Inheritance tax (IHT) receipts are on the up and expected to rise further as more estates are dragged into HMRC’s net.

The government raked in £8.5 billion in inheritance tax receipts in 2025/26, with the Office for Budget Responsibility (OBR) forecasting the tax take will increase to almost £15 billion by 2030/31.

The watchdog says rising equity and house prices, frozen tax thresholds and the impact of policies announced in the 2024 Autumn Budget, namely unused pensions falling under the scope of IHT from April 2027, will, in part, cause the rise.

It means families may want to take steps to ensure their estate’s eventual IHT bill is as low as possible.

Unfortunately, many are still making six costly mistakes, says Clare Moffat, pensions and tax expert at retirement firm Royal London.

1. Not knowing the implications of cohabiting vs. marrying

Every person receives a £325,000 tax-free threshold, known as the nil-rate band. Any portion of the estate over this threshold could be subject to IHT.

For example, if you died and your estate was worth £300,000, there would be no IHT liability.

If you have a husband, wife or civil partner and you die, any unused nil-rate band is passed to them, taking their threshold up to a potential £650,000.

If a property is being passed to children or grandchildren, there is an additional residence nil-rate band of £175,000 which can be transferred as well, potentially taking someone’s IHT-free allowance to £1 million.

However, these bands can only be transferred if you’re married or in a civil partnership, rather than if you’re cohabiting with someone.

Moffat says: “For me, this tops the list of mistakes that people can make if they're in a long-term relationship.

“This means unmarried couples are potentially missing out on a total of £1 million in inheritance tax exemption.”

2. Not making the most of exemptions during your lifetime

There are a host of exemptions and allowances which mean you can gift money during your lifetime and it won’t fall into your estate for inheritance tax purposes.

For example, you get a £3,000 annual exemption each year. If you didn’t use it all in the previous tax year, you can carry the unused allowance forward to the next – but only for one tax year.

You can also donate £250 cash gifts to as many people as you want per tax year, unless you have used another allowance, like the annual exemption, on that person.

You can also gift an unlimited amount of money, so long as it is made out of ‘surplus income’ – that is money from pensions, rent or dividends – and it doesn’t reduce your standard of living.

Gifting money out of surplus income could become a useful way to reduce inheritance tax liabilities when unused pensions fall under the scope of IHT from April 2027.

Moffat says: “Gifting during life is not for everyone but for people who know that they will have more than enough to live on when they're retired, the benefits are that it can help family when they need it most, be stopped at any time and you don’t need to worry about the seven-year rule.”

The seven-year rule means you can give away as much of your estate as you like during your lifetime, and if you live for another seven years the gifts won’t be subject to IHT.

3. Not keeping records

Keeping detailed records of any gifting throughout your lifetime will make it easier for the executors of your will to evidence it when they have to pay the IHT bill.

A lot of people don’t do this. Research from financial firm Canada Life found 54% of over 55s who had given a financial gift in the previous seven years had kept no record of it.

Executors need to fill in the IHT400 form upon someone’s death to report the full value of their estate. The IHT403 form has to be filled in alongside it to disclose lifetime gifts.

Delays in this form-filling process can mean a longer wait for probate to be granted and can increase the risk of queries from HMRC, prolonging the closure of the estate.

4. Not having important conversations

IHT disputes among families are on the rise, so having honest conversations with loved ones has never been more important.

This can prevent legal costs racking up and delays in probate being granted, leaving you unable to deal with the estate.

Moffat says: “Having good, open conversations about gifts or what a person's wants and wishes are for what's to happen after their death could prevent costly legal action at what is a difficult and emotional time for family, friends and loved ones.”

5. Forgetting the £2 million taper

The residence nil-rate band starts to reduce by £1 for every £2 your estate is worth more than £2 million.

Once someone’s estate reaches £2.35 million, the £175,000 residence nil-rate band is lost completely. A surviving spouse completely loses their residence nil-rate band once their estate breaches £2.7 million.

Moffat says: “For people who might be close to this bracket it's important to know this as they'll need to keep an eye on how much their total estate will be worth.

“They could take steps to reduce it to below £2 million using some of the options to gift during their lifetime, meaning the residence nil-rate band is available again.”

6. Not considering where inheritance tax should be paid from

If you make a larger gift which is not covered in the gifting exemptions and exceeds your inheritance tax allowance, for example to a child or grandchild to buy a house, and then die within seven years, IHT could be owed on that gift.

The beneficiary of the gift may not be able to pay this bill if it comes unexpectedly, the gift is tied up in property or has already been spent.

To reduce the risk of this, the donor of the money could take out a ‘gift inter vivo’ life insurance policy. This would cover the cost of the eventual IHT bill for the beneficiary, should you die within seven years.

Typically, these policies pay out less over time, as taper relief is applied to the IHT liability depending on when a gift was made.

For example, if you make a larger gift and die less than three years later, it would be taxed at 40%, but if you die six to seven years later, the rate drops to 8% on the gift.

Younger people faced with historically high housing prices and ongoing cost of living pressures may be hoping an inheritance will help them out.

Nearly one in four (23%) Gen Z (born between 1997 and 2012) say they are not prioritising retirement saving because they expect to inherit money or property.

This view is also common among Millennials (born between 1981 and 1996), with one in five (20%) of this generation saying the same, according to a Standard Life survey of 6,000 people conducted in June 2026.

Grandparents who have benefited from house price increases and may be enjoying bumper pensions, and who are worried for their younger loved ones’ financial prospects, could feel pressure to give away their homes to grandkids now, in an attempt to reduce the risk of them paying inheritance tax later.

Experts have said it’s trickier than just handing over the keys, however.

How much can I give away free of inheritance tax?

To quickly recap on the key inheritance tax rules – every homeowner has two inheritance tax-free allowances.

You have a nil rate band of £325,000 and there is a residence nil rate band of up to £175,000 when a family home is passed to direct descendants, including grandchildren, though this second allowance is tapered for estates above £2 million.

Married couples and civil partners can inherit each other’s allowances, meaning up to £1 million may be passed on by them after death before IHT becomes due.

Also, most gifts a person makes during their lifetime are exempt from inheritance tax – but the person must survive for seven years after giving it (these are known as ‘potentially exempt transfers’).

A gift can be money, property or possessions – anything that has value. A gift must reduce the value of the estate and you must include any loss incurred as part of the gift. For example, if a person sells their house to a child for less than it’s worth, the difference in value counts as a gift.

An outright gift is where value is transferred to another individual without conditions.

Losing legal control

Many people assume giving away their home – often one of their most valuable assets – is a straightforward way of reducing inheritance tax. The reality is often far more complicated.

Legally there are a number of things to consider.

When the original owner gives their property away, they lose legal control over it. This is true whether the original owner remains living in the property or not – but several factors mean it can be especially tricky if they continue to reside there.

Laura Walkley, partner and head of the private client department at TWM Solicitors LLP, said: “Even where there is complete trust between family members, circumstances and relationships can change over time. In a worst-case scenario, the original owner could lose their home.”

Four key scenarios could put the person giving away the property at risk, Walkley pointed out; disputes, debt, divorce and death.

1. The donor and recipient could fall out, and the recipient may decide to evict the original owner or to sell the property.
2. The recipient might also need to borrow against it, exposing the property to claims by creditors.
3. If the recipient goes through a divorce, the property may be vulnerable to claims for financial provision by a former spouse.
4. If the recipient dies before the person who made the gift, unless suitable arrangements are put in place, the property will pass under the recipient’s will or intestacy, potentially ending up in the hands of people the donor never intended to benefit.

Inheritance tax property gifting rules

Giving your home away while continuing to live in it is also one of the biggest inheritance tax misconceptions – it doesn’t automatically mean your loved one avoids inheritance tax.

Shaun Moore, tax and financial planning expert at financial advice firm Quilter, said: “If you gift a property but still benefit from living there, HMRC will treat it as a 'gift with reservation of benefit'. This means the property would still be counted as part of your estate for inheritance tax purposes.”

To avoid this, you would typically need to pay a full market rent to the new owner, plus your share of the bills. This creates its own complications and could generate an income tax liability for the recipient, who would also need to declare that rent on their annual tax returns.

You do not have to pay rent to the new owners if you only give away part of your property and the new owners also live at the property.

There’s normally no inheritance tax to pay if you move out and live for another seven years.

Capital gains tax problem

Grandparents with more than one property who want to give one away to a grandchild could also find there may be capital gains tax implications if the property is not the giver’s main residence.

Only a person’s private residence is exempt from capital gains tax. “So, if I gifted a buy-to-let, for example, the gift is viewed as a disposal for CGT purposes that realises any gain made,” said Moore.

This triggers an immediate CGT bill. Even if you receive no money for the property, you must pay capital gains tax on the difference between what you originally paid for it and what it is worth on the day you gift it.

Care costs

Permanently giving away your home could also create headaches if you come to need care in later life. You won’t be able to sell your home or use equity release, for example, to unlock some of your housing wealth to pay for your care.

At the same time, under deprivation of assets rules, local authorities could scrutinise gifts made later in life if they believe assets have been transferred primarily to avoid care costs.

Consequently the council may be reluctant to pay for your needs or even demand money back from the grandchild you gave the property to.

Alternatives to grandparents giving away property

Before taking the huge step of giving away your home (or another property) to your grandchildren, it is important to establish whether gifting property before death is even necessary.

Tom Kimche, financial adviser at Netwealth, said: “Outside of property, there are several other ways to gift which could be a better fit during your lifetime.

“For example, beyond the annual £3,000 gifting exemption, gifts from surplus income can often fall outside the scope of IHT if properly structured and documented.

“Larger gifts can also leave your estate for IHT purposes if you survive for seven years after making them.”

Structure is another important consideration. Gifts can be made directly or through relatively simple structures such as bare trusts.

“If you would like greater control and asset protection, discretionary trusts or Family Investment Companies (FICs) may be worth considering, though they add cost, complexity and additional tax considerations,” said Kimche.

Insurer Admiral Group (LSE: ADM) is among several firms which earlier this year saw their share price slump because of fears that AI-powered rivals could capture most (or all) of their business. However, since then many of these stocks have bounced back, with investors deciding that such fears are overhyped.

Admiral Group's shares fell by 14% in January after US firm Lemonade, which uses AI to process claims, launched a cheap policy for self-driving cars. While the policy was aimed at US consumers, it fuelled fears about AI being used to undercut traditional insurers.

Investors also fretted that the better driving record of autonomous vehicles compared with those steered by people could reduce the need for car insurance. Some analysts, such as AJ Bell's Dan Coatsworth, wonder whether car insurance will eventually be purchased by car manufacturers rather than by individual drivers.

How Admiral Group is using AI to cut costs

Yet even if such fears come true in the very long run, it's worth noting that full self-driving for individual cars (as opposed to a relatively small number of taxis currently on the streets) is at least a decade away from mass adoption. In any case, Admiral Group has itself been using AI and digitisation to cut costs and give it an advantage over its main rivals.

Earlier this year, Admiral Group also bought Flock, a technology firm it had been working with. The purchase gives it full access to, and ownership of, Flock's technology, which uses AI and telemetry (the process of collecting data from remote sources and passing it to a receiving system) to judge how well people are driving.

Meanwhile, Admiral Group has been taking steps to diversify its business by branching out into household, travel and pet insurance. While these areas currently make up only a small proportion of overall profit, they are growing at an extremely rapid rate, which should improve the group's medium-term prospects.

Meanwhile, sales almost tripled between 2021 and 2025, and are forecast to keep growing over the next few years. While profits have been more volatile, they have increased since 2021. Admiral boasts strong margins, with a double-digit return on capital employed. This has allowed the group to raise dividends to record levels. The stock's valuation also looks attractive at 15 times expected 2027 earnings and a dividend yield of just under 5%.

Admiral Group's share price has plenty of momentum behind it, having beaten the overall UK market over the last one, three and six months. It is trading well above its 50- and 200-day moving averages, and has also been one of the best performers in the FTSE 100 over the last six months. I suggest that you go long at the current price of 3,772p at £1 per 1p. I would put the stop-loss at 2,800p, which would give you a total downside of £972.

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Revolut will shift more than 13 million UK customers to its banking arm after securing a licence earlier this year.

The fintech firm acquired a full UK banking licence in March 2026 after a four-year battle with regulators.

Since then, it has been shifting its over 13 million UK customers to its banking arm.

Many existing customers and new Revolut customers already have current accounts with Revolut’s UK bank. 

While it has been popular with users who travel regularly due to perks such as zero FX fees when spending abroad, lounge access and travel insurance, this will be the first time Revolut will offer basic current accounts.

The move is expected to shake-up the banking sector, providing competition to the major high street names and challengers like Monzo.

Nik Storonsky, chief executive officer of Revolut, said in March that securing a banking licence was a “vital step in our mission to build the world’s first truly global bank”.

Existing customers’ accounts are still being transitioned to bank accounts in tranches. Revolut is contacting them one to two weeks ahead of being fully moved across.

In an email to customers, seen by MoneyWeek, Revolut said: "Becoming a licensed bank means we’ll be able to offer more banking products and features in the future.”

Kalpana Fitzpatrick, digital editor-in-chief on Moneyweek, said: “The good news for anyone using Revolut is that being part of a bank, your money is protected by the Financial Services Compensation Scheme and in future you could also benefit from competitive savings deals and mortgages.

"But the question is, do you want another current account? If you do not use your Revolut account much, then this will be another account you may have to manage.”

Here’s everything you need to know about what the changes mean for you.

What is changing?

Your account will switch from being an e-money account to a new current account.

Revolut customers can deposit money into the current accounts, with deposits protected under the Financial Services Compensation Scheme (FSCS) up to £120,000 per person.

If you have an account with travel insurance, available for premium accounts, the terms and conditions will stay the same.

However, travel insurance group policy numbers will change, which Revolut will send via email.

What is staying the same?

The account number you have with Revolut, as well as any sort codes, IBAN and BIC will stay the same when you move to a bank account.

You will be able to access transaction and statement history from before the start of the transition in March 2026.

Charges and fees for all Revolut plans will be unchanged while you can still trade in stocks and cryptocurrency via the app.

Can you close your account?

If you’re an existing Revolut customer and don’t want your account to be transitioned across to a current account, you can simply close your account via the app.

Do you dream of giving up the day job and enjoying the freedom that would bring? You’re not alone. But many don’t want to wait until retirement age winter years to kick back. Can the FIRE movement help?

FIRE - financial independence, retire early – is a personal finance strategy that involves extreme investing and frugality during your working life in order to enable early retirement and financial freedom. In theory.

The concept was first established in the US in the 1990s, and encourages a series of tactics that have the potential to allow someone to give up work in their 40s.

So, how does FIRE work and can it really help you stop work sooner and 'retire' comfortably?

What types of FIRE strategy are there?

There are number if ways you can approach a FIRE strategy. These include:

• ‘LeanFIRE’ requires strict frugality and living on a bare minimum budget to achieve your goals faster;
• ‘FatFIRE’ means putting significantly larger amounts away in the hope of a more luxurious retirement;
• ‘BaristaFIRE’ strives for an early retirement funded by a healthy income-generating investment pot, topped up with a part-time or low-stress job.

Katharine Photiou, managing director, workplace savings at Legal & General (L&G) says the approach that appeals to most people is likely the third, because it offers maximum choice for less sacrifice.

“We go from birth to nursery, into primary school, then secondary school, university or further education, then work... there’s all this structure and process. There’s no sense of freedom.”

She says the true benefit of FIRE-related movements is raising awareness of money matters.

“They shift the conversation from being one of ‘when can I retire’ to one of financial freedom. And anything that gets people thinking about their finances – especially encouraging youngsters to engage with their finances sooner – is positive.”

If FIRE taken to the letter feels extreme, she says thinking about the kind of life you want to live, what makes you happy or how much is enough are healthier conversations.

“At its heart, FIRE is about control, flexibility, choice and having options. Having a career break, reducing your hours, starting your own business or taking a sabbatical, these are all positive.”

What can the FIRE movement teach you?

Louise Matthews is an advertising copywriter who lives in North London. She stumbled upon the Rebel Finance School – which runs courses to help people better manage their money (and advocates the FIRE movement) – on Facebook.

“At first the group felt quite aspirational, and at times annoying,” she says. “People were talking about having a lot of money and it didn’t feel aligned to my situation. I almost left a couple of times. But since participating in the course, I’m finding it more helpful – plus a lot more people have joined who are just starting out and have debt questions.”

Matthews was self-employed for over a decade before taking a full-time job two years ago, seeking financial security as freelance life was looking more precarious.

“My partner started his own business about five years ago and hasn’t been able to contribute much to the household bills, so it’s pretty much all on my shoulders.

The couple doesn’t have a mortgage (they rent from a private landlord), nor any real savings besides a £3,000 nest egg set aside for their daughter. Matthews has around £50,000 saved into a pension.

“Finances-wise, we’re in quite a bit of debt, which was my impetus for doing the course. I have a personal loan with around £11,000 still outstanding (it was £25,000 so I’ve paid quite a bit off over the past two years), and another £14,000 on interest free credit cards.”

One lesson the course teaches is to try and put away £1,000 into an emergency fund before proactively paying off any debt.

Like many Brits, even though she’s only 42, she’s feeling the consequences of not starting sooner.

“I grew up with a mentality that money is fun money – ‘you only live once’ – that has made it hard to get out of debt. I used to say ‘yes’ to everything and worry about it later, hence having lots of interest-free credit cards,” she says.

Financial independence, or freedom, for Matthews isn’t about giving everything up to retire in her 40s, but about building better habits for a financially ‘freer’ future.

“What I’ve learnt is that [my lifestyle] isn’t sustainable. I don’t want to be in debt anymore. So my priority is to work hard to get out of it.”

Why investing earlier is so important

L&G’s Decades Ahead research estimates around nine million people aged 25-54 are currently not on track for an adequate retirement, taking into account basic needs, current income and housing costs.

Starting early and taking small steps beyond the bare minimum (like the 8% auto-enrolment through a workplace pension) has such a greater impact than thinking about saving huge amounts, says Photiou.

“A 27-year-old putting in just an extra £30 a month, at state pension age would have an additional £100,000. Just invest as early as you can, and stay invested.”

Alex King, founder of personal finance education platform Generation Money says it’s worth bearing in mind that, traditionally, the FIRE movement came from the US, so to beware guidance may be aimed at different audiences.

Done well, he says FIRE can deliver real freedom, but it relies on strong earnings, careful planning and navigating risks like inflation, market volatility and longevity.

Is FIRE for you?

There are limitations to such strategies.

Having a reliable income is a basic starting point. Being employed obviously helps, because of the employer contributions on offer.

It’s more challenging if you have dependants, be they children or elderly parents, says Photiou.

Anyone renting or paying off a mortgage has further outlay – especially high if they live in London or another major city.

“FIRE has clear appeal but works best for a specific group,” says King.

“In the UK, it favours higher earners who can save aggressively and benefit from higher pension tax relief, while keeping spending in check. At its core, it’s a simple mix of disciplined saving and smart use of tax wrappers like ISAs and pensions.”

So while the dream may be to kick back and relax for the next 40 years, the reality of ever achieving that looks quite different.

Recent years have thrown a series of cost-of-living challenges, with the majority of people undersaving and underinvesting.

Rules of thumb around optimal savings rates vary but assuming 8%-12% for a moderate retirement – based on a ‘normal’ retirement age, anyone hoping to retire sooner needs to do some serious budgeting.

In Australia, they suggest a 15% contribution rate, while in the US many suggest a ‘half your age’ savings rate (if you’re starting age 20, save 10% of your salary; if you’re starting at 30, 15%; those starting at 40 should save 20% and so on).

But these frameworks or ‘rules’ are blunt instruments, overlooking a multitude of factors.

Traditional retirement plans talk about a U-shaped expenditure path, with more outlay at the beginning, followed by a period of lower outgoings, which may pick up again if long-term care has to be factored in.

Photiou says: “The Australians call them the go-go years, the slow-go years and the no-go years.”

But if you’re looking at FIRE, you’ll likely be wanting more go-go, and less slow-go. So Photiou suggests a higher proportion of working life salary will be required.

Like the sound of FIRE?

L&G have kindly crunched some numbers for MoneyWeek using certain assumptions such as starting work age 22 and using the minimum, moderate and comfortable lifestyle costs as estimated by Pensions UK in its Retirement Living Standards.

Almost half of all adults in the UK struggle with financial literacy. Many do not understand the three key concepts – compounding returns, inflation, and risk.

Without understanding these concepts, building financial independence becomes harder. Indeed the rising levels of young people not in education, employment or training can be linked back to poor numeracy skills in schools.

A landmark report by former minister Alan Milburn found around one million young people (one in eight) are NEETs, and this number is rising.

That presents a “huge national challenge”, says Lizzie Gaisman, chief executive of The Richmond Project, a charity founded by former prime minister Rishi Sunak to champion numeracy.

One of the factors contributing to this rise is a lack of confidence with numeracy, Gaisman tells Kalpana Fitzpatrick, digital editor-in-chief, on the MoneyWeek Talks podcast.

“We all believe – and now hopefully our research underscores – that confidence with numbers and what that means in terms of people’s daily life and finances, is an absolutely critical driver of social mobility for people.

“Without it, it’s really hard to find opportunities, to make the most of opportunities, and the downside risk is also really strong for those who don’t have that core conceptual understanding [of finance].”

Gaisman says issues like the rising number of NEETs in the country are always complex with many different root causes, but adds: “I do feel very strongly – and I wouldn’t be in this job if I didn’t – that numeracy and financial literacy are sitting really at the heart of that web for our young people.”

Why do Brits have poor financial literacy?

There are major disparities between the financial literacy of different groups in the UK. Research by The Richmond Project shows there are large socioeconomic, age, and gender gaps that are leaving people without the financial education they need.

Gaisman says: “We’ve got quite a big challenge in front of us as a country, and that’s particularly acute for groups who have already got quite a lot to contend with.”

There can be many reasons people do not have the financial education they need. Gaisman notes that a lack of confidence in maths plays a key role.

“Our research shows if you’ve got poor financial literacy, you are four times as likely to say maths was your least favourite subject at school. There is an element of what we know to be quite a negative emotional association with maths or with your confidence around maths that’s playing a role here.”

She adds that for things to change, there needs to be a cultural shift to make people more comfortable with basic numerical concepts to boost financial confidence and literacy.

