As we come to the end of the first quarter of 2025 and move into a new tax year, the political and economic landscape has shifted. The advent of the Trump administration has brought an extra layer of uncertainty to already troubled times. At home, the government is faced with a difficult balancing act of matching fiscal caution with demands on public services and less than robust growth figures. The Office for Budget Responsibility has halved the growth expectations for 2025, from 2% to 1%, providing a difficult backdrop to Chancellor Rachel Reeves’s controversial Spring Statement.
Against that backdrop, most will be feeling increased tax pressures as we enter yet another tax year of frozen thresholds as well as increases in capital gains tax and employer national insurance. There are, however, advantages to engaging in some early tax year planning, where couples in particular may be able to adjust incomes and allowances. Our feature for this edition of our newsletter suggests strategies to avoid heading into a higher tax bracket and to use all available allowances whether you are an individual or running a business.
There is more time to prepare for a change in State pension age (SPA) due next year for those approaching retirement. The gradual increase in SPA to 67 begins in 2026, and during this transition phase your SPA is directly affected by your birthday. If you intend to retire in 2026 or 2027 make sure you are aware of how the change in pension entitlement age will affect you. Studies show many heading towards retirement are unaware of when they will become eligible for their State pension.
Our other stories in this edition include:
- The case for early ISA investment – The usual end of tax year rush to open ISA accounts was exacerbated by rumours the government is looking to cut the annual allowance, but it pays to invest early in the tax year, after carefully considering your options.
- Annuities lock in peace of mind –Changes to long-term interest rates and government plans to make pension death benefits subject to inheritance tax make buying an annuity increasingly attractive in 2025.
- The lessons of March 2020 – Unexpected incidents, whether the Covid-19 pandemic or changes in circumstances unique to you or your family, teach us that having some basic plans in place, such as wills and rainy day savings, are extremely helpful when you need to respond to a crisis.
By the next issue of our newsletter in the summer, the domestic economic and geopolitical landscape may be clearer. Please do get in touch if we can continue to help or provide you with more information on any of the topics covered.
