Insights

IHT receipts continue to rise. Before the tax year's end, take advantage of gifting allowances to reduce your estate and minimise future IHT liabilities. Advice is essential to ensure gifts are made and evidenced in the right way.

The traditional "hard-stop" retirement is fading, with many working longer for financial, social, or personal reasons. This shift requires careful tax planning when combining work income with pension withdrawals to ensure a smooth, comfortable transition to retirement.

Retirement planning involves visualising your key goals for your retirement years and setting up a plan to help you achieve those goals through financial planning.

Many wealthy individuals avoid discussing finances, fearing family conflict, leading to inheritance misunderstandings. Generational differences and financial pressures, especially in regions like London, contribute to tensions. Open, honest conversations about money can reduce stress and prevent future disappointments.

A significant minority of over-55s are considering unretirement, with over a quarter planning to continue with some form of paid work after retiring. However, nearly two-thirds haven't checked the potential tax implications of doing so; their tax liability could increase if extra earnings take their income above the personal tax threshold or pushes them into a higher tax bracket. It's essential to understand these risks and seek financial advice to avoid the unretirement 'tax trap'.

A recent study has identified several distinct pension personality types, each with its own strengths and challenges. Procrastination Pete and Paula are the most common type, often overwhelmed by the complexities of pensions. This group is likely to make poor decisions, such as hastily withdrawing a 25% tax-free lump sum without a clear plan – potentially costing them thousands in future income. No matter your pension personality, strategic planning and professional advice are crucial for securing long-term financial security in retirement. 

In 2023, there were 4.2 million people in the UK’s solo self-employed sector but concerningly, 45% of freelancers are not saving into a pension. Employed people are auto-enrolled into a pension scheme by their workplace, but if you are freelance it is your responsibility. The sooner you start saving for retirement, the more you can grow your investment and benefit from tax relief on contributions (within limits). Start by deciding on a minimum monthly contribution that feels manageable for you.