There is also an inter-generational challenge. “We know that if your parents don’t feel that they have the tools that they need to manage their financial life, it is really hard for you as a child to absorb those skills in your home life because you're not seeing the role-modelling.”

One way to help bridge this gap is by introducing more financial education in schools. The Richmond Project has already partnered with the Department for Education to help children learn more about these concepts in their classrooms.

“The big three things [compounding returns, inflation, and risk diversification] are transformational for people to learn and we’ll be testing the curriculum because it’s not only the ‘what’, it’s also the ‘how’ you’re taught as a child that makes a big difference.”

For more on why Britain needs higher levels of financial literacy and more, listen to the full episode of MoneyWeek Talks with Lizzie Gaisman on YouTube or wherever you get your podcasts. You can also catch up with our previous podcast episode with Rishi Sunak, talking about how his charity wants to help change financial education.

About the podcast

MoneyWeek Talks is a podcast that helps you unlock the secrets to financial success. Editors Kalpana Fitzpatrick, Andrew Van Sickle and Cris Heaton are joined by influential guests – from CEOs and entrepreneurs to economists and policymakers – to share their top tips on managing money, investing wisely and building wealth.

Subscribe to the MoneyWeek Talks podcast and get ready to make it, keep it and spend it with confidence.

Santander has launched a new range of fixed-rate cash ISAs paying inflation-beating rates.

With potential base rate cuts next year and changes to the ISA rules, fixed-rate savings accounts could offer an opportunity to lock in rates now for those with short term savings goals.

From the tax year 2027/28, the annual cash ISA allowance will be reduced from £20,000 to £12,000 for under-65s.

Santander’s fixed cash ISA range includes one, two, three and five-year accounts offering interest rates of up to 4.7% annual equivalent rate (AER).

The one and two-year ISAs pay 4.5% AER and the three and five-year ISAs pay 4.65% and 4.7% AER, respectively.

Analysis by Paragon Bank shows fixed and instant-access cash ISA balances grew by £38 billion to £478 billion across 25.6 million accounts between January and May.

Who can open Santander’s new fixed ISAs?

You can open an account if you’re 18 or over with a minimum deposit of £500.

Interest is paid into the accounts annually and at the end of the term. Deposits for the 2026/27 year must be made by the end of 30 September 2026.

You can withdraw money from the ISAs, but you must take out the entire balance and you’ll be charged a fee equal to 120 days’ interest.

Can I transfer an old ISA into Santander's ISAs?

If you have an ISA elsewhere with a much lower rate, and are happy to lock money away for a few years, then it is possible you can transfer it into one of Santander's new fixed deals.

Just ask the provider for the correct form so that you do not lose the tax free status of the savings.

Santander said it will also pay a hotel voucher of up to £400 when transferring in.

Santander will email you a link and registration code within 28 days of your ISA transfer completing which you need to activate within 60 days to receive the voucher(s).

It is worth noting that some providers are also paying up to £1,500 cash bonuses when transferring into a stocks and shares ISA.

How do Santander’s cash ISAs compare to the rest of the market?

Based on a deposit of £500, none of Santander’s fixed-rate cash ISAs are top of the market, but only by a small amount.

All four are also paying the highest rates out of the major high street banks, if you prefer a bank with an established name.

If the very top rate is your priority, then the one-year fixed-rate cash ISA can be beaten by Cynergy Bank paying 4.7%.

The two-year fixed-rate cash ISA by Cynergy Bank pays 4.75%. Coventry Building Society has a two-year fixed-rate deal paying 4.63%.

Its three-year fixed-rate deal is beaten by Tandem Bank, paying 4.78%. Meanwhile its five-year fixed-rate cash ISA can be beaten only by Hinckley & Rugby Building Society (4.82%).

Though, if you have a large sum and do not think you need it for five years or more, investing it could make better sense.

Two Premium Bonds holders have bagged the jackpot in the August National Savings & Investment prize draw - one of which only purchased their winning bond seven months ago.

The latest £1 million jackpot winners come from Kent and Hampshire and the Isle of Wight and won with bond numbers 664BF890888 and 491KF169443, respectively.

The Kent winner bought their bond in February 2026 and has a total holding of £21,000.

The winner from Hampshire and the Isle of Wight purchased their bond in March 2022 and holds £49,850 overall in Premium Bonds, close to the maximum of £50,000.

How many prizes will be issued in August’s draw?

Roughly 6.2 million tax-free prizes worth a total of £433 million will be paid to Premium Bond prize draw winners in the August draw.

This month, there were 136 billion £1 bonds eligible for the draw.

The total value of the prizes dished out since the first draw in June 1957 is £42.3 billion.

The table below shows the breakdown of prizes in August:

Credit: NS&I

How to check if you've won in August's prize draw

NS&I’s Agent Million will inform the £1 million jackpot winners in person.

Premium Bond holders can check if they have won the smaller prizes of £25 to £100,000 the day after the first working day of each month. For August 2026, the date you can check from is 4 August.

You can do this by using the Premium Bonds prize checker app, visiting the NS&I website or asking Alexa.

The prize checker app and website will show you prizes you’ve won that month, anything you’ve won in the previous six draws and any older prizes you haven’t claimed yet.

You will need your bond number or NS&I number to access your account.

As Premium Bonds do not expire, it’s worth checking if you have any prizes waiting for you even if you bought them years ago.

NS&I says over 99% of prizes have been paid to winners since draws began in 1957, but there are still 2.8 million left unclaimed.

We look at the alternatives to Premium Bonds in a separate piece.

Indigo Point, Great Camanoe, British Virgin Islands

A modern estate with three properties surrounded by landscaped gardens. There are no corporate or personal income taxes, or capital gains or inheritance taxes to pay. 2-bedroom main villa, 1-bedroom owner’s cottage, 1-bedroom guest cottage, pool, 2 boat slips, 4.4 acres.

Price: $5.5m Hamptons 020-8618 4551

Bolivia Mount, The Dhoor, Lezayre, Isle of Man

A distinctive property built in 1820 and surrounded by formal gardens and woodland. The Isle of Man operates a low-tax regime with low fixed income-tax rates and no capital gains, inheritance or wealth taxes. 6 bedrooms, 3 bathrooms, 3 receptions, 42.3 acres.

Price: £6.95m Knight Frank 020-7861 1065

Seaside Drive, Guana Cay, Abaco, Bahamas

An ocean-side residence featuring bright interiors with vaulted beamed ceilings, wood floors, floor-to -ceiling windows and an open-plan living area. The Bahamas operates a zero-tax jurisdiction with no personal or corporate income taxes, capital gains, wealth or inheritance taxes. 3 bedrooms, 3 bathrooms, gardens, tennis court, 2.1 acres.

Price: $4.8m Bahamas Sotheby’s International Realty +1 242 367 5046

Courtil Brock, St Peter Port, Guernsey

A fine Regency villa built in 1810, surrounded by landscaped gardens that include an English oak planted by the first owner in 1812. It has 12-foot high ceilings, grand fireplaces, shuttered sash windows, panelled walls and French doors leading onto the south-facing terrace. Guernsey levies a flat 20% personal income tax, and there are no corporate, capital gains, inheritance or wealth taxes to pay. 5 bedrooms, 6 bathrooms, 3 receptions, library, cinema.

Price: £4.9m Savills 01481-713463

Ordino, Andorra

A mountain home in Ordino in the Pyrenees. Although not strictly a tax haven, there are no wealth, inheritance or capital gains taxes to pay. The house has beamed ceilings and a partly covered terrace for outdoor dining. 4 bedrooms, 4 bathrooms, wine cellar.

Price: €3.15m Lucas Fox +376 775 077

Derry Farm, La Route Du Francfief, St Brelade, Jersey

A restored country house with modern bright interiors that retain original features, including marble fireplaces. The gardens include a stream and a swimming pool. Jersey imposes no capital gains, inheritance or corporate taxes, and has a fixed income-tax rate of 20%. 4 bedrooms, 3 bathrooms, 2 receptions, library, 2-bedroom self-contained cottage, 1-bedroom flat.

Price: £7.75m Knight Frank 01534-877977

Shoreview Point, West Bay, Cayman Islands

A renovated home in a gated community, with its own dock on a canal leading out to the ocean. The interiors have marble floors, large picture windows and French doors leading onto the garden and pool. The Cayman Islands has a “tax neutral” status and levies no corporate, income, capital gains or property taxes. 4 bedrooms, 4 bathrooms, reception.

Price: $3.75m Savills 020-7016 3740

Lorne House, Castletown, Isle of Man

A grand Georgian estate, which was originally the official residence of the island’s lieutenant governor. The property has landscaped gardens, orchards and paddocks and a restored walled garden overlooking Castle Rushen, a medieval coastal castle. The Isle of Man operates a low-tax regime with low fixed income-tax rates and no capital gains, inheritance or wealth taxes. 8 bedrooms, 5 bathrooms, 4 receptions, 6.5 acres.

Price: £6.85m The London Broker 020-7193 9969

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Inheritance tax (IHT) has long been dubbed Britain’s most-hated tax, despite only affecting a small chunk of the population. That’s changing though – more people are on track to be hit by the 40% levy in coming years.

Rising house prices and frozen inheritance tax thresholds mean more families have and will be brought into the IHT net each year, known as fiscal drag.

The issue is set to worsen when pensions are included in the estate for inheritance tax from April 2027.

In the tax year 2023/24, 4.72% of UK deaths resulted in an inheritance tax charge, acording to latest HMRC data – an increase of 0.10 percentage points to the previous year. The proportion of estates paying inheritance tax is now the highest it has been since 2006 to 2007, when it was 5.96%.

A total of 30,400 deaths in the UK led to an IHT charge, with the average bill for IHT-paying estates standing at £231,000. Inheritance tax receipts in that period reached £7 billion, up 5% compared to the previous year.

Inheritance tax raised £8.4 billion in 2024/25 for the taxman, the Office for Budget Responsibility (OBR) said and expects this to increase to £14.7 billion in 2030/21 due to factors such as the fiscal drag, the £2.5 million cap on 100% agricultural property relief and business property relief which came in in April 2026, and making pensions as part of an estate.

With more people facing inheritance tax in the future, here's how can you plan ahead now.

Can you make use of gifting allowances?

The standard inheritance tax threshold is £325,000, and this can be raised to £500,000 if you give your home to your children or grandchildren – provided your estate is worth less than £2 million. There are ways to reduce an inheritance tax bill though, such as through lifetime gifting.

Giving gifts can reduce inheritance tax liabilities as, if done right, they won’t be included in the estate. There are a number of allowances, such as the annual exemption, which lets you give a total of £3,000 of gifts each year without them being added to the value of your estate. You can give the whole £3,000 to one person, or divide it among different people. If this allowance wasn’t used in the tax year, it can be carried forward to the next – but only for one tax year. There are also gift allowances for weddings and civil partnerships.

Significantly larger gifts given during your lifetime could also potentially be exempt from inheritance tax. Known as the seven year rule, if you live for seven years after giving a gift, no IHT is due on it – unless the gift is part of a trust. The inheritance tax rate tapers off after three years – so even if you die within those seven years, the rate your loved one has to pay on the gift could be less than full whack (40%). The problem with the seven year rule is you likely won’t know your life expectancy, nor how much money you will need in the future, for example to pay for care.

You can also give away £250 per year to as many people as you like, known as the small gifts exemption, as long as the recipient hasn’t already benefited from the annual exemption that year.

Other gifting allowances also apply – you can give as much away as you’d like in regular payments to another person as long as you do not leave yourself short and the money is from monthly income.

If you can afford to, gifting during your lifetime could mean less of your money is subject to inheritance tax in the future. Plus, it could mean you get to see how your hard-earned money makes a difference to your loved one’s life. Though, it could be worth getting advice, as there are nuances to rules to be careful about.

Don’t avoid the inheritance conversation

Avoid talking about money, politics and religion at the dinner table, that’s how the unwritten rule goes. Conversations about inheritance may feel uncomfortable, but having these discussions are crucial.

Speaking about your plans for your estate while you’re alive means you can communicate your wishes to loved ones directly and address any concerns.

You can prepare a side letter explaining how you have arranged your will, which could help avoid disappointment or disputes after your death. It can reduce the risk of any nasty financial surprises while they’re grieving, and give them the opportunity to understand your decisions.

Make sure you keep the paperwork

Keeping a paper trail is important when it comes to inheritance tax.

If you’re in the position to give away your money, then make sure you keep a record – and put it in a safe place. Planning ahead is all well and good, but if HMRC comes knocking, your loved ones may need to show evidence.

At the same time, keeping a record of financial and personal details for after you’re gone could be incredibly useful for your loved ones after you die. Royal London has put together a “when I’m gone list” which covers where friends or family can find important documents, as well as your funeral wishes. Make sure you let your loved ones know it exists and where you keep it.

NS&I has hiked interest rates on its fixed-rate savings products for the third consecutive time this year, making them some of the best on the market.

The government-backed bank has increased the interest rates on new issues of its one, two, three, and five-year savings accounts, called British Savings Bonds.

It brings NS&I’s top interest rate to 4.75% for the new five-year guaranteed growth bond, or 4.72% for the new one-year guaranteed growth bond.

Andrew Westhead, retail director at NS&I, said: “Today’s increases mean savers can now choose from improved fixed-term rates across our one, two, three and five-year British Savings Bonds, with the certainty of knowing exactly what return they will receive over their chosen term.”

What are the new rates?

NS&I has increased rates on eight of its fixed-rate accounts, but the size of the hike differs depending on the term and type of each account.

There are two types of British Savings Bonds – guaranteed income and guaranteed growth bonds.

Guaranteed growth bonds are lump sum investments that earn a fixed rate of interest over a set period of time and are designed to be held for the full term.

Meanwhile, guaranteed income bonds pay out monthly income at a fixed rate of interest over a set period of time based on the size of your lump sum investment.

The table below shows the new and old rates for each savings account.

Source: NS&I, 31 July

Are NS&I British Savings Bonds any good?

With increased rates, new issues of NS&I’s British Savings Bonds are a lot more attractive for savers looking for high rates.

However, the accounts do not provide the absolutely highest interest rates available on the market.

NS&I’s one year fixed rate growth bond pays 4.72% interest. This is well above the market average of 4.27%, according to Moneyfacts, but still lower than the top one-year fixed rate saver from GB Bank that pays 4.92%.

Even with the new increased interest rates, you can currently find alternative accounts with stronger interest rates across all term lengths.

The table below compares the interest rate on the top fixed-term account on the market to the interest rate offered for the same term by NS&I.

Source: Moneyfacts, NS&I, 31 July

Caitlyn Eastell, personal finance analyst at Moneyfacts, said: “NS&I’s decision to increase rates on its British Savings Bonds is a welcome boost for savers and makes them a far more competitive option in the current fixed-rate savings market.”

She added: “While the market-leading fixed bonds are now paying 5%, some savers may be willing to sacrifice the extra interest for the peace of mind NS&I offers, especially those with large deposits.

“Unlike traditional savings accounts, every pound held with NS&I is backed by HM Treasury, giving savers an unlimited government guarantee rather than the £120,000 FSCS protection available with banks and building societies.”

The number of millionaires living in Britain has hit the lowest level since the financial crisis, new research suggests.

Analysis by think tank the Adam Smith Institute (ASI) shows high taxes and slowing house price growth are among a range of factors that have hit people’s wealth.

The latest records from its Millionaire Tracker show that there were 442,000 sterling millionaires in Britain last year, down by 7% since 2024.

This has been blamed on falling real asset prices, a low household savings rate and the emigration of high net-worth individuals (HNWIs) amid the abolition of non-dom status and fears of a wealth tax.

To reverse this trend, the ASI is calling on the government to make the tax environment more welcoming to wealth creators. In particular, they've suggested the abolition of inheritance tax, cuts to capital gains tax and an international competitiveness assessment on the UK’s tax and regulatory treatment of non-doms and HNWIs.

Mitchell Palmer, economist at the Adam Smith Institute, said: “The decline in millionaires may be greeted as a success by some on the left, but it should instead be viewed as a warning signal. Every millionaire that leaves means less capital for British businesses, fewer international connections, and weaker entrepreneurial spirit in the economy.”

Why is the number of UK millionaires falling?

The ASI uses Office for National Statistics data to estimate the number of constant-price sterling millionaires.

Its definition of a constant-price sterling millionaire is an adult British resident who has at least £1 million in individual net worth, across all real and financial asset classes, including pensions and property, measured in constant 2025 prices.

The figure of 442,000 is the lowest level since the 2008 financial crisis .

A range of factors have pushed this figure down.

The ASI said: “Higher interest rates, as well as a lack of confidence in the British economy, have mechanically reduced the inflation-adjusted values of pension pots and high-end London property.

“Moreover, Britain’s low savings rate has reduced the pace at which households make themselves millionaires. Finally, and perhaps most concerningly, there has been a well-documented trend of high net-worth individuals either leaving Britain or no longer choosing to move here.”

Millionaires are leaving the country for a number of reasons, the ASI said, including the abolition of non-dom tax status, high levels of general taxation, and a hostile culture for wealth creators.

The think tank also warns that calls for a wealth tax are misguided.

It said: “France, Austria, and the Netherlands all abandoned theirs after seeing vast outflows of millionaires or other avoidance behaviour. Given Britain is already haemorrhaging wealth, we could only expect similar results here.

“Every millionaire that leaves is a loss to the country. Both foreign- and British-origin millionaires bring jobs, capital, connections, and ideas to this country, which can create substantial wealth for other Brits.”

The think tank argues that millionaires already pay a disproportionate share of tax, with the top 1% of earners paying 29.1% of income tax.

Palmer added: “Recently mooted anti-wealth proposals, such as a wealth tax or equalising the capital gains tax rate with income tax, will only make this problem worse.

“Instead, the government should focus on making Britain an attractive place for ambitious people to build and keep their wealth. This includes cutting or abolishing inheritance tax and capital gains tax.”

How can you protect your wealth?

Many wealthy people may be concerned about calls for a wealth tax or higher taxes.

Nouran Moustafa, practice principal at Roxton Wealth, said she is seeing more high-net-worth clients ask how they can protect or diversify wealth outside Britain, with some considering leaving.

She said: “Those worried about preserving wealth should avoid panic. They should review diversification, tax wrappers, pensions, liquidity and estate planning, while keeping their strategy flexible enough to withstand future policy changes.”

Paul Denley, chief executive at Oakham Wealth Management, added: “For those staying, the answer isn’t panic but planning: diversify globally, use every available tax allowance, review estate and succession planning, and avoid irreversible decisions based on short-term headlines. Wealth is usually lost gradually through poor decisions, not overnight.”

Lionel Messi may have failed to win a second World Cup, but his legend seems destined to endure. He'll go down as a global star in the tradition of Pelé, Maradona and Ronaldo, but also as an Argentinian national icon. He's also done very well financially from the sport.

Argentina's football fan culture is especially famous for its “creative chants that evolve from one tournament to the next”, the Spanish magazine Hola informed its readers halfway through the World Cup. This year's La Cuarta Estrella (The Fourth Star) included the rousing line Por Malvinas, por el Diego, por la última de Leo – referencing the Falklands, the country's footballing patron saint Maradona, and Lionel Messi's last World Cup. The anthem gained “global traction” when the team was filmed “passionately singing it in the dressing room during their tournament run”, says the Buenos Aires Herald.

When Messi was 13, his father signed a contract with FC Barcelona on a napkin, says the Financial Times. It covered the family's move from Rosario in Argentina to Spain. The Messis, who were joining the diaspora fleeing Argentina's long economic decline, “wept in the taxi to the airport”.

Lionel Messi, now 39, has never lived in his country since: after 20 years in Barcelona, he now plays for Inter Miami. “Yet this émigré has become the face of Argentina.” It may be because, like many émigrés, “he identifies with the place he left”. Spain wooed him to play for youth teams, but “the kid with the flowerpot haircut” only wanted to play for Argentina. He was raised in Spain by Argentinians – eventually marrying a girl he knew from childhood.

Always something of an outsider, Messi is “a taciturn introvert” who lacks the “wild poetry” that Maradona had off the field, but has nonetheless gained an emotional hold on his homeland. “Crucially for his legend, he has learnt to express emotion” – often crying on the field out of joy or disappointment.

The key point, though, is that “his brilliance was unmissable”. He was what Argentines call a “pibe” – a natural dribbler whose “preternatural anticipation and short steps allowed him to change direction faster than opponents”. Messi sees everything. “He spends almost the entire game walking and scanning. When he breaks into a run, his teammates know he has seen an opening. They play to serve him.”

What is Lionel Messi's net worth?

Over the years, the hero worship has translated into big profits, says Forbes. Now a billionaire, Messi is one of just four athletes to have joined “the three-comma club” while still active in their sport. Much of Messi's estimated $1.1 billion net worth stems from “cash accumulation and appreciation” of earnings throughout his career – in his last years with Barcelona, he had a four-year contract worth $675 million. He earned “a massive salary” at Paris Saint-Germain (PSG) and now reportedly pulls in an estimated $70 million-$80 million annually with Inter Miami – “plus an option to acquire an equity stake” in the club when he retires.

Off the pitch, Lionel Messi has made more than $600 million from corporate sponsorships. His most notable deal is a lifetime contract with Adidas (signed in 2017), along with longstanding partnerships with brands such as Mastercard, Michelob Ultra and Lay's.

A measure of Messi's legend is the prices commanded by his memorabilia. In 2023, a set of six shirts he wore during Argentina's winning World Cup run in 2022 fetched $7.8 million at a Sotheby's auction – making them “the second most valuable football jerseys ever auctioned”.

Things haven't always gone smoothly for Messi, says Sky Sports. In 2016, he was found guilty, along with his father Jorge, of defrauding the Spanish government of €4.2 million between 2007 and 2009 over income earned from image rights. But resilience and patience are his watchwords, noted The Profile in 2021. For Messi, who has been playing football every single day since he was five years old, “the overnight success story” is a myth. “I start early and I stay late, day after day, year after year,” he once observed. “It took me 17 years and 114 days to be an overnight success.”

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What is a land value tax?

A land value tax is an annual levy paid on the value of the land upon which a property – or no property – sits, rather than a tax on the property itself. The basic idea is that land gets its value from location, rather than the calibre of the development that sits on it. And what gives a location value is what is going on around it. Is it close to the centre of a city? Is it in an area with great transport links, good schools, beautiful parks, hospitals and so on? Generations of taxpayers paid for all that civic infrastructure and a land value tax is a fair and efficient way of taxing what economists have called the “unearned betterment” part of the value of a property – that is, the rise in value that has nothing to do with the owner's efforts and everything to do with the state and community.

