As the UK’s tax environment continues to shift, staying informed is essential to making confident, forward-thinking financial decisions. Recent proposals around pension tax relief, inheritance tax (IHT), and other key areas may significantly influence how individuals and families approach long-term planning. While nothing is final until legislation is enacted, it’s wise to understand what’s on the horizon – and how best to prepare.

At Fogwill & Jones, we believe smart planning is about staying ahead of change, not reacting to it. Here’s what you need to know about potential tax changes, and how a well-structured financial plan can help you adapt with clarity and confidence.

1. Pension Tax Relief: Changes Could Be Ahead

The government is reportedly reviewing the current system of pension tax relief, with speculation around whether it may move towards a flat rate for all taxpayers. Currently, higher and additional-rate taxpayers benefit more generously, receiving tax relief at their marginal rate. A shift to a flat rate could reduce the incentive for some to save into pensions – but it could also improve fairness for lower earners.

What this means for you:

If you’re a higher-rate taxpayer, now may be a prudent time to review your pension contribution strategy. Maximising contributions while the current relief structure remains in place could enhance your retirement savings. For those earning close to key tax thresholds, especially the £100,000 mark where personal allowances taper, pension contributions can still serve as a powerful tool for reducing effective tax rates.

 

2. Inheritance Tax: A Changing Conversation

The Autumn Statement introduced proposals to adjust the scope of inheritance tax, particularly around the treatment of pension death benefits and business or agricultural property reliefs. While full details are pending, one significant proposal is that from April 2027, unspent pension pots may be counted within a person’s estate for IHT purposes. Historically, pensions have been a highly efficient vehicle for passing on wealth outside the IHT net.

What this means for you:

This change, if implemented, could shift how pensions are used in legacy planning. Reviewing your beneficiary nominations is now more important than ever. You may also wish to reconsider whether it is more tax-efficient to leave pensions to a spouse or civil partner, given their exemption from IHT.

Moreover, if you’ve previously relied on business or agricultural reliefs to manage IHT liability, these proposals may require a review of your estate plan to ensure it remains effective under future rules.

 

3. Annual Allowances: Use Them or Lose Them

In times of change, the fundamentals still matter. Making full use of annual tax allowances – including pensions, ISAs, and capital gains exemptions – remains one of the most consistent ways to reduce tax exposure.

With the capital gains tax (CGT) exemption now only £3,000 and further reductions being considered, reviewing any non-ISA investments becomes a more urgent task. Similarly, regular gifting and use of income exemptions within IHT can help reduce the future size of your estate.

What this means for you:

Efficient use of allowances is a key pillar of sound financial planning. These opportunities reset each tax year and can be lost if not used. For couples, combining allowances can create significant tax savings across income, gains, and inheritance.

 

4. The Value of Forward-Looking Advice

Tax rules will continue to evolve, often in unpredictable ways. That’s why we encourage clients not to anchor their decisions solely to what is, but also to what could be. Proactive planning ensures your finances are resilient in the face of change.

At Fogwill & Jones, we don’t believe in one-size-fits-all advice. Whether you’re building wealth, preparing for retirement, or considering how to support the next generation, your strategy should reflect both current legislation and your long-term goals.

 

Key Actions to Consider:

• Review pension contributions and reliefs, particularly if you’re a higher or additional-rate taxpayer.
• Revisit your estate plan, with a specific focus on pension beneficiary nominations and IHT exposure.
• Use your annual allowances for ISAs, pensions, and capital gains before the tax year ends.
• Stay informed, but avoid knee-jerk reactions. Legislative proposals often take time to finalise.
• Seek professional advice to ensure your plan remains fit for purpose.

Final Thought

In an evolving landscape, the most valuable asset is not a product or a portfolio, but a plan – one that’s tailored, responsive, and underpinned by expert advice.

At Fogwill & Jones, we help clients move forward with clarity, not complexity. If you’re unsure how potential tax changes may affect your financial future, now is the right time to speak with us.

Let’s make sure your plan is working as hard as you are.

The information in this article is intended for guidance only and does not constitute personal advice. Tax treatment depends on individual circumstances and may be subject to change. Please get in touch to chat with one of our qualified financial advisers before taking action.