Helping you prosper
Despite easing headline inflation, the cost of living remains significantly higher than it was five years ago, with prices almost 30% higher than in early 2020. Falling interest rates are now adding further pressure, particularly for those holding large cash balances, as after-tax returns struggle to keep pace with inflation. This combination is prompting many households to reassess how much cash they hold and whether longer-term investment strategies need to play a greater role in protecting purchasing power.
Retirement planning is also under increasing strain. While the State Pension has risen, it still provides only around £240 a week, well below what most people need for a moderate standard of living. With many underestimating how long they will live in retirement, there is a growing risk that savings will not last as long as expected. Workplace pensions, ISAs and SIPPs therefore remain essential tools, but contributions and long-term assumptions may need revisiting.
Recent and forthcoming tax changes add further complexity. Extended freezes to income tax thresholds will continue to pull more people into higher tax bands, while changes to dividend tax, savings income and property income are set to increase tax liabilities in the coming years. At the same time, previously announced reforms to the inheritance tax treatment of unused pension funds, due to take effect from April 2027, mean that pension death benefit strategies may need to be reviewed sooner rather than later.
Alongside this, HMRC is stepping up its compliance activity, using enhanced data and technology to identify undeclared income and gains. This makes accurate reporting and proactive planning more important than ever, particularly for those with multiple income streams or overseas assets.
For a closer look at how inflation, retirement planning, tax changes and protection planning could affect your financial position, read the Winter 2025 Financial Planning newsletter below and speak to our advisers about reviewing your plans for the year ahead.