Is a land value tax a new idea?

Not at all. Land value taxes have their roots in the ancient principle that people enclosing common land for agricultural use had a duty to share some of the resulting crops. In Anglo-Saxon England, the unit of land measurement called the hide (around 120 acres) was used to assess people's liabilities and obligations for such things as the maintenance and repair of bridges, fortifications and manpower for the army. A thousand years later, in The Wealth of Nations (Book V, chapter 2), Adam Smith argued in favour of a land tax on the grounds that it would fall on the owner of the land and not harm other economic activity. “Nothing could be more reasonable,” he concluded. David Ricardo, too, was a strong advocate. More recently, the most famous proponent of a land value tax was the late 19th-century US journalist and free-trade campaigner Henry George. Winston Churchill was a big fan, too.

Why is a land value tax so popular?

It's one of those interesting ideas (such as universal basic income or congestion pricing) that attracts support from a strikingly broad range of voices. Left-wingers are attracted to land value taxes because they capture unearned rents and reduce inequality from land ownership. Free-market liberals are keen because land value taxes are seen as highly efficient and tax a fixed resource without discouraging work or investment. The key point in favour is that such a tax “allows us to raise more money from the unproductive rich without disincentivising the productive rich”, says David Goodhart on Substack. Andy Burnham, during his first bid for the Labour leadership in 2010, backed the policy as “aspirational socialism”. Milton Friedman – guru of the “neoliberalism” so disdained by the new PM – also supported it as the “least bad tax”.

Why did Milton Friedman call it the 'least bad tax'?

Because if states must tax – and they must – then it's best that they do as little damage as possible to incentives that promote growth and enterprise. Income taxes disincentivise employment. Taxes on profits make businesses invest and trade less. But the supply of land is fixed: no tax increase will result in there being less of it. And “even the most tax-shy landlords cannot take their acres offshore or dodge the tax with legal jiggery-pokery”, says Edward Lucas in The Times. Moreover, a land value tax “stimulates growth by penalising inactivity. Landlords pay the tax anyway, so they had better make use of their land, or sell it, dropping the price if necessary” – and selling to more productive owners. Land value tax, in other words, helps tackle “grey belt” decay and discourages land hoarding and speculation, smoothing out booms and busts.

How high should the land value tax be?

Another proponent is Dan Neidle, the City lawyer turned tax reform campaigner. He supports scrapping stamp duty (which harms growth and labour flexibility by discouraging people from moving house); council tax (out of date, unfair and under-taxes the very rich); and business rates (arbitrary, stifle growth and stoke perverse incentives). To replace the £100 billion these three dreadfully designed property taxes bring in, Neidle's Tax Policy Associates think tank proposes a land value tax set at around 1.3%. Other groups have proposed models at between 0.48% and 1%. Stamp duty and council tax between them account for roughly £57 billion. At the 1.3% rate, at least 63% of people would be better off immediately (compared with council-tax payments), and in the long run the boost to the economy would make it a win-win for all.

What would a land value tax mean for homeowners?

In the short run, millions of homeowners in southern England would be looking at gigantic new annual tax bills. And that's not the only reason why land value taxes are a tough sell, politically. Initial implementation is tough, since the scope for disputes and legal challenges against a levy on a hypothetical value is clear. And opponents worry the tax would be unfair on asset-rich but low-income homeowners, especially the elderly. Without some kind of lengthy phasing in, a land value tax would constitute a one-off windfall tax on the current generation of land owners, since once they are introduced, land values would fall to reflect future tax liabilities. And letting cash-poor pensioners pay the land value tax from their estates risks turning it into a disguised inheritance tax.

Will Britain get a land value tax?

This week Andy Burnham appeared to back away from a far milder form of tax reform that he espoused as recently as last week – a big rise in the personal allowance to take more low earners out of income tax. So it's highly unlikely he would have the political capital – or mandate – to push through such a radical move this side of a general election. But it may be an idea whose time has come. An early attempt at a land value tax in Britain – under Lloyd George's Liberals – collapsed under the weight of the administrative burden involved and trenchant opposition from landowners. But today's technologies mean the task is not insurmountable, given the political will. Versions of a land value tax have been introduced in jurisdictions including Australia, Canada, Denmark, Estonia, Singapore and Taiwan. “Burnham has been right about this for 16 years,” says Neidle in The Sunday Times. “The question is whether he's willing to be right today.”

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Inheritance tax planning is becoming increasingly important as pensions will fall into estates for inheritance tax (IHT) purposes from April 2027.

As the government looks to cut off a typical avenue for transferring wealth, an estate planning tactic could boost your loved one’s pension pot while reducing inheritance tax liabilities.

You could make use of several gifting allowances, but gifts of any size made to someone through “surplus income” are also exempt from IHT, even if you die within seven years of making them.

Sarah Coles, head of personal finance at investment platform AJ Bell, said: “If you’re taking an income from a pension, regular income payments, including those from annuities or drawdown arrangements, are generally considered income, so can be given away under this rule.”

This means you could withdraw money from your pension and regularly gift money to your child or another loved one to add into their pension.

The added bonus is that the person receiving the money can then claim pension tax relief when putting it into their pension pot.

You may have to pay income tax on the pension withdrawals, but it could save your loved ones from a larger inheritance tax bill, and possibly income tax, down the line, particularly when pensions fall into an estate for inheritance tax purposes from April 2027.

Financial adviser Lisa Conway-Hughes said this is a way of building a family inheritance tax plan and “moving the pension down the generations”.

What gifting out of ‘surplus income’ is – and how to get it right

You have to meet three conditions for a gift to be classed as having come out of surplus income:

• The gifts must be part of normal expenditure (you need to establish a clear, regular pattern of gifts)
• You have to be able to maintain a normal standard of living after making the gift (and avoid dipping into savings or investments to pay for it)
• The gift has to come from “normal” income. This includes pension, rental and dividend income.

Coles said you may not even need to have gifted regularly to qualify for the surplus income exemption.

She explained: “As long as your intention to give this money regularly is clear, and you’re giving it to the same people, for the same purpose, you don’t need to have established a long history of frequent, regular gifts.”

In any case, it’s worth keeping detailed records of any gifts you’ve made, including those out of surplus income, to make it easier for the executors of your will, also known as personal representatives, to administer your estate.

Coles said: “It’s useful to complete HMRC’s IHT403 form as you go, so your personal representative dealing with your estate has the information they need.”

When giving away money from your pension, bear in mind the gifts out of surplus income exemption will only apply to money from regular income, such as regular pension withdrawals.

Ian Dyall, head of estate planning at wealth manager Evelyn Partners, said: “The funds must come out of regular pension withdrawals – and not, for instance, from taking 25% tax-free cash as a lump sum.”

It may be worth speaking to a financial adviser about estate planning strategies.

They will be able to help you calculate what you can afford to give away without leaving you short in the future and whether the tax savings are worth it.

Coles warned: “You need to take care not to withdraw too much from your pension, too soon, in order to make gifts: there’s no point beating inheritance tax and then running out of money in retirement.”

How an annuity could lower your inheritance tax bill

Another way to lower the value of your estate from April 2027 is to buy an annuity with part of your pension and use it to fund a whole of life policy written in trust, which can cover the cost of the IHT bill upon your death.

Dyall, from Evelyn Partners, said: “The annuity payments are liable to income tax, but after age 75 income tax on the pension is pretty much inevitable, it’s just whether you pay it or the beneficiaries.

“The life assurance premiums are usually immediately exempt from IHT due to the normal expenditure exemption.

“The criticism of annuities is that if you die young the money is wasted, but here if you die young, although the annuity is in some sense ‘wasted’, the life assurance pays out after only a few premiums, so you effectively win either way.”

Andy Burnham, the UK’s new prime minister, is never going to be popular with everyone – but this may well be his hardest lesson.

It’s clear he wants to be a superhero prime minister – the hero of UK politics who speaks without a lectern (signifying no barriers) and someone who wants to give power to local authorities rather than just the Number 10 powerhouse. In his words, he “wants to bring back hope” as he attempts to fix the broken political system and the UK economy.

And as such, welfare appears to be at the core of what Burnham wants to achieve by putting an end to rough sleeping, introducing more council homes, and providing more help for young people to end the growing NEET (Not in Employment, Education or Training) crisis. In recognising the cost of living pressures, he pledged breathing space, which has included axing the 5% VAT from electricity bills from October and capping bus fares outside the capital at £2. He’s also announced a 20% cut in business rates for pubs, clubs and music venues from April, though not all hospitality venues are included.

But are his moves bold enough? Removing VAT on electricity bills is estimated to save families around £45 a year, but amounts to a 12p saving per day. The reality is most people will not feel the benefit, especially as average household energy bills are around £2,000 per year.

The bus fare cap is useful for regular bus users, saving around a third off single journeys for many. But households that rely on their own transport are still subject to high prices at the pumps – petrol prices have shot up from around 133p at the start of this year to 151p on average now, the RAC Foundation shows. In the meantime, there is uproar over the £26.2 billion in profits made by energy companies since the start of 2026, according to the End Fuel Poverty Coalition.

You’d be forgiven for calling these measures tokenism, and perhaps that’s all it really is as he figures out how to tackle the bigger problem of reducing government debt, improving the economy and making Britain a great place for investors once again.

But what can we expect to see, and can he, alongside his new chancellor John Healey, deliver on the big issues?

What can Burnham do to boost the UK economy?

Tackling labour productivity would be key. UK productivity has been at a low since 2008, but it is the foundation of economic growth and can improve living standards as it promotes stronger wage growth, too.

Hear more about the UK's growth problem as economist Julian Jessop talks to MoneyWeek’s Andrew Van Sickle about the UK's productivity problem in our latest podcast.

Related to productivity and growth is the burgeoning NEETs issue. We cannot afford to let the young generation become a lost generation. Financial advice and wealth management firm St James’s Place estimates that youth unemployment costs the government £125 billion. It is an area Burnham must absolutely focus on. Plus, let’s not forget, without young people in the work system, there is no one funding future state pension payments – today's workers pay for today's pensions.

Speaking of pensions, there are also heavy calls for Burnham to scrap the changes to salary sacrifice pension rules. As of next year, only the first £2,000 of salary sacrifice contributions per employee will be exempt from National Insurance contributions.

That, plus changes to inheritance tax (IHT) rules which will bring pensions into an estate for IHT purposes from April 6, 2027, do little to encourage pension saving.

Age UK claims 1.9 million pensions live in relative poverty and is estimated to cost the government around £10-£15 billion, according to Pensions UK. Simplifying pensions and encouraging savings will be vital, rather than adding barriers that undermine retirement savings.

Care should also be on his mind as an ageing population is also looming and quite possibly the next big crisis to face the UK.

Taxes

While Burnham has ruled against making any changes to the frozen tax allowance, which has stood at £12,570 since 2021, there are calls for the new chancellor to address this in the Autumn Budget.

A £500 increase in the personal allowance would cut income tax bills by £100 for basic rate taxpayers, and could cost the government £5 billion, AJ Bell estimates. Resoring it to £16,000, which is where it could be without the freeze, would cost the government around £35 billion, the investment platform says.

Could a cut to the National Insurance rate be a better alternative to take the pressure off household finances? Employees currently pay 8% in National Insurance on earnings between £12,570 and £50,270 (the rate is 6% for self-employed profits) and the rate is 2% above the upper earnings limit.

AJ Bell says that cutting each main rate by 1% would cost the government £5.8 billion, but would give workers more breathing space and it would certainly not be seen as just a token gesture; someone earning £35,000 a year could save around £225, compared with a £100 tax saving from a £500 increase in the personal allowance.

Backing British

Former chancellor Rachel Reeves was incredibly keen to get investors backing British companies, so much so, she reduced the cash ISA allowance to £12,000 for under 65s in a bid to shift savers into investing instead. This limit, taking effect in April 2027, will only apply to cash ISAs – and the overall £20,000 ISA allowance remains. Reeves even decided that cash holdings of any kind, such as money market funds, could not be part of a stocks and shares ISA. If any cash is parked in a stocks and shares ISA, interest earned will be taxed.

While in government in the past, the Conservatives proposed a British ISA, an idea that never truly came to fruition.

I don’t think either of these policies would encourage savers to suddenly invest more and in British companies specifically. So, what will Burnham do? Can he save the UK stock market?

I think policies that undermine saving, instead of encouraging it, are bound for failure.

Addressing speculation about hikes to capital gains tax is needed if he is to encourage investors, and if he can also restore political stability, there is a chance the UK stock market could thrive. But to do this, he will have to find a fine balance between public spending and fiscal policies.

Can he do it? It is early days as we wait to see his final 10 year plan. That and Healey’s Autumn Budget will be ones to watch closely as this could really be Labour’s final opportunity to show it can change fortunes, fix politics and bring back stability to the UK.

High street banks and building societies have been battling it out with challenger banks such as Monzo and Starling, but Nationwide is fighting back by leveraging traditional roots with more presence on the high street as it pledges to open more branches with customer facing services.

Plus, its attractive Fairer Share scheme, which has consistently paid a £100 bonus to loyal customers for four years and shares profits with members, is popular.

You’ve more than likely seen the Nationwide adverts of Dominic West playing the pompous and out-of-touch chief executive of A.N.Y. Bank.

But behind the light-hearted campaign, Nationwide is winning the hearts of current account holders, bagging 65,000 new customers in the first quarter of this year, according to the latest available figures from the Current Account Switch Service.

In comparison, Barclays, which plans to close 166 branches in 2026 and 2027, bagged 18,500 new customers. Lloyds netted just 12,000 new customers; it has closed 397 branches since March 2022.

At its annual general meeting earlier this month, Dame Debbie Crosbie, chief executive officer of Nationwide, said the building society was “thinking carefully about whether there are any spots where it would make sense for us to open new branches”.

“I can say that it's currently under review, and there may be a few locations that we identify the need for a new branch,” she said.

Tom Riley, group director of retail products at Nationwide added that customers were deciding to switch because “they can see the difference a large-scale mutual is making”.

Nationwide’s £175 switching sweetener, paid to eligible new customers when they move current accounts, has also helped the bank gain new customers.

Nationwide’s pledge to keep bank branches open

Banks have justified closures saying customers are increasingly carrying out transactions online, but charities have warned they risk leaving the elderly and those living in rural communities in danger of financial exclusion.

Nationwide is bucking this trend and through its “Branch Promise” has pledged to not close any more branches until 2030 at the earliest.

The building society had initially committed to keeping its nearly 700 branches open until 2028, but extended the pledge in November 2025.

Martyn James, personal finance and consumer rights expert, said Nationwide’s commitment to the high street was an “astute move”.

He said: “Vast numbers of people need an actual branch to go into, including the millions of carers for vulnerable people, small businesses that take cash, people with specific needs or vulnerabilities and people who just don't like online services.”

How other building societies and banks are pledging to keep branches open

Other building societies are also following Nationwide’s ambitions.

Newcastle Building Society is growing its branch network, opening a new site in Guisborough, North Yorkshire, in April.

The building society says it has invested more than £12 million to grow and improve its network of branches since 2015.

In July, Cumberland Building Society pledged to keep all its 31 branches open as it looks to prevent the decline in the high street.

Andrew Gall, head of savings, consumer and insight at the Building Society Association, said: “Building society branches continue to play an important role because they offer something many customers still value: trusted, face-to-face support alongside digital and telephone services.”

In recent months, major banks have also made pledges to keep bank branches open and invest in their existing branch networks, recognising that customers possibly value it more than previously thought.

In July, Santander, which owns TSB, announced it would not close any more of its 480 branches before 2028 at the earliest.

In December 2025, HSBC promised to keep all its remaining sites open until at least 2027.

Fairer Share payment

Nationwide paid over four million customers a £100 “Fairer Share” payment in June this year – the fourth consecutive year it had made the payment since 2023.

When the building society launched it for the first time four years ago, Crosbie said it was “part of our enduring commitment to rewarding our members”.

Vicky Reynal, financial psychotherapist and recent guest on the MoneyWeek Talks Podcast, said the appeal behind the Fairer Share payment was the surprise element, but also that it makes customers feel like they are part of something bigger in an “increasingly lonely and disconnected world”.

Reynal said: “The financial services industry has often suffered a perception from customers that their interests are with shareholders rather than account holders, so this handout feels to customers like a different positioning, like a bank that cares about its account holders.”

Families are facing a major shake-up to the inheritance tax regime from April 2027 when unused pensions will form part of estates for inheritance tax (IHT) purposes.

Historically, many pension pots have fallen outside the IHT net, making them a useful vehicle to transfer wealth through generations. But under new rules, announced in the 2024 Autumn Budget by then chancellor Rachel Reeves, unused pension funds will no longer be able to be passed down without facing an IHT liability from 6 April 2027. The change is expected to drag over 10,000 extra estates into the IHT net in 2027/28.

Gary Smith, senior client partner at wealth manager Evelyn Partners, said the rule change will have major impacts on how people spend their pensions in retirement as well as making wills and estate planning far more complex.

But while the headline would suggest all pensions will fall under the scope of IHT, the rules are more nuanced than this.

Here's everything that is expected to change and how to prepare.

How will inheritance tax be applied to pensions from April 2027?

From April 2027, most unused pension funds and pension death benefits will be liable for an IHT bill, should it tip the value of an estate over the nil-rate band of £325,000.

Specifically, this is what will be included for IHT purposes:

• Personal (private) or occupational defined contribution (money purchase) pension funds
• Any inherited pension funds that remain in drawdown
• Pension funds that are paid into a trust on death
• Guaranteed payment period income or value protection lump sums paid from an annuity
• Defined benefit (final salary) lump sum death benefits

When inheritance tax won’t be owed from April 2027

There are some circumstances when IHT won’t be owed after the new rules come into force. These include:

Death in service benefits

Death in service benefits linked to either a defined contribution or defined benefit pension will not be liable for IHT. Death in service benefits are payments made to the beneficiary of a pension owner who dies while working for a company.

Clare Moffat, pensions and tax expert at pensions and investment firm Royal London, said it’s worth updating paperwork to ensure your death in service benefit goes to the person you want it to.

“Many people fill in an expression of wish form when they start a job – one for their pension and one for the death in service scheme,” Moffat said. “Keeping both up to date is important. If you die while still working, it allows the scheme administrator to know who you’d like to receive the death benefits.”

Dependants’ scheme pensions

A dependants' scheme pension, which pays a regular income to a “dependant” on the pension holder’s death, will not be subject to IHT under the new changes. The government defines a “dependant” as a surviving spouse, civil partner, child or anyone else who is financially dependent on you.

Trivial commutation

This is a lump sum payment, instead of a regular monthly one, made from an inherited dependants' scheme and will also be exempt. The lump sum has to be under £30,000 to qualify for trivial commutation.

Joint-life annuities

No IHT will be owed on joint-life annuities, which pay out to another person on your death.

Joint-life annuities usually pay out to surviving spouses, civil partners or to people who are financially dependent on you.

Death benefits paid to spouses, civil partners or charity

Death benefits transferred to a spouse or civil partner won’t be subject to IHT, if they are UK long-term UK residents. The same rule applies if pension death benefits are paid to charity.

The state pension

The state pension will not fall within the scope of inheritance tax from April 2027 and will apply only to personal and workplace pension schemes.

Why the majority of estates won’t owe inheritance tax after the changes

The government estimates that of the roughly 213,000 estates with inheritable pension wealth in 2027/28, around 10,500 will have an IHT liability where they wouldn’t have before.

Moffatt, from Royal London, said: “Many people are concerned about pensions being subject to inheritance tax, however, even with pensions being included, the majority of estates won’t have to pay it.

“Most people will need their pensions in retirement and if they don’t use the whole pot, it will pass to a husband, wife, or civil partner inheritance tax-free.”

That said, those who are wealthier will obviously be at greater risk of being dragged into paying IHT, or paying a higher amount than they would have before, from April 2027.

Anyone in this position should consider how gifting can reduce an eventual IHT bill while providing financial support to a loved one.

“I hate losing money more than anything. Losing money is what kills you. It is not the actual loss. It's the fact that it messes up your psychology,” Michael Platt of BlueCrest Capital Management observed in 2012.

So, just imagine how angry he is at losing a high-stakes £200 million battle with HMRC over the employment status of some of his traders, says The Times. The Supreme Court has thrown out BlueCrest's appeal, ruling that payments to some of BlueCrest's “partners” were effectively “disguised salary” and should be taxed accordingly.

Platt was so livid he launched a broadside, declaring that the UK is “no longer a serious contender as a place to do business” because of the taxman's propensity to shift guidance rules and move goalposts. It was a rare loss of composure in public from the publicity-shy financier from Preston, Lancashire, who has flown “under the radar” to build one of the world's leading hedge funds – now more properly described as his multi-billion-dollar private family office.

The ruling has implications for limited liability partnerships across the financial-services industry. Still, the consensus among City lawyers and industry peers is that BlueCrest had devised a “particularly aggressive” remuneration structure, says the Financial Times. That's no surprise given Platt's history of pushing the envelope in all matters financial.

But the judgment has brought “unwanted publicity” to a man who has spent “the best part of two decades cultivating a reputation as one of the industry's most private figures”, with only the occasional lapse. In 2019, he was filmed bragging about his wealth in the back of a New York taxi: “I'm the highest-earning person in the world of finance”.

What is Michael Platt's net worth?

Platt's success has certainly been extraordinary. Forbes puts his private worth at $20.9 billion, placing him among Britain's wealthiest, although he has long since decamped to more tax-friendly climes. In 2010, he moved the group's headquarters to Guernsey, days before the UK government's new top rate of income tax took effect.

“Platt's empire, built on mathematical precision and unrelenting secrecy, is a study in controlled opacity,” says The Capital Review in Singapore – one of several BlueCrest international outposts, including New York and Dubai. Platt himself stopped trading publicly after 2010, but has remained “deeply involved” in strategy, risk allocation and personnel decisions.

The firm's “signature” is his “obsession with data and asymmetry – the idea that small mispricings could yield outsized returns if traded with precision”. Former colleagues describe him as “analytical, detached and surgical – a man who reads numbers like prose”.

