Spring Newsletter 2026
Deferring difficult decisions is surely something we can all relate to, and the government is certainly not averse to employing this approach to tax-raising methods, as governments of the previous 10 years and earlier have done before them.
UK taxation is perhaps at its most complex, as tax increases that avoid targeting income tax or national insurance rates are necessarily multi-layered to generate required revenue without a blanket approach affecting all taxpayers. These deferment tactics may remove some of the initial sting, but can mean the effects are slow to be realised. For example the freeze on personal income tax rates and allowances, originally set to run through to 2028/29, has now been extended to run to April 2031. That distance may mask how soon you could tip from a basic to higher rate tax bracket. Similarly, an announcement on changes to salary sacrifice arrangements made in the Autumn 2025 Budget won’t take effect until April 2029, but you may need to start thinking about the consequences much earlier.
One of the biggest decisions we all must make involves ensuring an adequate income when we are no longer working. Annuities, once a cornerstone of retirement planning, fell out of favour following the pension reforms of 2014. With interest rates low they were considered poor value and rejected by many who instead chose newly available flexible drawdown. However, the attraction of a guaranteed income, paired with improved interest rates, has meant sales of annuities are at their highest in ten years, and many people are also opting for an escalating product which offers increasing annual payment rates. While there is only one chance to decide which type of annuity to buy, including them in your retirement planning could give you more flexibility than you think. It can be incorporated as part of your income, leaving a ‘reserve fund’ to access as and when you need it.
If you are a higher-rate taxpayer you are entitled to an additional 20% tax relief on pension contributions (on top of the 20% relief granted to all basic-rate taxpayers), and additional-rate taxpayers’ extra relief is worth 25%. Some employers will calculate this when allocating money to pension schemes, but not all, so if you are in this earning category you will be entitled to your share of the millions in unallocated tax relief held by HMRC.
For updates on these and other issues that could affect your financial planning, please see our spring newsletter. We will be back in touch in June, with a greater understanding of the impact and implications of the latest Middle East conflict.
