s) non-pension assets. This could leave them with financial problems.

Get in touch

For more information, contact Innes Reid today. Call us on 01244 347583 or email info@innesreid.co.uk. We are available at times to suit you.

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The chancellor reportedly intends to introduce a new system of flat-rate tax relief on pension contributions.

All workers would receive tax relief of somewhere between 20% and 30%, hitting higher-rate taxpayers in the pocket and saving the Treasury an estimated £6bn a year.

Mr Osborne may not go ahead with the reforms, of course, but if he does we’re sure to hear claims from many commentators that the pension is dead.

Don’t believe the doomsayers, though. A flat rate of relief would indeed have a negative impact on high earners, but that doesn’t mean they should give up on pensions.

The bottom line is that – and this is hardly a startling revelation – as a nation we are simply not saving enough for retirement.

Younger people face a particularly worrying scenario. Recent research by Royal London revealed the extent of the problem. It showed that:

• Today’s 35-year-olds need to have saved at least £666,000 by age 65 to secure the same standard of living of today’s pensioners
• The cost of living for a pensioner is expected to soar by nearly 150% by 2050
• Today’s 30 – 40 year olds have a median pension pot of only £14,000, well short of the fund they require to secure a monthly income that will just cover the predicted basic £1,715 cost of essentials in 2050

Royal London found that the biggest single piece of financial advice 65-75 year olds would give those in their 30s is to start saving as soon as possible. Only 2% would tell a 35-year-old to not worry and to live for today.

The importance of passing the savings habit down through the generations is perhaps the main reason that, whatever the chancellor announces on March 16th, today’s high earners should stick with pensions.

Leading by example and extolling the virtues of retirement savings to the next generation could be the key to defusing Britain’s pensions time-bomb.

Call us today on 01244 347583 or email info@innesreid.co.uk for advice and guidance on all aspects of pension and retirement planning.

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It’s much easier, because of the immediacy of your financial goal, to save for a deposit for a house or a new car or holiday.

That’s human nature, but the stark reality is that the earlier you start saving for your retirement, the better.

If you’re in your twenties, thirties or forties, it’s easy to put off starting a pension. Many justify this decision to themselves, and their loved ones, by talking about alternative plans for their retirement.

Sadly, falling into this trap can often be a recipe for poverty in retirement. Here are three common pension pitfalls that everyone should avoid:

1) “I’ll be fine, I’ll just rely on the state pension”

Relying purely on the state pension is highly unlikely to give you your desired retirement lifestyle.

April 2016 will see the introduction of a flat-rate, single-tier state pension with a full level of £155.65, but there will be many other reforms and reinventions by the time today’s young workers retire.

Tellingly, a recent survey found that nearly half (40%) of young Britons think the state pension will no longer exist in 2050.

If you’re planning to depend on the state in your old age, it would probably be wise to think again.

2) “Don’t worry, property is my pension”

With house prices continuing their long-term upward trajectory (particularly in London) it’s tempting to see your property as a replacement for a pension pot.

The temptation is particularly strong if you’re one of a growing number of buy-to-let investors.

Don’t be fooled, though. Houses can go down as well as up in value and the financial crisis of 2007-08 offered a stark reminder of the perils of relying on an ever-growing economy.

3) “It’s OK, I was automatically enrolled into a pension scheme”

One of the biggest risks associated with the recent introduction of auto-enrolment workplace pensions is that they lull workers into a false sense of security over their retirement savings. The total minimum contribution currently stands at just 2% (1% from the employer and 1% from the employee). This will increase gradually over time but even so such schemes should not be seen as a solution in their own right.

Call us today on 01244 347583 or email info@innesreid.co.uk for guidance on your pension and retirement planning.

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