How Michael Platt built his fortune

In Platt's own account, it was his grandmother who set him on the road to hedge-fund wizardry. Born in 1968, his background was academic yet practical: his father was a lecturer in civil engineering, his mother worked in administration. But it was his grandmother who gave him shares as a teenager and taught him the basics of investing. After graduating, he joined JPMorgan where he became a managing director of proprietary trading, notes The Telegraph, before founding BlueCrest in 2000.

The early years were “explosive”, says The Capital Review. By the mid-2000s, BlueCrest was managing more than $10 billion and went on profitably to surf the volatility of the 2008-2009 financial crisis. The firm's success was partly down to Platt's trading acuity – he had a knack for “quantifying instincts” – and also sheer drive.

The upshot was a hard-charging culture where traders were ranked, rewarded and ruthlessly replaced; insiders called it a “meritocracy of terror”. How galling for a man who hates to lose, says the FT, that the “one opponent his firm has struggled to beat” is HMRC.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

The common perception of elite level, world class boxers is that they ooze confidence. While confidence is important, there is a clear line between being confident and reckless.

When I was trading punches under the bright lights in fights around the world, there were moments where my mind would release a surge of confidence. That confidence, when mentally mishandled, occasionally transpired into shots being thrown harder than necessary, drifting into hope rather than discipline in search of a knockout blow.

I would tend to hear the guiding voice from the corner of the ring: "Relax, Delicious, Relax – You got time”.

At the highest level of boxing, loading a big punch is dangerous. When you put too much into a shot, it becomes telegraphed. A smart fighter only has to wait for a small opening to hit you on the button. One moment of impatience or idleness guided by emotion and the fight goes against you.

When it comes to money and pension planning – investing can seem like a fight.

Fighting for the long-term

Parents and grandparents know too well that for the younger generation, the temptation to swing big is real. Housing costs, inflation and everyday expenses have made building wealth feel like a distant dream for most of Gen Z and HENRYs (high net-worth, not rich yet), housing is the clearest sign of the squeeze. The average house price in the UK is around £300,000, while average full-time earnings were around £39,300, meaning the average home cost roughly 7.6 times annual earnings. Compare that with the late 1990s, when house prices were closer to three to four times earnings in many areas. That gap doesn't just mean working harder, it breeds the kind of pressure that makes discipline harder to hold onto.

When pressure becomes overwhelming, desperation or resignation takes control. It makes people act from emotion, searching for an escape rather than a solution, the financial equivalent of loading everything into one punch and hoping it lands. We saw this during the 2021 meme stock frenzy and the cryptocurrency explosion, where many people chased life-changing returns overnight. Most retail investors who trade this way end up losing money, whether they're in and out within days or holding for years.

It's tempting, under that same pressure, to write off the long game altogether, to assume that saving for a retirement decades away is pointless when the cost of living is squeezing you right now. But that instinct works against you. According to the Pension Policy Institute, only 46% of Gen Z believe the state pension will still exist by the time they retire. If anything, that uncertainty makes building your own retirement pot more urgent, not less.

Research and history consistently tell us that building wealth is less exciting but much more effective than chasing a knockout. US-based research from The Millionaire Next Door by Thomas Stanley and William Danko found that most self-made millionaires are ordinary people who live below their means and understand the consistent game of investing.

In the UK, household wealth is dominated by housing and pensions. This is ‘asset-based’ forms of wealth, where growth comes mainly from price appreciation and compounding over time rather than wages alone. Pensions are one of the simplest ways to step onto that asset ladder. The younger you are, the more it feels like you're strapped to a jetpack as you climb it, because time turns those small steps up the ladder into leaps eventually.

Small, consistent actions repeated over time beats risky bets. This is where the power of compounding comes in, famously described as "the eighth wonder of the world" by Albert Einstein.

I like to think of compounding as my sparring partner. While there was always noise outside about how good I was as a fighter or how I performed in my last fight, we were working quietly behind closed doors. No headlines, no opinions. Just hard work every day, improving and building strength.

Why are we not talking about pensions and compounding?

Making the most of your age and increasing your pension contributions where possible fits naturally into the picture. When I was boxing, nobody mentioned pensions, retirement felt like something that only happens to other people. Then I came across a statistic that changed everything for me.

Assuming 7% annual growth, if you invest £200 a month from age 20 to 30 and then stop, you'll have put in £24,000 and by age 65, that pot grows to around £370,000. Now take a mate who starts investing at 30 and keeps going all the way to 65, let’s call him Steve. Despite contributing £60,000 more than you overall, Steve ends up with about £360,000, slightly less than your pot, even though you stopped contributing 35 years earlier. That's before factoring in the government top-ups your contributions attract along the way.

With the state pension slowly becoming something we are not banking on, this is exactly the kind of number that should change how urgently you treat your own pot. The power of compounding hits harder than a clean uppercut.

Win on points

The smartest boxers don't chase knockouts. They win through consistency, wearing their opponent down like water wears away stone.

Investing is the same. Stop chasing the knockout. Go the full 12 and win on points.

Over one million Brits are set to be additional rate taxpayers in the 2026/27 tax year, with record numbers paying above the basic rate of income tax according to the latest HMRC projections.

The number of people in the highest tax bracket is set to reach 1.3 million this year, double the number in 2021/22, as a record 3.2% of the population have an income of at least £125,140.

The number of additional rate taxpayers has ballooned by 33.8% since the 2023/24 tax year as tax thresholds have not increased in line with inflation.

Meanwhile, the number of higher rate (40%) taxpayers is also rising rapidly. An estimated 7.7 million Brits are set to pay tax at this rate in the 2026/27 tax year as they earn between £50,270 and £125,140 – up by 34% compared to figures from the 2023/24 tax year.

The overall number of people paying tax in the UK is up too. There are projected to be a total 40.8 million taxpayers across all bands in the 2026/27 tax year, up from 36.7 million in 2023/24.

Frozen thresholds are dragging more Brits into higher tax bands

The higher and additional rate tax bands are seeing fast increases as more people’s incomes rise above the thresholds.

But many of them are paying tax at higher rates than they would have in 2021/22 when adjusted for inflation.

This is a result of a process called ‘fiscal drag’, where tax thresholds are frozen by the government and not uprated with inflation. That means that when workers’ earnings rise (even just to keep up with inflation), they are ‘dragged’ into higher tax brackets.

Fiscal drag is often called a stealth tax because, while tax rates have technically not increased, more people start to pay income tax at higher rates despite their purchasing power not increasing significantly.

For example, the tax-free personal allowance has remained at £12,570 since 2021 and has not increased with inflation. If it had, then, using the Bank of England’s inflation calculator, it should have risen to around £16,013 by May 2026.

Thanks to frozen thresholds, workers are paying tax on their earnings between £12,570 and £16,013 when they wouldn’t be if thresholds had increased in line with inflation.

Laura Suter, director of personal finance at AJ Bell, said: “Frozen tax thresholds are affecting almost everyone who pays income tax, from pensioners to anyone earning more than the £12,570 personal allowance. But the biggest impact is felt by those pushed into a higher tax band.

“Once your income exceeds £50,270, every additional pound you earn is taxed at 40%, rather than the 20% basic rate. That means a much larger slice of any pay rise goes to the taxman, leaving you with far less extra money in your monthly payslip.

How to lower your tax bill

Fiscal drag can be damaging to your personal finances as it means you are keeping less of your earnings than you otherwise would have if thresholds had increased with inflation.

It can be particularly difficult for people whose earnings sit on the edge between tax bands. For example, someone who earns £50,000 will today pay the basic 20% rate of income tax. However, if their earnings increase by just 2% (£1,000), £730 of this will be dragged into the higher 40% tax band.

In this situation, the only way you can lower your tax bill is to reduce your taxable income. That does not mean saying no to a pay rise – it means using the extra cash in a more tax-efficient way.

The simplest way of doing this is to put more money into your pension through salary sacrifice as this is deducted from your pre-tax income.

If you earned £51,000, you would need to pay 40% income tax on the £730 of your income that sits in the higher rate tax bracket. However, if you put this into your pension through salary sacrifice instead you would be taxed 0% on that £730.

There are other salary sacrifice schemes in the workplace too where you can pay for certain things out of your pre-tax income. The most common of these is the ‘cycle to work’ scheme where you can pay for a bike with tax relief, but schemes exist to pay for electric cars and other goods and services.

Hundreds of thousands more pensioners look set to pay income tax than the government previously estimated, according to new HMRC figures.

Since freezing the thresholds in 2021, more people – especially pensioners – have been caught by the income tax net.

The tax allowance was set at £12,570 in 2021/22. Since then, three million more people over 65 are due to pay tax and for the first time, more than 10 million people in this age group will be liable.

Why are more pensioners paying tax?

Steve Webb, partner at pension consultants LCP and the former pensions minister, said a combination of the freeze in personal tax-free allowances, combined with the significant year-on-year rises in the state pension (and other sources of taxable income), alongside a rise in the size of the pensioner population, means the number of tax-paying over-65s has risen dramatically.

Department for Work and Pensions (DWP) figures suggest around 12.2 million people in the UK are receiving a state pension, meaning more than seven in 10 pensioners are now taxpayers, with an extra million expected by 2030-31.

The new state pension is currently £12,547 – just below the basic income rate threshold of £12,570. From April 2027, it is expected to rise to £12,578 – just above it, meaning state pensioners will have to pay income tax on these small amounts.

Every year the government releases income tax liabilities statistics, which show the total number of people paying tax. The data is split by factors such as age, region and marginal tax rate.

The Spring Statement suggested previously published figures might have underestimated the number of taxpaying pensioners but it was buried in the accompanying paperwork, whereas it has now been officially confirmed.

What are the government plans to help pensioners?

In the Autumn Budget, chancellor Rachel Reeves proposed a special scheme that would prevent such people paying tax, citing the administrative burden but as yet, no details have emerged.

Speaking to MoneyWeek, Webb said: “They need to get cracking because it needs to be clear by next April and it will probably need legislation. It’s all very well saying it doesn’t matter until the next of the financial year but that’s not really good enough – people want to know where they stand. So I think they’re up against it because any of the possible solutions so far look to be a bit of a mess.”

While no details have emerged, Webb said rumours are circulating.

“There’s talk they'll do something quite radical, like tax everybody’s state pension at source – taxing everybody at 20% and then people who are non-taxpayers will have to claim a refund.

“That doesn’t actually solve the problem but it means that they’re not collecting lots of silly small amounts of tax through a ‘process’. That’s the rumour, which I think would be absolutely awful as you’d then have several million non-taxpaying pensioners who would all be overtaxed and all have to jump through hoops to get back money that they don’t currently have to pay.”

A HM Treasury spokesperson said: “Anyone whose only income is the full new or basic state pension without any increments will not pay income tax and we are committed to that over this Parliament.

“By keeping the triple lock, 12 million pensioners will see their income rise by up to £470 this year, and they continue to benefit from the highest personal allowance in the G7.”

Millions of older workers could face a longer wait until they retire amid reports that changes to the state pension age could be brought forward.

Currently, the state pension age is due to rise to 68 from 2044 but a report from the Office for Budget Responsibility (OBR) suggests this could take place sooner.

It comes amid debate about the cost of the triple lock and a government backed review of the state pension age which is due to make recommendations on changes in the comings months.

The OBR’s latest Fiscal Risks and Sustainability Report said state pension spending is projected to increase from 5% to 9% of GDP over the next 50 years.

It added that a policy assumption underpinning the state pension projection is around future changes to the state pension age.

In its baseline scenario, the OBR assumed that the state pension rises to 68 between 2037 and 2039 and then to 69 in the 2070s.

This is different to the current trajectory that suggests the state pension age will rise to 68 in 2044/45.

Keeping to the timetable would cost an average additional £6 billion in today’s terms in each of the years the state pension age rise is delayed.

The OBR said: “The Treasury has confirmed to us that this is the government’s current policy position, rather than the legislated increase set in the Pensions Act 2007.

“This is also consistent with the recommendation of the first state pension age review in 2017 that the legislated-for rise to 68 between 2044 and 2046 should be brought forward to the late 2030s, and the principle that 32% of adult life should be spent in retirement, both of which the government at the time committed to. However, the rise to 68 remains legislated to happen between 2044 and 2046, with no subsequent rises legislated for.”

If these changes are made, it is estimated that five million people aged between 49 and 55 would have to work for an additional year before being eligible for their state pension.

The Treasury has been asked for comment.

How to prepare for state pension age changes?

The funding and timing of the state pension seems to regularly be under review.

Much of the criticism around the state pension is the use of the triple lock calculation, which can lead to above-inflation rises and is costly for the Treasury.

Beyond scrapping the triple lock, an alternative is to make people wait longer by changing the state pension age.

The state pension age was always going to increase in the coming decades but may now be sooner than many expected to help boost the nation’s finances.

Nothing has been confirmed yet but a revised timetable does potentially mean working longer.

Catherine Foot, director of the Standard Life Centre for the Future of Retirement said: “The state pension remains a critical element of retirement incomes in the UK for millions of people, and the reports that state pension age increases could be accelerated are a reflection of the difficult balancing act government faces in keeping the system affordable while people live longer, and ensuring it remains fair and adequate for those who rely on it.”

But Adam Cole, retirement specialist at Quilter, suggest that rather than relying on the government, there are steps that people can take.

“Someone aged 49 could build a fund capable of replacing a year's projected state pension with contributions costing just over £50 a month after basic-rate tax relief. Even someone aged 55 could potentially achieve the same outcome for around £75 a month net,” he said.

"While no one welcomes changes to the goalposts, these examples highlight the power of starting early. Small, regular pension contributions, combined with tax relief and investment growth over time, can provide valuable flexibility and help reduce dependence on an increasingly stretched state pension system."

Workers could boost their retirement pots by thousands of pounds under major government reforms.

The Department for Work and Pensions (DWP) has laid out its workplace pensions roadmap for the next three years, aimed at bettering outcomes for savers.

The government estimates that, on current trends, those retiring in 2050 will have lower private pension incomes than those retiring in 2026, with millions facing retirement poverty.

Rachel Vahey, head of public policy at investment platform AJ Bell, said: “The government has set out an ambitious programme of reforms that has the potential to transform workplace pensions, making it easier for people to compare pensions and switch to get a better deal.”

The measures will run alongside the new free online pensions dashboard, which is expected to launch in the 2027/28 tax year.

Vahey added: “Combined with pensions dashboards, these reforms have the potential to create a new generation of more engaged savers.

“For the first time, people will be able to see what pension savings they have built up across different providers, alongside clearer information about how well those pensions are delivering for them.”

League table for workplace pensions

The "centrepiece" of this three-year plan is a Value for Money framework.

Pension savers will be able to see how their workplace pension scheme is performing and the returns it is generating against other pension schemes via a league table.

Schemes will be ranked from red (poor value) to green (outperforming on value) on a range of metrics including investment performance, charges and quality of service.

Schemes not performing well for savers will have to improve or be forced to wind down.

The league table will be rolled out to all workplace pension schemes from 2029.

Torsten Bell, minister for pensions, said: “The stakes are high, when the gap between the best and worst performers could cost a saver with a £10,000 pot over £5,000 across just five years.”

However, Helen Shackelford, partner at consulting firm LCP, said introducing a league table could “constrain innovation”.

She added: “Short-termism in a long-term system may ultimately compress the range of member outcomes and penalise funds that have made strategic decisions with a 20–30 year horizon.”

Creation of pension ‘megafunds’

The government reforms also include plans to consolidate smaller defined contribution (DC) workplace pension schemes which are used for automatic enrolment into ‘megafunds’.

From April 2030, these multi-employer schemes must reach at least £25 billion of assets under management or have at least £10 billion with a growth plan to reach £25 billion by 2035.

The government says these larger funds will improve returns for savers through lower fees, higher returns and a more diversified pool of investments.

‘Guided Retirement’ to provide better outcomes for savers

Under a Guided Retirement framework, pension savers accessing their pots at retirement will be offered default options from 2029.

The idea behind the change is that pension savers who don’t want to take an active role in deciding how to access their pots will still receive a decent stream of income in retirement.

But savers won’t have to accept the default option and they’ll also be able to choose an option more suited to their needs, if they prefer.

Bank bonuses have reached their highest levels since the 2008 financial crisis, prompting calls for a hike in the windfall tax to help struggling households with their energy bills.

Analysis of bank bonus data by the Trades Union Congress (TUC) shows £25 billion was paid out in bonuses in the financial year ending in March 2026 - up 16% annually.

The TUC said bank bonuses have never been higher in cash terms and saw their highest real-terms quarter since 2008.

Ahead of the chancellor’s Mansion House speech this evening, the TUC claims these figures suggest there is room for a higher bank surcharge tax that could help fund a social tariff that would permanently cut energy bills for the majority of households.

The trade union says that “while sky-high bills are looming for ordinary working people, bank bonuses are booming”, adding that this is further evidence that banks could easily afford to pay more tax.

What is the bank surcharge tax?

The bank surcharge tax or windfall tax is an additional 3% corporation tax on the profits of banks above £100 million.

It was introduced 2016 as part of efforts to redistribute wealth back into the UK economy and was reduced from an initial 8% in April 2023 by the Conservative government.

Reforming the bank surcharge tax

Critics claim that the surcharge doesn’t go far enough, especially as banks have also benefited from charging higher interest rates on loans and mortgages in recent years.

Sara Hall, co-executive director at research group Positive Money, said: “Record bonuses to celebrate record profits - the cost of living crisis must be something of a fantasy to City bankers.

“Banks aren’t redirecting the windfall profits they’ve made from higher interest rates towards the households or businesses struggling to pay them, so it falls to the Government to do so in their stead.”

TUC analysis reveals an increase in the bank surcharge could raise between £9 billion and £60 billion over the next four years.

Even just reversing the Tory cuts and setting it at 8% would raise £9 billion over four years, the TUC said.

A 16% surcharge, doubling the surcharge's previous value before the Conservatives cut it, would deliver £24 billion over four years.

Meanwhile, a 35% surcharge, which would be the same level as the windfall tax the Conservatives imposed on energy companies, would deliver £60 billion over four years.

It comes after the big four banks made profits of £45.7 billion in 2025.

TUC analysis of the wider banking sector shows profits are 40% higher than in the lead up to the 2008 financial crisis.

The trade union suggests an increase in the bank surcharge tax could deliver a permanent social tariff - and further support when there is a spike in costs - to cut energy bills to all those on low and middle incomes by up to £559 a year.

Paul Nowak, general secretary of the TUC, said: “While sky-high bills are looming for working people, bank bonuses are booming.

“Every time there is talk of taxing banks, some of the richest people in the country start whining and try to claim they can’t afford to pay any more.

“But the big banks are making a killing off the back of higher interest rates and mortgage misery across the country. They can well afford to pay more tax.

“The case for an increase in the bank surcharge tax has never been greater. It’s a long overdue common-sense solution – and the government should use to money raised to cut people’s energy bills.”

Positive Money's Hall suggests prime ministerial frontrunner Andy Burnham is being handed a rare opportunity to rebalance the scales in the public’s favour.

She said: “He should seize the chance to implement this popular policy that won’t cost the Government a penny, but might just earn it some desperately-needed trust.”

Should banks help fund a social tariff?

A higher bank surcharge could ultimately mean reduced bonuses.

That may please the unions but not everyone is in agreement.

Samuel Mather-Holgate, managing director of Mather and Murray Financial, highlights that bank bonuses are not just City excess but are a performance tool.

He said: “If banks want to attract people who can grow lending, manage risk and deliver returns, pay has to reward results.

"Since the bonus cap era, UK bank profitability and competitiveness have hardly looked world-beating, so doubling down on restrictions would be a strange answer. There is a fair debate about whether banks should contribute more to public finances, but cutting bonuses to fund energy bills risks treating pay policy as a piggy bank.

“A social tariff may be worth considering, but it needs a stable funding model, not a raid on incentives that help banks perform.”

Anita Wright, financial planner at Ribble Wealth Management, added: “Energy bills didn't go up because bankers got paid too much. They went up because years of cheap money and a falling pound made everyone's cash worth less.

“The same forces that fattened those bank profits are the ones now squeezing families.”

If you really want to help people with their bills, said Wright, people should ask why the pound in their pocket buys less every year.

She added: "Blaming bankers is easier. It also fixes nothing. Someone always has to pay. Changing who picks up the tab isn't the same as shrinking it.”

The number of investigations into capital gains tax (CGT) rose by 26% last year, netting HMRC £266 million from Brits who had underpaid.

The taxman closed 9,800 investigations in 2024/25, up from 7,800 the previous financial year, according to new Freedom of Information (FOI) figures – the highest number of investigations in a tax year since the Covid pandemic.

Of those whose claims were probed, the average amount of underpaid tax rose from £23,333 to £27,142.

The total tax taken by HMRC following investigations increased by 46% year-on-year, from £182 million in 2023/24, the FOI figures obtained by tax and accountancy firm Lubbock Fine revealed.

Rachael Griffin, tax and financial planning expert at wealth manager Quilter, said the figures suggested “investors, landlords and business owners should not assume capital gains tax reporting slips under the radar”.

Griffin added: “At the same time, HMRC has significantly improved its ability to identify discrepancies through increased data sharing and digital reporting.

“Investment platforms, estate agents, conveyancers and other financial institutions provide information that can be cross-checked against tax returns, making it increasingly difficult for gains to go unreported.”

An HMRC spokesperson said: “We’re committed to helping people pay the right amount of tax, and the vast majority do. We take a variety of approaches to ensure all taxpayers are aware of their obligations and pay what they owe at the right time.”

Why people are being investigated over their capital gains

The uptick in CGT investigations comes after the annual exempt amount was reduced from £6,000 to £3,000 in April 2024. It was reduced from £12,300 to £6,000 in April 2023.

Griffin said: “Far more people now have a potential reporting obligation, including those who may never previously have had to think about CGT. As a result, some individuals may be finding themselves caught out simply because they are unaware of the rules.”

Lubbock Fine said HMRC was also cracking down on cryptocurrency investors, some of whom might not be aware crypto assets are taxable.

Graham Caddock, director at Lubbock Fine, said: “Cryptocurrencies were renowned for being the ‘wild west’ of investing. For many crypto investors this categorisation has stuck and many underestimate how seriously HMRC treats undeclared gains.

“Even worse, some crypto investors think that gains made through digital assets somehow sit outside the normal tax rules, which is exactly why HMRC is targeting the sector so aggressively.”

Lubbock said a lot of retail investors and young day traders were unaware selling shares could trigger a CGT bill as well.

How to avoid being investigated over your capital gains

First, it’s worth making sure you report any gains correctly.

Caddock, from Lubbock Fine, said: “Many CGT enquiries start because of basic errors such as failing to get an independent valuation (perhaps more than one) for such things as gifts of family company shares or even property.”

If you have had to input estimates in the value of assets when you report your capital gains, it’s worth explaining why too.

“This may avoid an enquiry altogether, and the disclosure will help limit HMRC’s ability to enquire into earlier tax periods,” Caddock explained.

Charlene Young, senior pensions and savings expert at investment platform AJ Bell, said lots of people come unstuck when it comes to reporting gains on property.

Young said: “While gains made on your main residence are usually exempt from CGT, profits on second homes must be declared and the estimated tax paid within 60 days of completion to avoid penalties and further investigation.

“HMRC can use data from the Land Registry, banks and estate agents to cross-reference what it has been told by taxpayers, or what it suspects hasn’t been declared.”

It’s also worth making full use of your annual £20,000 ISA allowance where possible. Gains made from investments held in a stocks and shares ISA are shielded from CGT.

Heatwave after heatwave have made for a brutal British summer so far.

In June, the record for the hottest June day ever recorded was beaten three days in a row, and 26 June marked the sixth-hottest day in the UK since records began.

Average temperatures in Britain are already around 1.2°C higher than pre-industrial levels, and heatwaves are set to become more frequent and longer because of climate change.

As the UK has been a cooler country for much of its existence, we have very little infrastructure to deal with such high temperatures. But there are reasons why Britain needs air conditioning now.

With higher temperatures seemingly here to stay, many will be considering whether they should invest in air conditioning (AC). It can be a life-saver in heatwaves, but can also be expensive to install.

However, a government grant may be able to bring down the costs for some.

Are there air conditioning grants in the UK?

Eligible households in the UK can get a grant to help with the cost of installing certain air conditioners that both heat and cool your home.

The grant is part of the government’s boiler upgrade scheme (BUS) which helps with the cost of replacing fossil fuel heating systems with environmentally-friendly ones.

A maximum £2,500 discount is currently available to households to help them install an air-to-air heat pump – commonly called an air conditioner.

Air-to-air heat pumps operate using the same principle as air or ground source heat pumps whereby they extract heat from outside to heat your home. However, unlike air or ground source heat pumps, they are able to cool your home as well as heat it.

These types of heat pump were previously exempt from the BUS, but the government announced in late 2025 they will be included in it, meaning you can now get help from the government when installing air conditioning.

It is important to note that the BUS is only available for households who are upgrading their fossil fuel heating system to something more environmentally friendly. That means that you will not be able to get the grant if you intend to use the air-to-air heat pump exclusively for cooling while keeping your current heating system in place.

What is an air-to-air heat pump?

When used as an air conditioner in the summer, an air-to-air heat pump works by drawing in warm air in your home, cooling it down, and then disposing of the heat outside.

The air is drawn in through fans, then refrigerant is used to cool the air down before it is returned to your room and the heat is disposed of. The whole process is powered by electricity.

Meanwhile, in cooler months the air-to-air heat pump can effectively do the same process in reverse to deliver heat to your home.

The reason the government is encouraging people to install these is because they are better for the environment than traditional heating methods. The fact they also work to cool the air down in summer is a bonus.

How can you get an air-to-air heat pump grant?

To get the grant, you will have to purchase an air-to-air heat pump through an MCS certified installer. They will apply for the grant on your behalf.

It is important to note the grant is only available when you get the heat pump installed by an MCS registered firm. If you go with a firm that does not have the certification you will not be eligible for the grant.

However, though the grant is now available, there is still work being done to get it offered by more MCS suppliers. That means that it may still be a little longer before you can get the discount.

If you want to use the BUS to get an air-to-air heat pump installed, you should contact an MCS certified installer and ask them about when the grant will become available to you.

How much does an air-to-air heat pump cost?

The cost of installing an air-to-air heat pump will vary depending on where you live, the state of your home, the specific model you want to install, and much more.

Supply and installation costs around £3,000 on average, with a typical lifespan of 15 to 20 years, according to checkatrade.

Once the £2,500 government grant is subtracted from these costs, the price looks more manageable, though you should note that you may not necessarily get the maximum amount.

When your air-to-air heat pump is installed, it will cost you money to run and the amount you pay will vary. It depends on many factors including how long you keep it running, the temperature you are trying to achieve, the size of your room and the current level of the price cap.

That makes it difficult to calculate an average cost, but you can work out how much it would cost you if you multiply the power of your model in kilowatts (kW) by how much you pay for a kilowatt hour (kWh) of energy.

Using the July price cap as an example, it would cost you £0.86 to run a 3.5 kW air-to-air heat pump for an hour, though this figure will vary by model and change when the price cap rises or falls.

Insurance company Hiscox is benefiting from a volatile global backdrop that means firms want to make sure that their assets – from their factories to the goods and services they sell – are properly insured. Meanwhile, the rise of the digital economy has created new types of insurance, such as protection against cyberattacks.

It may not be glamorous, but some of the best investment opportunities are in industries that may seem dowdy, but are solid, profitable and crucial to the global economy.

Hiscox (LSE: HSX) focuses on three areas. It provides large-scale insurance through its membership of Lloyd's of London, the main insurance market in the world. It also offers reinsurance, whereby it takes on a portion (or all) of the risks in policies originally written by other insurance companies.

Both of those businesses have been successful, with Hiscox boasting a strong record of striking a balance between risk and return in its investments, which has allowed it to generate consistent profits. However, the most interesting part of Hiscox is its growing retail division, which offers insurance policies to small companies in the UK, US and Europe.

Hiscox's growth strategy is working

Thanks to advertising and a strong reputation for customer satisfaction, Hiscox has been able to burnish its brand and grow the retail part of the company faster than the other two segments: the retail side now accounts for around half of sales. The market is competitive, but Hiscox seems to have a sensible plan for maintaining this growth, including new products; striking deals and partnerships; and acquisitions to expand its presence outside the UK.

Hiscox's revenue grew by around 50% between 2020 and 2025, with earnings per share more than tripling between 2021 and 2025.

Both sales and profits are set to keep growing. Hiscox has also been able to increase its pricing power: operating margins more than doubled to 15%. This has enabled it to grow its dividend consistently since 2022. The stock nonetheless remains very reasonably valued, trading at only 12.8 times projected 2027 earnings, and offering a solid dividend yield.

This combination of strong profits and low valuations has started to attract interest from potential buyers. In May it was reported that Canada's Intact Financial had been exploring a potential bid for Hiscox. While nothing has been formally announced, Zurich Insurance Group agreed in March to purchase rival Beazley, demonstrating that the UK insurance sector is on global companies' radars.

In any case, Hiscox's share price seems to have plenty of momentum behind it. Hiscox has been the eighth best-performing share in the FTSE 100 over the past six months, gaining a third. It is also trading above its 50-day and 200-day moving averages. I would therefore go long at the current price of 1.861p at £1.50 per 1p. In that case I would put the stop loss at 1,261p, which gives you a downside of £900.

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Rumours are already swirling about what changes Andy Burnham could make if he were to win the Labour leadership contest – including a shake-up of the capital gains tax regime.

The MP for Makerfield looks more-than-likely to gain the keys to Number 10 later this month and is said to be considering Wes Streeting as his chancellor.

Should Streeting take on the role, he could look at reforming capital gains tax (CGT) in attempts to drum up much-needed cash for the Treasury.

In an interview with the BBC’s Nick Robinson in May, the former health secretary suggested raising the three CGT rates to mirror income tax rates – 20%, 40% and 45%.

Currently, you pay a rate of 18% if you’re a basic-rate taxpayer and 24% if you are a higher or additional-rate taxpayer.

A number of experts have called for the equalisation of CGT rates with income tax rates, including the Centre for the Analysis of Taxation and Dan Neidle, founder of tax think tank Tax Policy Associates, arguing it would reduce tax avoidance and boost UK economic growth.

Neidle posted on X that Streeting’s proposal was “good”, suggesting the extra money it brought in could be used to cut the basic rate of income tax.

“That would be a brave thing for a Labour politician to do, but in my opinion the right thing at this moment. Spend the rest on e.g. defence. I think most people would agree,” Neidle said.

However, Jeremy Hunt, former chancellor for the Conservative Party, said a CGT rate rise would be “terrible” for the economy.

He said: “It doesn't matter if you're left or right, don't do it. If you increase your CGT above 24%, you will get less revenue, not more, because investors will change their behaviour.”

MoneyWeek asked Andy Burnham’s office for comment.

How would a rise in capital gains tax rates affect you?

Calculations by wealth manager Rathbones suggest aligning CGT rates with income tax rates could increase the tax bill on a £50,000 gain by almost £10,000 for an additional-rate taxpayer.

A higher-rate taxpayer’s bill would rise by over £7,500, according to Rathbones. The tax bill on a £10,000 gain would be more than £1,000 higher.

Basic-rate taxpayers would be stung less – Rathbone’s calculations suggest the tax bill on a £10,000 gain would be over £100 more compared to the current rates.

These figures were calculated based on gains being made outside tax wrappers such as ISAs and pensions and including the £3,000 CGT annual exempt amount.

How to protect against capital gains tax

Everyone gets a CGT annual allowance of £3,000. Any gains made within each tax year less than this amount aren’t taxed, and there are other methods you can use to lower your CGT bill too.

Maximise the use of ISAs

Gains made inside tax wrappers like ISAs are free from CGT so it’s worth utilising your full ISA allowance each year. The current annual ISA allowance is £20,000 per tax year.

Assets like shares or funds held outside an ISA can be transferred into a tax-wrapped ISA through a ‘Bed and ISA’.

Jason Hollands, managing director at wealth manager Evelyn Partners, said: “This involves selling investments, ideally not exceeding the annual £3,000 CGT exemption, and then repurchasing them within an ISA so that future gains – and income – are sheltered from tax.”

Use interspousal transfers

Assets can typically be transferred between married couples and civil partners without triggering a tax bill.

Transfers can be a useful way of moving your assets around and using up each person’s CGT and ISA allowances to full effect.

It can also be worth transferring assets to a partner who pays a lower rate of CGT, thereby reducing your combined tax bill.

Use your annual allowance rather than letting gains build

By selling assets each year within your annual £3,000 allowance, you can pull out profits tax-free and save yourself a larger bill on a big chunk of gains down the line.

Holland said: “The annual CGT exemption has become much smaller at £3,000 than it used to be, but it is still valuable. Many investors overlook it, allowing unrealised gains to build up over many years.”

Keir Starmer vowed not to touch the triple lock, a system that promises to increase the state pension each April by either the rate of inflation, average earnings growth or 2.5% – whichever is highest.

The triple lock guarantee saw over 12 million pensions receive a state pension boost in April, as it increased by a very generous 4.8%. This added £575 to state pensioner income this year.

Most pensioners saw their income increase more than non-pensioners, who are effectively funding the state pension.

The Office for Budget Responsibility estimates the triple lock will cost around £15.5 billion by 2030, up from the £5.2 billion originally estimated when it came into play.

The triple lock was introduced by the Conservative-Liberal Democrat coalition in 2012. The Conservatives left it untouched and Labour, under the leadership of Keir Starmer, also promised to leave it alone.

The policy is hugely popular among state pensioners, making it a difficult policy for politicians to tinker with. But is a costly policy set up in 2012 still sustainable or fair today?

Will Andy Burnham, who looks likely to take the top spot in government later this month, finally axe the triple lock?

While Burnham’s focus is on devolution, he cannot escape the need to cut government debt. Pressure will inevitably mount for him to be the leader to finally stop placating pensioners.

What’s the problem with the triple lock?

Depending on who you ask, you may get a different answer. Steve Webb, who was the pensions minister when the triple lock was introduced, told me on the MoneyWeek Talks podcast that the triple lock was there to do a job to keep pensioners afloat.

“I became pensions minister in 2010. But in the previous 30 years, the state pension had been falling in value relative to what people earn, so it just went up with inflation most of the time.

“But the problem with that is if you earn and earn and then stop earning, then the thing you fall onto when you stop earning needs to be connected to some proportion of what you were earning. Otherwise, you just fall off a cliff and your standard of living crashes. So, the state pension needs to be pegged to a proportion of what people are earning and for 30 years, [prior to the triple lock] that had not happened.”

“So, the point of more generous indexation post 2010 was to undo 30 years of damage. I’m not embarrassed or ashamed; I am proud of the fact that the state pension has been over-indexed.”

But the working generation would argue the system is an unfair burden on taxpayers, especially as young workers doubt the state pension will even exist for them.

Pensioners will say they worked for it and the increase merely protects them from rising living costs.

Though, according to the think tank Resolution Foundation, the triple lock has done little to reduce pensioner poverty. In the 12 years following the introduction of the Triple Lock pensioner poverty rose by 2.3 percentage points.

Difficult choices for Burnham?

Former Labour leader Tony Blair and former Conservative chancellor Jeremy Hunt have both called for the ‘outdated’ and ‘unaffordable’ policy to go.

A report from the Tony Blair Institute earlier this year called for the triple lock to be cut by 2030 and to overhaul the UK state pensions system.

Though it is unlikely the new Labour leader will make any change during this parliament, he will need to make some difficult choices, eventually. Will Burnham be the man who finally takes the triple lock out?

Tens of thousands more households could be dragged into paying the ‘mansion tax’ under rumoured plans, if Burnham becomes the new Labour leader.

The prime minister-in-waiting could potentially lower the threshold at which people start to pay the High Value Council Tax Surcharge from £2 million to £1.5 million, according to reports in The Mail on Sunday.

An estimated 150,000 additional households could be pulled into paying the surcharge if the levy was brought down to the reduced amount, based on calculations done by think tank Tax Policy Associates.

The so-called mansion tax was first announced by chancellor Rachel Reeves during her 2025 Autumn Budget and is set to come into force in April 2028.

As it stands, the measure will see those with properties worth over £2 million pay between £2,500 and £7,500 per year depending on the value of their home. It is expected to bring in £430 million in 2029/30.

But should Burnham win a Labour leadership contest, he will need to find ways to fund an ever-growing welfare budget and multi-billion pound hole in the Defence Investment Plan (DIP).

Lowering the entry level at which households pay the mansion tax could be one way of doing this alongside potentially scrapping the triple lock pension system.

MoneyWeek approached Andy Burnham’s office to comment.

What is the mansion tax and how will it work?

The High Value Council Tax Surcharge will take effect from April 2028 and apply to homes in England worth £2 million or more.

The Valuation Office (VO), which is part of HMRC, is set to carry out a valuing exercise to assess which homes the surcharge will apply to.

Homes valued at £2 million or more but less than £2.5 million will be charged £2,500.

Properties worth £2.5 million or more, but less than £3.5 million will need to pay £3,500. Homes worth between £3.5 million and £5 million will need to pay £5,000. Properties worth £5 million or more face a £7,500 surcharge.

These charges are set to be increased each year in line with the Consumer Price Index (CPI) measure of inflation. Revaluations will be conducted by the VO every five years.

How a reduced threshold of £1.5 million on the levy would be applied exactly is unclear, but would almost double the amount of households paying it, according to calculations done by Tax Policy Associates.

The think tank predicts around 243,000 households would have to pay at least something, up from 127,000 under a £2 million entry-level threshold.

What else is Andy Burnham considering?

In a major speech on 29 June, Burnham said he intended to reform business rates to support high streets and pubs which have taken a battering in recent years.

According to the British Beer and Pub Association, a trade body for the sector, 161 pubs closed across Britain in just the first three months of 2026. UK Hospitality, a trade body for the hospitality sector, has forecast six hospitality venues will close each day in 2026.

Rumours have been swirling about what else Burnham could introduce if he were to become the next prime minister of the UK.

The MP for Makerfield could reportedly look at reforming Capital Gains Tax (CGT) by bringing the rate paid in line with income tax. Basic-rate taxpayers currently pay a CGT rate of 18% while higher and additional-rate taxpayers pay 24%.

Burnham could also replace stamp duty with a ‘land value tax’ – an annual tax based solely on the value of the land itself.

The UK is obsessed with cash. Out of the 15 million adult ISA accounts that were in use in the 2023/24 tax year, almost 10 million were cash ISAs, making up around 66% of the total.

We love cash because it is simple and we know that when we need to access it, we won’t find that the value of our savings has fallen to zero. Put simply, cash is risk-free.

But that is not the whole truth, according to Andy Reed, head of behavioural economics research at Vanguard.

Speaking to Kalpana Fitzpatrick, digital editor-in-chief , on the MoneyWeek Talks podcast, Reed said there is a significant opportunity cost in hoarding more of your savings in cash than you might need.

In the UK, there is over £200 billion of excess cash languishing around, research by Vanguard found.

This does not include savings that it may make sense to hold in cash, like what is needed for an emergency fund or short-term spending..

Reed said: “When you dig a bit deeper and start to ask ‘why are you sitting on the sidelines? Why are you not invested?’, they realise that there is a risk-return trade-off that they’re making and they tend to say they prefer a more conservative approach. They feel like cash is safer.”

Reed says this is partially a result of inertia.

“[Savers] are going with the flow. They’re maintaining the status quo. The status quo feels safe. It doesn’t feel risky. But what they don’t realise is that investing is risky, yes. But not investing is also risky.”

That is because every moment that your money is not growing, it is being eaten away by inflation.

This has been particularly true in recent years as the UK, and many other western countries, have had to deal with price growth above the 2% target.

In Britain, inflation reached a recent peak of 11% in 2022, while the latest data shows it reached 2.8% in May 2026.

As cash ‘stuffed under the mattress’ earns 0% interest, it will be worth less in real terms after years of inflation. But cash in savings accounts are not entirely safe either.

“The risk is that your cash is not going to keep up with inflation because the interest on cash can be very low while inflation might be higher and so your purchasing power is going down over time.

“But inflation is out of sight, out of mind for many people, so they don’t realise the hidden cost of cash.”

That is not to say that cash is inherently evil and all your savings should be diverted to investments.

Reed says: “Cash is a story of too much of a good thing. You need enough for emergencies, say your dishwasher breaks, or your car breaks down, you also arguably need cash in case of job loss.

“That’s where highly liquid assets like cash are super valuable because they give you that flexibility to withstand bumps in the road.

“But having cash above and beyond those short-term emergency needs means you’re incurring opportunity costs. What you’re giving up by not investing is quite a bit larger than what you might realise.”

Listen to MoneyWeek Talks for our full interview with Andy Reed, where he discussed how emotions can affect investor behaviour, the barriers to investment in the UK, how different generations invest, and much more.

You can watch the podcast on YouTube, or listen to it wherever you get your podcasts.

About the podcast

MoneyWeek Talks is a podcast that helps you unlock the secrets to financial success. Editors Kalpana Fitzpatrick and Andrew van Sickle are joined by influential guests – from CEOs and entrepreneurs to economists and policymakers – to share their top tips on managing money, investing wisely and building wealth.

Subscribe to the MoneyWeek Talks podcast and get ready to make it, keep it and spend it with confidence.

Cohabiting couples who are not married or in a civil partnership are set to receive new rights to finances under new rules proposed by the government.

The proposals could see unmarried partners allowed a portion of the proceeds from a house sale, a percentage of a pension, automatic inheritance rights, and more when a relationship ends.

The measures are part of a new framework by the government that aims to bring family law “into the modern age” as more couples cohabit without getting married.

Cohabiting couples who are unmarried have far fewer financial protections than married couples under current laws. This can lead to complications if a relationship ends.

The government says these difficulties disproportionately affect more vulnerable groups such as women, children, and victims of domestic abuse.

The framework for new financial rights is set to establish more concrete rules for how assets should be split when a separation takes place.

The consultation proposes that courts should have access to similar actions that are available in the case of a divorce, though options are set to be narrower to maintain the unique status of marriage in law.

David Lammy, deputy prime minister and justice secretary, said: “We’re launching this consultation to make sure our new family law builds a fair system that offers the most vulnerable protection in the event of a breakup, and at a time where the country is facing cost of living pressures.

“Whether you’ve been left bereaved by the sudden and unexpected death of a partner, or escaped horrific domestic abuse, our laws should work to protect you.”

The consultation launched on 5 June and will run for 10 weeks, closing on 14 August. The government will then use the findings to help inform future reforms, which will be made law “when parliamentary time allows”.

Separating couples could be entitled to a portion of a partner’s pension

The new framework will provide family courts with a number of new remedies they can use when an unmarried couple separates. These mirror the ones available in divorce cases.

Possible remedies include property adjustment orders which can transfer interest or ownership in a property from one party to another, potentially entitling a partner to partial ownership of a house.

Separating couples may be entitled to a percentage of their partner’s pension too under the new rules as courts will have the power to enforce pension sharing orders.

Courts could be granted the power to order one partner to pay a lump sum of money to the other partner.

The government also says in exceptional circumstances time-limited maintenance orders that require one party to provide regular payments to the other may be granted by a court.

Couples would need to cohabit for at least three years or have a child together for the rules to apply to them. Courts must also be satisfied the couple are in an “enduring family relationship”.

The consultation adds that while cohabitants may have access to the same measures as divorcing couples, this does not mean there would be equivalent financial outcomes to divorce.

Prenups and postnups set to become legally binding

Pre-nuptial agreements (prenups) and post-nuptial agreements (postnups) are becoming increasingly common in the UK.

Around 20% of couples sign prenups before marriage today, up from just 8% in the 1990s, according to research by the Marriage Foundation.

Prenups and postnups are written contracts made before a marriage or civil partnership that outline how assets will be split in the event of separation, divorce, or death.

In the UK, these agreements are not currently automatically enforceable by courts in England and Wales. Instead courts are simply told they should consider them unless doing so would be unfair, so long as the agreements were entered into freely and with full understanding.

This means that there is a degree of uncertainty around when the agreements made in prenups and postnups apply and when they do not.

However, as part of this new set of reforms, prenups and postnups are set to become enforceable contracts that “are not subject to substantive scrutiny by the court” as part of the new framework proposed by the government, eliminating much of this uncertainty.

This would allow couples to make legally binding agreements about financial arrangements in the event of divorce, though the consultation adds that safeguards would still need to be met.

Cohabiting couples set to get automatic right to inherit

The new framework is also set to extend new rights to couples when a partner dies without a will.

Under the current rules, when a couple have been living together for years but have remained unmarried there is no automatic right for the surviving partner to inherit a portion of the other’s assets if they die without leaving a will.

However, if the proposed laws come in, qualifying couples will receive an automatic right to inherit parts of their partner’s estate with similar rights as spouses or civil partners even if they are unmarried and have not left a will.

Why is air conditioning becoming a necessity?

Until recently, the UK scarcely needed to consider air conditioning; now it is a pressing economic and political issue. A sweaty, sleep-deprived country is wondering what has happened to the traditionally underwhelming British summer – the “three fine days and a thunderstorm” of blessed memory. For centuries, summer's lease hath, famously, had “all too short a date”.

This year, though, it's an all too long one – kicking off with a killer heatwave in May, and smashing temperature records before we even got to July. The Climate Change Committee warns that 92% of homes are at risk of overheating by 2050 because they are “built for a climate that no longer exists”. If you live in a sweltering flat in a city, or have a bedroom at the top of a loft-converted house, you'll already know that.

How has the heatwave affected Britain?

Tens of millions of people across southern England have been unable to sleep properly, or have had their working lives upended by the failures of public transport or the closure of overheating schools. Writ large, all that makes for a massive public-health and economic issue that we are only beginning to understand.

Extreme heat is especially hard to cope with for older adults and those already ill: the summer of 2022 caused 60,000 excess deaths across Europe (according to a 2023 paper in Nature), the vast majority among people aged over 65. The World Health Organisation puts the number even higher, at 175,000 a year. Extreme heat hits children even harder, says George Monbiot in The Guardian. They have higher metabolisms and lower sweating rates, and their thermal comfort levels are, on average, 1.9˚C-2.8˚C lower.

What a heatwave means for the UK economy

Researchers at insurance group Allianz have found that extreme heat is now a “structural economic risk” for Europe. Productivity losses intensify sharply above a critical 30˚C threshold – a three percentage point decrease in productivity for each degree of heat – and cooling costs rise sharply.

Under an entirely possible stress-test scenario – in which the five hottest years between 2014 and 2024 are repeated sequentially over the next five years – they project a hit to output of 5%-7% for the most exposed economies: $240 billion for France, $147 billion for Italy, $131 billion for Germany and $120 billion for Spain (the UK wasn't included in the study).

“The heatwave is not an exception, it is a direction,” said Katharina Utermohl, one of the co-authors. “Extreme heat costs all of us as workers, as businesses, as taxpayers, and there is a difference between countries that adapt and those that wait.”

Will air conditioning save us?

It will certainly be part of the response, along with other cooling measures. Air conditioning has emerged in recent weeks as the new hot topic in the online culture wars, with American blowhards bashing lily-livered Europeans for being too soft to fire up the air-con and cool themselves down.

The difference in take-up is indeed stark. In Europe, only around 19% of homes have air conditioning compared with 88% in the US. That's largely because Europe's housing stock is much older than in the US and its mitigations against heat – thick walls, small windows, shutters and so on – have developed over centuries.

Europe has also been cautious about widespread adoption of a technology, which, bluntly, can easily disfigure the built environment. But the reality is that the take-up of air-con in Europe is already rising due to the heating climate, with southern Europe being first to embrace it.

Is Europe warming up to air conditioning?

Penetration has doubled in Europe overall since 1990, but in hot countries it has risen much faster. More than half of Italian homes now have air conditioning, a doubling since 2013 – a trend that's true of the continent as a whole. In France, 28% of homes now have air-con, in Germany it's 6%, and in the UK 4%, a doubling in the past three years.

There's no reason to think that trend won't continue and accelerate, even without the promptings of US observers. Europe's climate is heating faster than any other continent (due to its proximity to the north pole). As that continues, it will seem ever more silly to argue that heating homes to a safe, liveable temperature is necessary, but that cooling them to the same level – saving lives and making life bearable – is somehow an extravagance that should be frowned upon.

Is air conditioning bad for the environment?

Environmentalists have long argued that it contributes to global heating by consuming energy and raising temperatures in urban areas. That is reflected in official policies. The government denies there's an “air-con ban”, but nor is it straightforward to install. Most homes don't need formal planning permission for air conditioning, which falls under “permitted development”. But that does not include flats – often more difficult to keep cool than houses – where planning permission is required, and is hard to get. The rules require developers to prioritise passive cooling and use air-con as a last resort.

What needs to change?

Policymakers need to catch up with changes to the climate and technology and let the market get on with meeting growing demand, says John Burn-Murdoch in the Financial Times.

The rising demand for air conditioning now aligns with the rapidly rising supply of solar energy, which will be most abundant when it is most needed to power cooling. Moreover, the potential for air-to-air heat pumps both to heat and cool buildings without burning gas means that the net impact on emissions could even be negative.

“Far from encouraging this, regulations in countries including the UK and France continue to disincentivise and even restrict these technologies.” That's not sustainable. There were once sound arguments against Europe adopting air-con en masse, but that's no longer the case.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

If you’re a frequent flyer, having an airport lounge membership like Priority Pass or Dragonpass can make travelling significantly more comfortable.

Rather than waiting at a crowded terminal, airport lounge access can mean complimentary food and drinks, Wi-Fi, quiet workspaces and even shower facilities.

You can get lounge passes with certain packaged bank accounts or credit cards with airport lounge access, but that’s not the only way. You could book one-off visits to some airport lounges, for instance, or access global lounge networks by buying a membership – such as with Priority Pass or Dragonpass.

What is Priority Pass?

Priority Pass is an airport lounge programme that gives members access to more than 1,900 lounges across 856 airports in 142 countries.

Your membership may also include benefits such as complimentary Wi-Fi, meals and drinks, shower facilities and dining credits at select restaurants.

The lowest membership tier doesn’t give you free access to lounges – instead, you pay an annual fee and discounted rate on visits. However, no matter what membership you have, you will need to pre-book your slot for an extra £6 to guarantee a space when it gets busy.

Here’s a complete breakdown of membership fees.

What is Dragonpass?

Dragonpass is an airport lounge programme that offers access to more than 1,400 lounges, over 200 fast-track security lanes and around 2,500 travel experiences worldwide.

While Priority Pass gives you access to more airport lounges, Dragonpass is more focused on offering a premium experience, whether it’s meet-and-greet services, dining discounts, spa treatments or fast-track security.

The lower membership tier only gives you one free visit, after which you have to pay for entry. However, you will need to pre-book your slot for around £6 per visit to guarantee a space during busy periods, no matter which membership tier you’re on.

Here’s a complete breakdown of membership fees.

Should you buy a Priority Pass or Dragonpass membership?

For many travellers, Priority Pass offers better overall value thanks to a significantly larger lounge network globally. If your priority is finding a lounge wherever you fly, it’s generally a better option.

However, when it comes to costs, Dragonpass is cheaper and a better choice if you regularly travel through airports where you can take advantage of its fast-track security and premium services like spa and wellness centres.

Before buying either membership, it’s worth checking which lounges are available at the airports you typically go to. It might be that some airports support Priority Pass or Dragonpass but not both.

Is an airport lounge membership worth it?

Whether an airport lounge membership is worth paying for depends on your travel habits. If you only take a handful of flights a year, paying for individual lounge access can be more cost-effective than buying an annual membership.

However, if you fly several times a year, particularly on long-haul or international trips, and want to access an airport lounge, you could save with a membership. Lounge entry usually costs between £35 and £50 per visit, so frequent travellers could save money while enjoying a quieter and more comfortable airport experience.

It’s worth considering whether you already have access through another financial product. Many premium credit cards, travel reward cards and packaged current accounts include Priority Pass or Dragonpass membership as a benefit, meaning you may not need to buy a separate membership.

Brits are facing major changes to ISA rules from April 2027 as the government tries to foster a culture of investing in the UK.

The reforms, as confirmed in the 2025 Autumn Budget by chancellor Rachel Reeves, will see a new annual cash ISA limit of £12,000, down from the current £20,000 ISA allowance, for under 65s.

The £20,000 annual ISA allowance – which also covers stocks and shares, innovative finance ISAs and lifetime ISAs – will remain.

A new 22% charge on cash held within stocks and shares ISAs will also apply, while retail investors will be banned from having a stocks and shares ISA made up wholly of money market funds.

Under 65s will also not be allowed to transfer money from stocks and shares ISAs into cash ISAs.

However, how these new “anti-circumvention” rules apply to those aged 65 and over is more nuanced.

How will the new ISA rules apply to 65-year-olds and older?

Government guidance states that the 22% charge on interest earned on cash in a stocks and shares ISA will apply to those aged 65 and over.

Meanwhile, the prohibition on 100% cash-like investments (money market funds) will also remain in place for those aged 65 and over.

However, individuals aged 65 and over will be able to transfer money from stocks and shares ISAs into cash ISAs when the new rules come in from April 2027, unlike those aged under 65.

Jason Hollands, managing director at wealth management company Evelyn Partners, said the new rules were adding an unneeded layer of complexity for all investors and “undermine the tax-free promise”.

He added: “We've never had different rules applying to different people depending on age.”

Hollands welcomed that 65-year-olds and over will be able to transfer money from stocks and shares ISAs into cash ISAs when the new rules come into force, allowing them to free up more liquid cash and avoid paying tax on cash held within stocks and shares ISAs.

A HM Treasury spokesperson said: “Parking cash long term in a non-cash ISA to earn tax-free interest isn't investing. These changes will push more people towards investments that actually grow their money, and industry leaders including Nationwide and the Building Societies Association back us on this.

“Savers can still hold up to £12,000 in a cash ISA, and those 65 and over keep the full £20,000 allowance.”

How exactly do the new anti-circumnavigation rules apply?

The 22% charge on cash held within stocks and shares ISAs will apply to any interest paid on it.

A number of investment platforms such as Bestinvest, AJ Bell and interactive investor, pay interest on cash held within a stocks and shares ISA.

Individuals will not have to declare any interest paid to HMRC as it will be paid by investment brokers.

Cash-like assets, like money market funds, will be allowed within stocks and shares ISAs, so long as they don’t make up 100% of the portfolio.

Investments such as shares, funds, investment trusts, ETFs and bonds, including gilts, will not be treated as cash-like assets under the new rules.

Transfers from stocks and shares ISAs will not be allowed for investors aged under 65, although they will be able to transfer money from a cash ISA to a stocks and shares ISA. This rule doesn’t apply to investors aged 65 or over.

Two Premium Bonds holders have woken up millionaires after NS&I revealed the winners of the July 2026 prize draw.

The latest £1 million jackpot winners come from Reading and Warwickshire and won with bond numbers 250TP871786 and 217AV429216, respectively.

The Reading winner bought their bond in July 2015 and has a total holding of £49,931, close to the maximum of £50,000.

The Warwickshire champ purchased their winning bond in January 2014 and holds a total of £14,000 in Premium Bonds.

How many prizes will be issued in July’s monthly draw?

More than 6.2 million tax-free prizes, worth over £433 million, will be paid to Premium Bonds winners in July.

This month, there were more than 136 billion £1 bonds eligible to be picked in the draw. The total value of the prizes dished out since the first draw in June 1957 is £42 billion.

The table below shows the breakdown of Premium Bonds prizes in July:

Credit: NS&I

How to check if you’ve won in July’s prize draw

NS&I’s Agent Million will inform the £1 million jackpot winners in person.

NS&I says bond holders can check if they have won prizes ranging from £25 to £100,000 the day after the first working day of each month.

You can check using the Premium Bonds prize checker app, by visiting the NS&I website or by asking Alexa. For July 2026, Premium Bonds holders can check from 2 July.

The prize checker app and website will show you prizes you’ve won that month, anything you’ve won in the previous six draws and any older prizes you haven’t claimed yet.

Just make sure you’ve got your bond number or NS&I number to hand so you can access your account.

As Premium Bonds do not expire, it may be worth checking if you have any prizes waiting for you even if you bought them years ago.

NS&I says over 99% of prizes have been paid to winners since draws began in 1957, but there are still millions of unclaimed Premium Bonds prizes.

We look at the alternatives to Premium Bonds in a separate piece.

Marriage rates among the over 50s have risen significantly in recent years, according to the Office for National Statistics (ONS). Latest data reveals the number of men who said ‘I do’ aged 50+ is up by 33% in the past decade; for women in that age group it’s even higher, at 47%.

Those figures are greater still for people in their 60s, where there’s been a 33% increase in men who have married aged 60+ and a 56% rise among women over the 10 years to 2022.

Later-life marriages – whether people’s first, second or subsequent – often come with children on at least one side. Estimates vary but based on ONS figures, somewhere between 10% and 33% of families in the UK are blended, which the ONS defines as at least one child having a parental relationship with both members of the couple and another child being a stepchild.

Blended families can bring complications, whether around presents or planning holidays. But what happens when the stakes are higher?

If you’re widowed or divorced and have found love again, the last thing you might want is to start thinking about the end. Yet imminent inheritance tax (IHT) rule changes mean more families may need to do exactly that.

As announced in the 2024 Budget, from April 2027, defined contribution (DC) pensions will be treated as part of an estate for IHT purposes. The change is expected to double the number of estates liable for IHT to around 8%.

For people with children from a previous marriage, it’s a reminder of the importance of planning ahead. A common piece of advice is to think about what you want to happen after you die as early as possible. When everyone’s healthy and getting along, emotions are steadier and discussions tend to be easier. Once circumstances change, those conversations can become more difficult.

What myths and misconceptions do people have about estate planning?

Many people still assume estate planning is only relevant to the very wealthy. Yet rising house prices, combined with the nil-rate band (NRB) being frozen at £325,000 since 2009, have brought more families into scope for inheritance tax.

Other common misconceptions include believing a spouse automatically inherits everything if someone dies intestate (without a will), that pension benefits automatically fall to family members, or that unmarried couples have the same legal protections as married couples.

Add in the complexities of blended families, differing financial needs and the pension changes and the value of clearly documenting your wishes is emphasised.

How do trusts fit into estate planning?

Trusts are often used to provide control over how assets are passed on.

Every trust has three key parties: a settlor, who provides the assets; the trustee, who manages them; and the beneficiaries, who ultimately benefit from them.

Assets that can be placed into trust include cash, property, investments and land.

In the UK, there are several different trust structures available.

Lifetime trusts take effect immediately and include arrangements such as bare trusts, vulnerable person’s trusts and personal injury trusts.

Will trusts are created through a will and only take effect on death. Examples include discretionary will trusts or pilot trusts, which can hold assets such as pension death benefits or life insurance payouts.

Interest in possession trusts, often known as life interest trusts, allow a surviving spouse to benefit from an asset during their lifetime without owning it outright. For example, they might have the right to live in a property or receive investment income, while the underlying capital eventually passes to your children or other beneficiaries.

Discretionary trusts offer trustees broad control over how and when assets are distributed. Provided the settlor lives for seven years after making the transfer, assets can fall outside their estate for IHT purposes, although periodic trust charges (typically every 10 years) may still apply.

Who to name as a beneficiary

Andrew Zanelli, head of technical engagement at investment platform Aberdeen Adviser warns of a potential “nomination minefield” once pensions become subject to IHT.

For blended families, the key question may be whether pension assets should pass to a surviving spouse or directly to children from a previous relationship.

You can see the attraction of leaving everything to a husband or wife. Pension wealth passing directly to a surviving spouse or civil partner benefits from the ‘interspousal exemption’ and is not subject to IHT on first death.

That exemption doesn’t just apply to the NRB but an additional residential nil rate band (RNRB), which is currently £175,000. This means a husband or wife could potentially pass on up to £1 million with no IHT consideration.

The challenge is what happens later.

The hope is that if everything passes to the spouse on first death, when they die, they would direct everything as intended – such as to the first spouse’s children or other named beneficiaries. But circumstances can change.

Zanelli shares an example: “The main issue here is the potential for the children of the first to die to be disinherited. Let’s assume the husband dies first. By nominating his wife, he is effectively handing over future control of his pension pot to her. She could change her nominations at any time in favour of other individuals, cutting out his own children. This could be motivated by remarrying someone else, or falling out with his children.”

Leaving assets directly to children presents a different problem. Any amount above available allowances may attract IHT immediately, plus the surviving spouse may have no access to those funds if they need them.

If you’re trying to look after your surviving spouse but want to commit something for your children, Zanelli says you can gain peace of mind by setting up a structure where your spouse is looked after for life – even through they don’t own the asset – and ultimately your children will be the recipients of any capital that's left.

These trust structures could take several forms, including a discretionary will trust, life interest or spousal bypass trust.

What are bypass trusts?

Historically, spousal bypass trusts have been used to balance support for a surviving spouse and protecting assets for children from previous relationships.

Whether they remain popular beyond April remains up for debate.

Dan Blandford, chartered financial planner at The Private Office (TPO), believes two broad approaches may emerge.

The first is that people may stop using bypass trusts altogether and instead leave assets directly to a spouse, taking advantage of the IHT exemption and trusting them to pass wealth to the intended beneficiaries later.

This may prove attractive for families looking to avoid an immediate IHT charge, although it relies heavily on the surviving spouse ultimately carrying out those wishes.

The second scenario he foresees is more likely among wealthier families with very large pensions expected to support several generations.

Rather than allowing pension wealth to pass down through successive estates and potentially attract IHT multiple times, some may choose to pay the tax once and move assets into a discretionary trust structure.

“I envisage that would be the second reason it will be used; do people accept a ‘one-off’ IHT charge in exchange for avoiding repeated charges as wealth passes from one generation to the next,” says Blandford.

But he believes spousal bypass trusts will still have an important role for those motivated primarily by control rather than tax savings.

For those conscious of inheritance tax and retaining oversight of family wealth, these trusts allow them to determine when assets or income are distributed and help protect beneficiaries from risks such as divorce or financial difficulties.

At the same time, he expects more people to draw pension assets during their lifetime, reducing the size of the pension pot potentially exposed to IHT.

The importance of reviewing a will

Estate planning concerns are not unique to pensions.

Tamsin Caine, director of financial planning at Smart Financial, points to the example of a life interest trust involving the family home. A surviving spouse may retain the right to live in the property for life, while the deceased’s spouse’s share ultimately passes to their children.

To achieve this, the property generally needs to be owned as tenants in common. Otherwise, ownership passes automatically to the surviving spouse, bypassing the will altogether.

Caine says careful drafting and regular reviews are essential.

“It’s important to revisit wills and keep them up to date, making sure they’re still in line with wishes, with legislation and that they still reflect everything that you’d want.”

She also cautions against viewing pensions primarily as an IHT planning tool.

“Pensions are intended to provide income in retirement. While we know people have used them for planning for the next generation, if you’re thinking about passing down the generations – in my view, pensions should be the last thing you touch,” she says.

For all these scenarios legal advice is highly recommended – ideally sitting alongside financial advice if that’s possible.

Paul Gotch is senior partner at Private Client Solicitors. He says by nature a pension will be held in trust, subject to scheme rules, depending on the individual policy. All anyone really has the power to do is change their expression of wish, or nomination form, which tells the trustee who should receive it on their death. The trustee should take that guidance but they’re not legally binding.

Think about how you’re splitting things. Does the spouse get the pension and any children get other assets? Are you splitting things 50/50? Have you got other children with the new spouse?

“You need to balance the legal perspective – what you can do, with the financial perspective – what is fair. Are you leaving your spouse sufficient funds to maintain their standard of living, the cost of the property and so on,” says Gotch.

“Equally, if assets go to that surviving spouse, there's a risk that on his or her death, they update the will and nomination to only include his or her own children, which then creates the disinheritance of the first.”

Think about care costs as well. It’s very common when a relationship is going well and is full of trust, that the surviving spouse will ‘do the right thing’ but circumstances change.

What if they’ve not fallen out with your children but they needed several years of expensive care, asks Gotch. They planned to pass on the remaining assets as their spouse intended but by the time they die, these might have been significantly depleted.

Ultimately, there isn’t a trust structure that can eliminate every risk. Family circumstances evolve, relationships change and intentions can be misunderstood. But for blended families facing a more complex IHT landscape, taking time to put clear plans in place may help prevent disputes and uncertainty later on.

Hundreds of thousands of young people have more than £2,000 sitting unclaimed in Child Trust Funds (CTFs), a type of tax-free savings account for children born between 2002 and 2011.

The government has now launched a taskforce aimed at reuniting people with their money, with ministers teaming up with financial institutions including Nationwide, HSBC and Sheffield Mutual to reconnect savers with their accounts.

Roughly 6.3 million CTFs were opened for children born between 1 September 2002 and 2 January 2011, mostly by parents and guardians but some by HMRC.

The tax-free funds could be opened as cash savings or stocks and shares accounts.

These accounts started maturing in 2020, but due to a number of reasons including difficulty tracing them, people forgetting they have them or deciding to leave the funds invested, more than 750,000 matured accounts still remain unclaimed.

Once a CTF matures, you can no longer add money into it and it is typically moved into a default account paying a weak interest rate.

Rachel Blake, economic secretary to the Treasury, said: “Too many young people are missing out simply because they are not aware of where their Child Trust Fund is or how to access it.

“We are acting to fix that by bringing government and industry together – improving coordination and making it easier for people to find and claim what’s rightfully theirs.”

HM Treasury said the taskforce will “improve tracing approaches, test more effective engagement with young people, and drive practical actions that lead to more accounts being claimed”.

Its launch comes after HMRC wrote letters to thousands of 21-year-olds reminding them to claim the money in their CTFs in April.

HMRC is reminding eligible young people they can claim the funds through online campaigns on social media platforms like X, formerly Twitter.

Antonia Medlicott, founder and managing director at personal finance website Investing Insiders, welcomed the government’s taskforce but said more should have been done sooner.

She added: “Far too many Child Trust Funds are going unclaimed. Some accounts will hold significantly more than the £2,200 average figure that has been circulated, and it’s a shame to see that they have been left until now.”

How to track down lost Child Trust Funds

In the first instance, you should contact the provider the CTF was set up with, who should be able to reunite you with the account.

Alternatively, you can use HMRC’s Child Trust Fund tool to request your CTF details if you’re over 16. Make sure you’ve got your National Insurance number to hand.

You can also use this tool if you’re a parent or guardian of a child under 18. You will need the child’s full name, address and date of birth, and also any previous names you or the child have used.

You may have a CTF under your name even if you or your parents didn’t set one up for you. If an account wasn’t set up for an eligible child after 12 months, HMRC opened one on the parents’ behalf.

Sarah Coles, head of personal finance at investment platform AJ Bell, said: “Of the 6.3 million accounts that were opened, 1.8 million were opened by HMRC, so there’s a decent chance the parents of these children never engaged with where the money ended up.

“For those who did choose where to put the money, so much time has passed that there’s a real risk they moved house and didn’t update their details, and if the paperwork has gone astray, they may have forgotten these accounts entirely.”

What should you do once you’ve tracked down the Child Trust Fund?

Unless you need all the money from the CTF for an emergency, it could be worth keeping some of it invested to grow.

However, it might be worth transferring the remaining funds from the CTF into a Junior ISA.

Coles explained: “Stocks and Shares CTFs tend to have higher charges and less choice than their equivalent Junior ISAs, while Cash CTFs often pay less interest. It means parents should waste no time in tracking the accounts down and deciding whether to move the money into a Junior ISA.”

Just how much cash will you be able to hold in your ISA from next year and what will it cost you to do so? At first sight, new rules for individual savings accounts (ISAs) due to come into force from 6 April 2027 look straightforward. In practice, they are likely to prove anything but, thanks to tricky new regulations published this week.

The confusion stems from changes announced in last November's Budget. Chancellor Rachel Reeves stressed her determination to use the tax system to encourage risk-taking investment into UK companies and infrastructure; she therefore announced that from the 2027-2028 tax year onwards, the annual limit on investments into cash ISAs – where your money is simply held in a risk-free bank or building society account – will fall to £12,000. By contrast, the annual stocks and shares ISA allowance – where your money flows through into productive investments – will remain at the full £20,000.

So far, so good. But what about cash held in a stocks and shares ISA? You're also entitled to hold cash in these accounts. Perhaps you're concerned about market volatility, or think you might need to make a withdrawal soon; maybe you just want to maintain a small cash balance to fund fees and investment charges; you may even have opted to take dividends from existing holdings in cash, potentially to be invested later on.

Moreover, what about cash-like investments in a stocks and shares ISA? Opting for a money-market fund, say, is akin to holding your ISA savings in cash, even if you're technically making an investment.

Reeves's new ISA changes will affect everyone

These complexities have prompted some head-scratching at the Treasury, which delayed publication of the detailed regulation on how the new rules will apply to stocks and shares ISAs until earlier this week. Now, however, it has published an “anti-circumvention rules fact sheet” that is more demanding than many had expected. Most strikingly, the Treasury plans to introduce a new tax on interest earned on cash held in a stocks and shares ISA, even though the tax-free nature of money held in such accounts is meant to be sacrosanct. A 22% tax charge will apply, in line with the rate of savings interest tax, from April 2027 onwards.

While a similar arrangement operated in the UK until 2014, some ISA providers believe the change will fundamentally undermine the tax efficiency of ISAs. Providers will no longer be able to describe all ISAs as tax-free in order to encourage savers and investors, they say. Some ISAs will be more tax-free than others.

The Treasury has also confirmed plans to restrict savers from holding cash-like investments in their stocks and shares ISA. Money-market funds will not qualify for ISAs if they account for the entirety of the investor's stocks and shares ISA portfolio; ISA managers and platforms will then be forced to intervene.

There will also be a veto on transfers of money into a cash ISA from holdings in a stocks and shares or innovative ISA, which is currently allowed. Again, while the goal is to stop investors getting round the new rules, one result will be to limit financial planning and constrain the flexibility of investment strategies.

This will affect everyone. In last November's Budget, the Treasury said savers and investors aged 65 or over would be exempt from the lower annual allowance on cash ISAs, maintaining their full £20,000. The thinking is that older people are often in a phase of running down their savings and may therefore need to take a more risk-averse approach to managing their money. This week, however, the Treasury revealed that the over-65s won't be exempt from tax on interest from cash or from the ban on investing an entire stocks and shares ISA in money-market funds, although they will be allowed to transfer to stocks and shares Isas to cash ISAs.

All of which adds a great deal of complexity to the ISA rules – and plenty of scope for adverse outcomes for investors. Plus, ISA providers themselves will muddy the waters. JPMorgan Personal Investing, for example, has already announced that, from this week onwards, it will no longer pay interest on cash held in a stocks and shares ISA if an investor's entire pot is held in cash. The move is in line with the intent of the Treasury's thinking, but will naturally save JPMorgan Investing some money. And previously, the Financial Conduct Authority has warned the whole ISA industry about paying poor interest rates on cash held in a stocks and shares ISA.

Elsewhere, ISA providers – including leading online platforms – are already beginning to rethink their policies on what they will and won't allow investors to do. They will want to get ahead of restrictions and may simply withdraw certain products and services completely. Maybe they'll no longer allow investors to receive cash dividends, for example, requiring everyone to use accumulation funds.

Will Reeves stay chancellor long enough?

All of which is a reminder of how strongly the law of unintended consequences applies in the world of tax. The desire of the Treasury to shift money out of cash ISAs into stocks and shares accounts that are seen as more supportive of economic growth is understandable – the most recent official statistics reveal investors put £69.5bn into the former in the 2023-2024 tax year against only £31.1bn in the latter. But more doubt and complexity may simply put people off, reducing the size of the whole pie.

There's one final unknown, meanwhile. This scheme is the brainchild of Rachel Reeves and her team. But will she remain chancellor long enough to finalise the remaining details – a short technical consultation will take place between now and the autumn – let alone to see it come into operation next April? Maybe a different chancellor will want to do something completely different.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Grieving families now face paying out more money to help resolve a loved one’s estate after the cost of applying for probate rose by 75% this month.

The Grant of Probate fee - giving someone a legal right to deal with the assets of a person who has passed away - increased on 13 July from £300 to £526.

It has almost doubled since May 2024, when it was £273.

Martyn James, consumer expert, said the hike would leave people “absolutely justified in feeling upset and ripped off”.

He added: “Probate is one of the most antiquated, bureaucratic and complex processes we will encounter – precisely at the point where we need simple and clear help the most.”

A Ministry of Justice spokesperson said the cost helps improve its service.

The spokesperson said:  “We know that losing a loved one is already a difficult time. That’s why it’s vital the probate service remains as smooth, swift and simple as possible. 

“The new fee reflects the full cost of an ever-improving service which enables families to resolve disputes in as little as two weeks. Increasing fees is always a last resort, however the new cost accounts for rising inflation as well as investment in delivering an efficient and modern service.

“The worst off will face no fees whatsoever and anyone struggling can still apply to have the fee reduced or removed entirely through our Help with Fees scheme.”

While the application fee has increased, the charge for copies of the probate documents – when requested alongside the application – has been cut from £16 to £2.

What is probate?

Probate is the legal right granted to someone to deal with and distribute another person’s estate (property, possessions and money) when they die.

You can only apply for probate if you’re the executor of a will or the closest living relative of someone that has died who didn’t have a will in place.

Typically, the next of kin or executors of a will have to apply for probate before they can claim, transfer or distribute a deceased person’s assets.

You don’t always need to apply for probate. You may not need it if the person who died only had savings in their estate. You may also not need probate if they owned shares or money with others, in which case the shares and money go to the surviving owner.

You also don’t need to apply for probate if the deceased person owned land or property as a joint tenant. In this instance, the land or property is automatically passed to the other tenant.

Financial institutions, such as banks and mortgage lenders, have different rules on whether you can access a deceased person’s assets without having been granted probate, so it’s worth contacting them to find out what you need to do.

How do you apply for probate?

You can apply for probate by post or online via gov.uk, which is usually quicker.

If you’re applying by post, the form you need to fill in is different depending on whether the person left a will or not.

If they did, you need to fill in the application form PA1P. If they didn’t have a will, you need to fill in the PA1A form.

The government says the probate is typically granted within 12 weeks of submitting an application.

It’s crucial you do a few things before applying for probate though.

This includes working out an estimate of the value of the dead person’s estate for inheritance tax (IHT) purposes.

Even if no IHT is due, you’ll need the value as part of your probate application.

If IHT is due on the estate, you have to report its value to HMRC within one year via an IHT400 form. You can’t apply for probate until this is done and normally need to start paying any IHT due before you can get probate granted.

If IHT is owed on an estate, you also need to send “full details” of the estate to HMRC within 12 months of the person dying and before applying for probate.

Full details refers to the estate’s assets and debts, any gifts made, and any reliefs and exemptions.

Even if no IHT is owed, you may still need to send full details of an estate to HMRC.

For example, if the person who died gave away over £250,000 in the seven years before they died or if their estate is worth more than £3 million, you will need to contact HMRC.

There is a whole list of reasons on the gov.uk website of why you may still need to send full details of an estate to HMRC despite no IHT being owed.

You don’t have to give full details of an estate’s value to HMRC if all of the following applies:

• The estate counts as an “excepted estate”,
• There’s no IHT to pay, and
• There are no reasons, as per gov.uk, the full details of an estate still need to be sent to HMRC, despite IHT not being due.

An estate is typically classed as excepted if its value is below the nil-rate band (£325,000) or it’s worth £650,000 and any unused nil-rate band was transferred to a surviving spouse or civil partner.

An estate is also classed as excepted if the person who died left everything to a spouse living in the UK or a qualifying charity and the estate is worth less than £3 million.

The last way an estate can be excepted is when the deceased person was living permanently outside the UK when they died and the value of their UK assets is £150,000 or less.

How to help your loved ones with the probate process

You can’t do much about the cost of applying for probate, but Sarah Coles, head of personal finance for AJ Bell, suggests people can ensure their own affairs are in order so it is easier for their loved ones to manage their estate.

This includes making sure your wishes are clear by making a will, make a list of your financial arrangements including bank accounts and pensions and ensure any paperwork for taxes or unpaid debts can be found.

Coles says: “Having to pay a fee for probate is bad enough, given it creates an endless pile of admin for those you leave behind, so a 75% hike in the fee is adding insult to injury.

“For those who can’t afford it, there’s a Help with Fees remissions scheme, to cover the cost.

“For everyone else, this is one more horrible hoop to jump through that makes the paperwork and processes after death such a nightmare. It means we could all benefit from taking steps to make the process easier for our loved ones after our death.”

Investors will face a charge on any interest paid on cash in a stocks and shares ISA, the Treasury has confirmed in its latest guidance on ISA reforms.

Plans are underway to reduce the cash ISA allowance to £12,000 per year from April 2027 for savers under age 65.

The Treasury is also disincentivising holding uninvested cash in a stocks and shares ISA and restricting how much can be held in cash-style products within this type of ISA.

It has confirmed plans for a 22% charge on any interest or alternative finance return paid on cash held within a non-cash ISA, from April 2027. This may be money that account holders haven’t invested yet or from dividends paid out.

But in some good news for investors, money market funds will be allowed in a stocks and shares ISA as long as they do not make up 100% of the investments.

Common investments held in stocks and shares ISAs such as individual shares, funds, investment trusts, exchange-traded funds and corporate and government bonds, including UK gilts, will not be treated as cash-like assets, the Treasury said.

James Carter, head of platform policy at Fidelity International, said: “We are pleased to see that cash-like investments will remain eligible for non-cash ISAs.

“These products are genuine investment products, holding short-term government and high-quality debt, and form a valued part of many balanced portfolios. Removing them from the stocks and shares ISA framework would have undermined the government’s objective of encouraging more people to invest, by giving customers a cliff edge choice between staying in cash or moving directly into higher-risk, more complex products.”

New restrictions on transfers into cash ISAs

Transfers from stocks and shares ISAs into cash ISAs will not be permitted but it will be allowed the other way round.

Individuals aged 65 and over will still benefit from a higher cash ISA limit of £20,000 per year, if they wish to use the full annual ISA allowance for that type of account.

The transfer restriction will be stopped from this point but the charge on interest earned on cash in a stocks and shares ISA and the prohibition on 100% cash-like investments will remain in place.

A technical consultation is due to be released by the Treasury on how the charge will work.

Greg Davies, head of behavioural finance at Oxford Risk, has already warned that the measure risks backfiring.

He said: “Getting people invested is an inherently behavioural challenge. You do not encourage nervous savers into investing by making the first step feel more complicated, more punitive and harder to reverse.

“People move from cash into markets when the journey feels clear, safe enough, and matched to their goals, time horizon and financial circumstances. Adding tax charges and transfer restrictions to an already confusing ISA system sends precisely the wrong behavioural signal.

“For many would-be investors, this will not create confident investors. It will create more hesitation, more disengagement, and more people doing nothing.”

Rachel Vahey, head of public policy for AJ Bell, warned that the changes are “increasingly complex” and “riddled with unintended consequences” and may mean people just keep money in cash ISAs instead.

She said: “The new rules mean a charge of 22% will be applied to interest paid on cash in investment ISAs. This is a flat rate charge, meaning the same rate applies whether the ISA account holder is a basic rate taxpayer, higher rate taxpayer, or indeed doesn’t pay any income tax.

“The ISA holder cannot invest 100% of their (non-cash) investment portfolio in money market funds, or that would be classed as a ‘non-qualifying’ investment. This means they could invest 99% in money market funds and 1% in, say, UK equities and that would be allowed.

“It also means they could hold 50% of their portfolio in cash, but if the remaining 50% was held in money market funds that wouldn’t be allowed. Whereas if they held 49% in money market funds and 1% in UK equities, this would be permitted under the rules.”

Will investment platforms stop paying interest on cash?

Several investment platforms such as Bestinvest, AJ Bell, interactive investor, Fidelity and Hargreaves Lansdown pay interest on cash held within a stocks and shares ISA.

The rates are not that competitive but the benefit for investors is that they can get cash in the wrapper or receive dividends and decide how they want to invest it.

It is currently unclear if platforms will stop paying interest or if investors will just need to be aware of the charge.

Carter said: “We have consistently welcomed the government’s recent focus on encouraging more people to invest, supporting better long-term outcomes. Recent initiatives such as a review of risk warnings, the introduction of a targeted support regime, and an education campaign on the benefits of investing, will all help to reset the approach to risk and bridge the gap between precautionary cash savings and long-term investment.

“We look forward to the publication of the technical consultation which will include further details required to enable providers to implement these changes.”

A spokesperson for AJ Bell was unable to comment on whether the platform will stop paying interest on cash.

Jason Hollands, managing director of Bestinvest, described the anti-circumvention measures as a "disproportionate response to a problem that may never meaningfully materialise."

He added: "Investors will also need to weigh up the relative difference in returns on a money market fund minus any platform fees, versus holding cash and having the 22% charge deducted."

MoneyWeek has asked Hargreaves Lansdown and interactive investor for comment.

The Treasury has revealed plans for a revamped Lifetime ISA (LISA) product that will remove the upper age limit and withdrawal charges but the retirement savings component will also disappear.

Chancellor Rachel Reeves revealed in her 2025 Autumn Budget that the government would launch a consultation on a “new, simpler ISA product to support first-time buyers to buy a home” in “early” 2026.

A consultation released by the Treasury this week said there is evidence that the current product is “not working well for many".

The LISA was launched in 2017, aimed at first-time buyers and pension savers.

Under current rules, you can put up to £4,000 a year into a Lifetime ISA and the government adds 25%, up to a maximum of £1,000 per year. This allowance is included within the overall £20,000 annual ISA allowance.

The money can be used either to contribute towards a deposit on a property worth up to £450,000, or to save the money and withdraw it fee-free once you reach 60 years old.

Critics suggest the price cap and age limits as well as the 25% withdrawal charge for "unauthorised" withdrawals make the Lifetime ISA unattractive.

The Treasury consultation acknowledges this and highlights that the number of unauthorised withdrawal charges is increasing year on year, reaching 8% of all accounts opened in 2024/25.

The document also warns that the LISA "may be diverting people from saving into pension products that may be a more appropriate for them".

The Treasury said: “The government is committed to making the aspiration of home ownership a reality for as many households as possible. However, we recognise that the LISA is not working for everyone, and that when people’s circumstances change, they should be able to adjust their finances accordingly.

“We understand that the complexity of the LISA may have dissuaded many providers from offering it, and savers from taking it up, meaning that it is not as accessible as it could be. That is why we are consulting on the implementation of a new, simpler, ISA product to support first-time buyers.”

The government is now seeking views on a replacement product called the First Time Buyer ISA (FTB ISA).

How would the First Time Buyer ISA work?

The new First Time Buyer ISA (FTB ISA) will solely be for the purposes of buying a first home.

The self-employed who can't access auto-enrolment would need to stick with a LISA or focus on a private pension or self-invested personal pension to save for retirement.

Similar to the LISA, there would be cash and stocks and shares options, money saved into the account would go towards your annual ISA allowance and there would be a government bonus, although the level hasn't been announced.

Accounts can only be open from age 18 and there would be no upper age limit.

Subscription limits, property price caps and the level of the government bonus will be announced at a future fiscal event to take account of market conditions and wider public finance context, the Treasury said.

The document added: “Increases to any of these parameters in isolation would come with a cost. A lower subscription limit and/or property price cap could allow for a higher government bonus and would shift the benefits towards lower income savers outside London and the South East.”

There isn't a launch date yet for the product but the Treasury said it would like it to be available "as soon as practically possible".

What is the difference between the First Time Buyer ISA and the Lifetime ISA?

There are a few differences between the FTB ISA and the LISA, including it only being available to first-time buyers.

Unlike the LISA, which has to be opened by age 40 and the bonus can only be earned until age 50, there will be no upper age limit.

The government bonus will be paid as a percentage of subscriptions made, rather than the value of the account, at the point that an individual withdraws funds to purchase their first home.

This means that the bonus is calculated on what an individual has put into the account, minus any withdrawals made, not on any investment growth or savings interest accrued subsequently.

Under the current system, providers pay the government bonus in a LISA each month, when a contribution has been made in the previous month. For example, if you deposit £1,000 in one month, a 25% bonus (£250) would be added in the following month.

But the new FTB ISA bonus will be paid at the point an individual makes a withdrawal for purchasing their first home.

The Treasury said this removes the need for a withdrawal charge and means a saver can withdraw funds, should their circumstances change, without penalty.

Rachael Griffin, tax and financial planning expert at Quilter, said: “Thousands of savers have been charged for accessing their LISA for an unauthorised withdrawal, often because their financial circumstances changed unexpectedly and they needed to dip into their savings. Allowing people to access their money when needed, while still being incentivised to save towards a deposit for a first home, would be a much better design.

“Equally important is the decision to remove the upper age limit. The average age of a first-time buyer has been consistently on the rise, yet the Lifetime ISA effectively shut the door on those who did not get onto the property ladder prior to turning 40. A reformed product with no age limit would reflect a more modern housing market.”

Rachel Vahey, head of public policy at AJ Bell, said moving away from an upfront bonus should make the system simpler but she has warned that savers will lose out on the investment growth they could have earned on the bonus while building up their deposit.

She highlighted that someone paying in £4,000 each year for five years into a Lifetime ISA with a bonus added each year would have built up £28,165 assuming 4% growth net of charges. Under the FTB ISA, assuming the same terms including payments, and that a government bonus of 25% is added when buying the house, the ISA holder would only have built up £27,532.

Vahey added: “For some first-time buyers, that could mean having less money available when they come to purchase a home.”

Who can use the FTB ISA?

The FTB ISA will be available to UK residents over age 18 looking to purchase their first home.

It can only be used with a mortgage, which excludes cash buyers and you will need to have the account open for at least 12 months to become eligible for the bonus.

What will happen to the Lifetime ISA?  

There is no suggestion currently that the LISA will be phased out so accounts can still be opened and used.

Individuals with funds in a LISA will not be able to transfer their money to the new FTB product as they will have already received the government bonus.

But you will be able to use any funds in your existing LISA and those in the new FTB ISA for the same purchase.

Individuals will be able to hold both the new FTB ISA and an existing LISA, but will only be able to save into one in the same tax year.

Regardless of where the property price cap is set, the FTB ISA, LISA and Help to Buy ISA cap will be aligned so that no account holders will lose out, the Treasury said.

To ensure that holders of the Help to Buy ISA do not lose out, the Treasury is also proposing that holders will be able to transfer their holdings into the new FTB product up to the subscription limits.

Additionally, as part of wider ISA reforms, transfers from a stocks and shares ISA to the new cash FTB ISA will be banned.

Paula Higgins, chief executive of the HomeOwners Alliance, said this is “well-intentioned reform” but warned that unless the property price cap is reviewed, it risks fixing one unfairness while leaving another firmly in place.

She said: “The Treasury should update the cap now and future-proof the scheme by ensuring it rises in line with house prices, rather than allowing it to become outdated again.

“First-time buyers need a product designed for the housing market of the future, not one based on prices from nearly a decade ago.”

NS&I has increased the rates on nine of its savings accounts as it looks to draw in customers and meet its financing target.

The Treasury-backed bank increased rates on one, two, three and five-year fixed bonds and a green savings bond today (23 June).

The rise in the fixed bonds comes as NS&I looks to meet its net financing target for the 2026/27 financial year of £15 billion, up from £13 billion in 2025/26.

The financing target is set by the government, which can influence what rates NS&I offers on its accounts. If the target is higher, NS&I may raise interest rates.

It is the third time NS&I has hiked interest rates on the one, two, three and five-year fixed-rate bonds in 2026.

Sarah Coles, head of personal finance at investment platform AJ Bell, said: “The savings market is impressively competitive right now, and NS&I has entered the fray.

“Banks are pulling out all the stops to compete, keeping fixed rate deals higher and forcing NS&I to raise rates again to attract the cash it needs.”

Which NS&I accounts will pay more?

The interest rates have been raised on the following nine accounts:

Credit: NS&I

You can open one of the eight Guaranteed Growth or Income bonds with a minimum investment of £500 and save a maximum of £1 million.

You can open the Green Savings Bonds with a minimum £100 investment and hold a maximum of £100,000.

You cannot withdraw funds early as all nine accounts are fixed-term while you also cannot access the money until the end of the term.

After the accounts mature, you can withdraw any cash or reinvest it into a new NS&I account.

You can apply for the accounts on the NS&I website.

How do NS&I's savings accounts compare to others on the market?

While the boost in rates is good news for savers, there are slightly better options if you want to get the top rate.

The better deals are with smaller providers, but they are protected by the Financial Services Compensation Scheme (FSCS).

Customers can get a 4.81% interest rate with StreamBank on its one-year bond, as well as 4.8% with Afin Bank.

In terms of two-year fixed-rate deals, Market Harborough Building Society is offering a 4.86% interest rate on its two-year bond while Afin Bank is offering a two-year bond paying 4.85% interest.

Afin Bank is also offering the most competitive rate on three-year fixed-rate bonds (4.85%) while thisbank has a three-year fixed bond paying 4.82% in interest.

Meanwhile, Afin Bank’s five-year fixed-term bond pays 4.9% interest while Atom Bank has a five-year fixed bond paying 4.85%.

NS&I’s Green Savings Bond has shot up the rankings and is now the joint-second best green savings account on the market, according to Moneyfacts, beaten only by Castle Trust Bank’s three-year e-Saver account paying 4.54% interest.

Coles said the significant hike to the rate on the Green Savings Bond suggested “the previous policy of hoping green-conscious savers would be happier to overlook a much lower rate for the bonds just wasn’t working in attracting the cash” NS&I wanted.

Santander has launched a market-leading regular savings account which pays an interest rate of 8%.

The account is open to new and existing customers with a qualifying Santander current account, including: Santander Everyday, Edge, Edge Student, Edge Up and Explorer.

The Everyday and Edge Student current accounts are fee-free while the other three charge up to £17 a month.

You must be 16 or over and live in the UK to apply for the regular saver.

Customers can open Santander’s regular saver with just £1 and save up to a maximum of £200 every month.

The 8% interest rate includes a 5% bonus for the first 12 months. After 12 months, it falls to 3%. The interest rate is variable meaning it could go up or down at any point.

Money can be withdrawn from the account anytime penalty-free.

Jessica Sheldon, MoneyWeek's deputy digital editor, added: "While an 8% interest rate is certainly eye-catching, restrictions on monthly contributions mean savers might not end up with as much interest as they think they would with a regular savings account, so it’s worth considering whether it’s the best option for you.”

“It’s a good idea to regularly check the best rates for savings accounts, and set a reminder to review the account once a bonus rate period ends.”

How does Santander’s regular savings account compare to the rest of the market?

When it comes to headline interest rate, Santander’s regular savings account pays the most on the market as of 23 June.

The next best account in terms of rate is Zopa’s regular saver paying 7.1% interest, followed by The Co-operative Bank’s regular saver paying 7%.

However, you could earn more interest with The Co-operative Bank’s regular saver as it lets you add £250 into the account each month.

Assuming you added the maximum £200 into the Santander regular saver each month, didn’t withdraw any money and the interest rate stayed the same, you could earn £104 in interest over the course of a year.

But, if you paid the maximum £250 per month into The Co-operative Bank’s regular saver, you could earn £114 over the year, assuming no withdrawals or changes to the interest rate.

Is a regular savings account the best option for you?

Regular savings accounts may not be as attractive as they seem, as the headline interest rate only applies to money that is saved for a whole year – meaning the first month’s deposit.

The second month’s deposit is only in the account for 11 months of that year, so you only earn eleven twelfths of the interest rate.

Therefore, on average, you’re effectively getting half the headline rate advertised.

This means, if you already have a lump sum, you could get more interest by putting the money into an easy-access or fixed rate savings account instead.

For example, you would get £104 in interest by drip-feeding £2,400 into Santander’s regular savings account over 12 months, based on no withdrawals being made and the interest rate remaining at 8%.

However, if you added a lump sum of £2,400 into the top-paying easy-access savings account, currently Chase which pays 4.5%, at the end of the year you would have earned £110 in interest.

The Labour leadership election may be set to dominate the news agenda and dinner party conversations for the next month or so but it may not have as much of an impact on your investments as many fear.

Sir Keir Starmer resigned as Labour leader this morning, paving way for a leadership election and a new prime minister to be appointed before the summer recess.

Newly-appointed Labour MP Andy Burnham is the only candidate to have thrown his name in the ring so far and it is unclear what his policies will be and who else will challenge.

Stock markets don’t like uncertainty but investors have had to get used to plenty of political upheaval in recent years.

Starmer is the fifth prime minister to resign since 2016, starting with when David Cameron stepped down in the aftermath of the Brexit vote.

The most recent resignation before that was Labour leader Tony Blair in 2007.

But exclusive analysis by wealth manager Quilter for MoneyWeek shows that while these resignations make good headlines, they don’t actually have a drastic impact on stock markets, which could be good news for investor portfolios.

What impact do leadership elections have on financial markets?

Quilter analysed economic indicators such as equities, gilts and the value of sterling against the dollar in the three month build up to a prime minister’s resignation and the three months after.

The analysis showed a mixed picture.

Tim Armitage, investment strategist at Quilter Cheviot, said: “Leadership resignations often prompt headlines about market uncertainty, but history suggests markets do not react to resignations themselves, rather they respond to the underlying risks those resignations expose or resolve.

“Across recent UK history, market reactions tend to fall into three broad patterns – where the resignation follows an external shock, reflects a loss of policy credibility, or occurs against an already dominant macro backdrop.”

UK equities were up by 3.8% in the three months before Tony Blair stepped down in May 2007 and fell 7% in the three month aftermath.

But in some cases, such as the resignations of David Cameron in May 2016 and Liz Truss in October 2022, UK equities actually rose in the three month aftermath by 13.6% and 12.3% respectively.

Armitage added: “In the case of David Cameron, his resignation followed the Brexit referendum, which drove a sharp fall in sterling. While this created immediate volatility, it also supported UK equities and bonds due to the international earnings profile of many listed companies.

“In contrast, Liz Truss’ resignation followed a clear crisis of policy credibility linked to unfunded tax cuts. Markets had already reacted sharply, particularly in gilt yields, and stabilised as her departure removed a key source of uncertainty alongside intervention and reassurance from the Bank of England.”

The impact on sterling has also varied, falling by 7.2% against the dollar when Boris Johnson resigned in July 2022, but rising by 9.2% when Truss left Downing Street.

Armitage said: “Boris Johnson’s resignation came during a period dominated by global macro forces, namely rising inflation and the energy shock following Russia’s invasion of Ukraine, meaning there was little discernible shift in market direction attributable to domestic political change.”

The FTSE 100 and FTSE 250 don’t appear to have been impacted since Starmer’s resignation.

Armitage said: “For investors, the key takeaway is that political change tends to matter most when it alters confidence in fiscal and economic policy. Periods of uncertainty can create short-term volatility, but markets often stabilise quickly once a clearer policy direction emerges.

“Looking ahead, any market reaction to Sir Keir Starmer’s resignation will depend less on the event itself and more on whether it reduces or increases uncertainty around fiscal policy, regulation and economic direction. Early signals on policy continuity and key appointments are likely to be more important for investors than the leadership change alone.”

The key lesson appears to be that time in the market, rather than timing the market, remains the main policy that investors should follow.

Andrew Prosser, head of investments at InvestEngine, said: “Political instability – such as a change in prime minister – can create both risks and opportunities for investors but those who want to grow their money over the long term should not be worried. This upheaval may move markets in the short term, but history has shown markets always recover, and often quicker than expected.

“The investors who tend to come out ahead of periods like this are the ones who stay diversified and stay invested. Our advice is that long-term investors should avoid making knee-jerk decisions, ignore the noise and sit on their hands. Time in the market, as ever, matters more than timing the market.”

Tadashi Yanai is living out his dream. Of all the many art books lining his wood-panelled office in Tokyo, the most “sacred text” turns out to be a Next catalogue from 1987, shot by the now famous Vogue and Vanity Fair photographer Koto Bolofo. “This inspired me most, back in the Eighties,” says Yanai, who at 77 is Japan's richest man with a fortune put at around $69bn. “Ordinary people looking cool and casual… I wanted to deliver this kind of clothing for current times. Clothes to make people happy.”

You know when a brand has conquered the zeitgeist when the vocabulary around it goes mainstream. For Uniqlo – the fast-fashion phenomenon with a mission to dress the world in its anonymously chic “wardrobe building blocks” – that moment came when the word “unibare” entered the lexicon, says The Times. It expresses the moment you realise that someone is wearing Uniqlo, “rather than anything more expensive”.

In April, shares in Fast Retailing – Uniqlo's parent company – hit a record high on the back of roaring overseas growth in the US and Europe, says Bloomberg. They've now gained 45% year-to-date. Fast Retailing is the third biggest apparel company in the world after Zara's Inditex and the H&M stable, and its humble brown paper bags have become a fixture from Oxford Street to Fifth Avenue.

In a business culture “famed for grey conformity”, Tadashi Yanai “can't help but swim against the tide”, says Time – happily flaunting his success despite local taboos against ostentatious wealth. He owns two golf courses on the Hawaiian island of Maui alone. Yet when you walk with him through Uniqlo he reveals some “quintessentially Japanese traits”, says Bloomberg Businessweek: “attention to detail, supply-chain prowess, minimalist aesthetics” – and frugality.

Tadashi Yanai was born into the rag trade

Tadashi Yanai grew up in the trade – his parents ran a menswear shop in Ube on the main Japanese island of Honshu. The event that changed his life was the Vietnam war, which interrupted his studies in political economy at Tokyo's Waseda University because of a student walk-out. The break enabled him to travel to the US and UK, where the proliferation of mid-market clothing shops planted a seed. In 1972, after a brief stint selling men's clothes for a supermarket chain, Tadashi Yanai was handed the keys to his father's now expanded business.

In 1984 he opened the first branch of the Unique Clothing Warehouse in Hiroshima to pursue a more casual style. The firm's big breakthrough came in 1998 – as Japan was reeling from its burst economic bubble – when Yanai opened Uniqlo's first Tokyo outlet and sold a lightweight fleece for just £15. “Every fourth Japanese consumer bought one.”

When Tadashi Yanai published his autobiography, One Win and Nine Losses, he had a cathartic time describing his many mistakes down the years – not least overhasty expansion efforts, which necessitated a humiliating retreat. These days, Uniqlo's expansion is more measured, but has a relentless quality, says The Times. Having targeted national capitals, it's going for the regions – in the past year, opening new British stores in Liverpool, Glasgow, Edinburgh and Bristol. A series of designer collaborations – with minimalist Jil Sander and, latterly, Dior maestro Jonathan Anderson – has boosted the brand's appeal.

Tadashi Yanai, who is building sponsorship programmes with art galleries globally, has strong ideas about being “a force for good” and giving back to society. Yet he runs his own fiefdom like “a dictator”, says Time. With two sons now working in the business, questions about the succession abound. But he's giving nothing away. “When I get older my dream is to take a walk every day on the streets of London” – a continuing source of inspiration, he told The Telegraph in 2015. No sign of that happening any time soon.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Around £221.5 million was stolen in investment fraud during 2025, as scammers target those trying to get investing.

Across all types of scams, Brits unknowingly handed over a whopping £1.3 billion to fraudsters in 2025, up 4% from 2024, trade body UK Finance found.

Investment fraud was the leading type of authorised push payment (APP) fraud, where criminals exploit online platforms to manipulate victims into authorising payments themselves, making up just under half of all losses of this type.

The vast majority (66%) of all APP fraud, including investment fraud, begins online as scammers are more easily able to cast a wide net to attract victims with get rich quick schemes, UK Finance found.

Other types of APP fraud on the rise include purchase scams, where a victim pays in advance for goods that are never received, which accounted for 71% of all APP fraud. Losses in this category were up 20% to £118.1 million in 2025.

The amount stolen through romance fraud, where victims are persuaded to make a payment to a person they have never met but believe they are in a relationship with, was up 22% in 2025, totalling £39.2 million.

Ruth Ray, managing director of economic crime at UK Finance, said: “Fraud operates on an industrial scale, harming people, businesses and the UK economy, typically funding serious and organised crime in the UK and globally.

“The financial sector invests huge amounts in protecting customers, but we cannot be the only line of defence. Almost £1.3 billion was stolen again last year and it is clear we are not tackling the underlying problem effectively enough.

Ray called for online tech platforms to have “stronger, enforceable responsibilities” to urgently stop criminals profiting from fraud.

AI is making investment scams easier than ever

The rise of AI-generated images and videos has made fraud easier than ever for scammers, as many imitate famous figures in finance to feign credibility. Last year, MoneyWeek found fraudsters using the likeness of investor Steven Bartlett to lure unsuspecting victims.

Since then, similar scams that use the likeness of Bank of England governor Andrew Bailey, and Blackrock CEO Larry Fink, and others have been found.

A survey of fraud-management and financial crime prevention experts showed that AI is making fraud more difficult to deal with.

Around 84% of respondents to the survey by BioCatch, said AI has increased the sophistication of fraud and scam schemes as deepfakes are becoming increasingly difficult to spot.

Jonathan Frost, director of global advisory for EMEA at BioCatch said: “Agentic AI is making fraud faster, more scalable, and harder to detect. Criminals will inevitably use AI, potentially leading to exponential growth in fraud.”

How to protect yourself from fraud

With fraud on the rise, there are steps you can take to protect yourself. These include:

• Never give out your personal information to any organisation before you check they are legitimate. This includes your name, address, bank details, email, or phone number.
• Make sure your personal devices have up-to-date antivirus software so that any malware targeting you can be stopped before it does significant damage.
• Be conscious of phishing attempts where scammers send emails, texts, or phone calls pretending to be an organisation or individual that they are not. They often try to get you to give out your personal details or passwords. Common signs of a phishing message include grammatical errors, urgent language and suspicious-sounding email addresses or numbers.

If you think you have been a victim of fraud, contact your bank as soon as possible. You should also report the crime to Action Fraud.

To prevent yourself from becoming a victim, you should also remember the number 159 – a number you can dial if you get a suspecting call. It will direct you to your bank who can confirm if the caller is legitimate.

Pensioners who were in certain pension schemes of failed companies are in line for a share of almost £2 billion in top-up payments.

The Pension Protection Fund (PPF) – the industry-funded rescue fund for defined benefit pension schemes – will begin writing to in excess of 300,000 former staff of collapsed firms from July. Payments will be made from January 2027.

These pensioners missed out on inflation protection which they should have been entitled to as part of their payments from their company pension schemes – meaning their pension should have risen in line with prices but didn’t.

Defined benefit pensions pay a regular guaranteed income based on a worker’s salary and length of service. Many are closed to new members but are particularly valuable because of the inflation protection which boosted the retirement income.

However some pensioners were denied this valuable benefit before 1997 by their former employers, in firms that later went bust.

A recent rule change now means they will get the money they are owed. In April, the Pension Schemes Act became law, allowing the PPF and the Financial Assistance Scheme (FAS) to make the additional inflation-linked payments.

The PPF protects millions of UK defined benefit scheme members if their employer becomes insolvent. The Financial Assistance Scheme (FAS) is a separate but similar government-funded scheme designed to help those whose employers became insolvent between 1997 and 2005. Both are administered by the PPF.

A PPF spokesperson said: “Supporting our members is central to the PPF's role. The government's decision to enable us to pay inflation increases on pre-97 compensation will strengthen outcomes for many PPF and FAS members.

“Implementing this change requires significant work and we’re making good progress to be able to start paying these increases to eligible members from January 2027. We will continue to keep members fully informed throughout."

Who will get payouts?

The change in the law applies to PPF and FAS members whose former pension schemes promised to pay its members pre-1997 inflation-linked increases in their retirement payments.

Prior to 1997 – long before the PPF and FAS were set up – the law did not compel employers who provided defined benefit scheme pensions to also provide inflation protection for their members’ retirement income.

In practice the majority of defined benefit pension schemes did, in their scheme rules, provide inflation protection, but not all.

When the PPF and FAS were set up, the founding legislation (Pensions Act 2004) did not allow these lifeboat funds to pay pre-97 inflation-linked increases to all their members.

Now, however, the change in the Pension Schemes Act applies to PPF and FAS members whose former schemes promised pre-97 indexation as a right.

The PPF has, in the past months, reviewed the scheme rules of all 2,000 schemes which have transferred to the PPF and FAS.

Having completed this exercise, the PPF has determined that in excess of 300,000 members will be eligible for pre-1997 inflation-linked pension increases in the future.

Affected pension scheme members don’t have to do anything. The PPF will write to those eligible from next month.

Small-cap stocks have been abandoned by investors. That is bad news not only for the companies themselves, but for the wider UK economy. In the past, the smallest businesses listed on the London stock market have played an important role in Britain's economy. Ambitious young companies could raise money, expand their operations and, if successful, grow into much larger businesses. Investors who backed them early often enjoyed excellent returns along the way.

Today, that system is breaking down. A series of regulatory changes and industry shifts has steadily diverted money away from smaller companies and towards the largest firms in the market. The result is a funding drought for many promising businesses and fewer opportunities for savers seeking long-term growth. Because these changes are now deeply embedded, a reversal looks unlikely anytime soon.

That does not mean investors should ignore small caps. In fact, the current environment may offer some of the best opportunities seen for years. But investors need to adapt. Simply buying cheap shares and waiting for the market to recognise their value is no longer enough. Many small-cap stocks remain overlooked for years. The most attractive opportunities are often companies that can grow rapidly, recover from temporary setbacks, or unlock value through corporate activity. In other words, investors should be looking for tomorrow's mid-caps rather than today's statistically cheap shares.

Finding bargains in small-cap stocks isn't enough

The UK stock market is shrinking as listed companies disappear through takeovers, private-equity bids and delistings. At the same time, fewer investors are directing money towards small caps. As a result, prices at the lower end of the market often fail to reflect the underlying performance of a business. In theory, that should make stockpicking easier. If markets become less efficient, bargains should become more common. The problem is that cheap shares can now remain cheap for a long time. Buying undervalued stocks only works if someone eventually notices that they are undervalued.

To understand why this is happening, it helps to look at how the wealth-management industry has changed. Not long ago, stockbrokers and fund managers devoted considerable resources to researching smaller companies and allocating clients' capital across the market. That process helped ensure that money flowed to promising businesses and that share prices broadly reflected reality. Things have changed. Building bespoke portfolios has become increasingly expensive and administratively burdensome. Faced with rising compliance requirements and growing scrutiny over fees, many advisers have stopped making investment decisions themselves. Clumsy rules from the regulator triggered this shift. To eliminate compliance risks and operational costs, advisers stopped managing money altogether. Instead, they outsourced the process entirely to mass-market model-portfolio services (MPS).

That trend has concentrated massive wealth into a handful of firms. Four dominant discretionary managers now control the bulk of the UK MPS market. Quilter WealthSelect, Tatton Investment Management, Timeline Portfolios and AJ Bell Investments manage more than £70 billion combined and are growing rapidly. Today, the MPS marketplace relies almost entirely on passive tracking funds. Driven by regulatory pressure to keep fees low, providers invest in cheap index funds that replicate the wider market. Human judgment has been replaced by algorithms. Instead of analysing whether a business is worth buying, a passive fund allocates cash based purely on how large a company it already is.

The big four allocate a combined £9 billion to the UK stock market. Yet tracing the money down to the underlying holdings reveals that almost none of it reaches smaller companies. When investment committees use passive UK equity trackers, index rules determine where the money goes. These index rules explain why the largest wealth managers hold next to nothing in smaller companies. In the past, a balanced portfolio routinely allocated several percent to small caps. Today, that support has vanished. Quilter WealthSelect and Tatton Investment

Management control around £50 billion between them, yet their reliance on broad market benchmarks dilutes actual small-cap exposure to around 0.3% of total assets. AJ Bell relies on trackers that systematically lop off the bottom 3% of the investable market, so its allocation to pure small caps sits at virtually nothing.

This starvation of capital has triggered a destructive feedback loop, worsened by past regulatory mistakes. New rules permanently damaged the stock market by forcing brokers to charge separately for research and trading. When active funds dominated the market, brokers employed armies of researchers to write detailed reports, helping fund managers choose where to invest. In the past, brokers spent time analysing small companies to drum up interest among investors and find buyers for their shares, funding the work through trading in large companies. This research gave smaller firms visibility and kept their share prices accurate. Once the regulator banned this so-called bundling, the commercial model for small-cap broking collapsed because passive tracking funds do not buy research.

Analysts' coverage for companies valued under £250 million has all but vanished. Today, hundreds of listed British businesses are completely ignored by the market. With no regular broker reports, private investors have to work much harder, using specialised resources to find out how well these businesses are performing. Institutional investors will not buy shares in a company that nobody covers and brokers will not spend money writing about companies that the big wealth platforms are blocked from buying. Investing is becoming a purely automated exercise driven by index size, leaving high-quality small companies completely cut off.

How to find the right small-cap stocks

Yet all is not lost. For savvy investors who understand this breakdown, the dysfunction creates a lucrative hunting ground. To succeed, investors must leave behind old-style value investing. Buying a stock simply because it looks cheap on paper is a mistake, as passive investing means that value stocks may remain cheap forever. Instead, investors must look through these three specific lenses to find the stocks that can entice money from investors.

The first lens focuses attention on structural growth – that is, high-quality businesses expanding their operations and becoming more valuable in the process, generating high levels of real growth by deploying a proven commercial formula. This could make them the mid-caps of the future. When a company grows its earnings consistently, the compounding effect eventually overwhelms the lack of market interest. Even if the valuation multiple stays depressed, the sheer scale of the underlying profit expansion forces the share price higher, dragging the business out of the small-cap index to where there are far more investors.

The second lens reveals recovery plays that have hit cyclical lows. The turbulent economy of the last few years has battered corporate earnings, causing share prices to collapse and pushing formerly substantial businesses down into the small-cap sector. But this is often a temporary condition driven by external cyclical factors rather than permanent structural decline. The goal is to identify businesses that have survived the worst of the downturn and have the strength to capitalise on the inevitable rebound. When the cycle turns, these companies will enjoy a dramatic recovery, delivering an explosive bounce in earnings.

The third lens focuses on corporate activity – revealing under-the-radar businesses where an activist investor has built a stake to force operational change, unlock shareholder value or streamline the group. The activity can take many forms – from cost-cutting programmes to selling off non-core assets, or shrinking the share count using excess cash – and create prime targets for full takeovers by external corporate buyers. Private-equity firms and larger international corporations routinely scan the UK small-cap market for high-quality assets trading at steep discounts to their private market value. When a corporate buyer launches a full cash takeover bid, the market reaction can deliver value for shareholders. The following companies are examples that meet some of these three criteria.

Nine of the best UK small-cap stocks

Fintel (LSE: FNTL) is a structurally growing business that is priced as if it is not. It provides critical compliance data and fintech software to thousands of British financial advisers through its dominant SimplyBiz and Defaqto brands. The result is a highly predictable stream of recurring subscription income, with demand likely to increase as regulation across the retail wealth sector becomes more stringent. Yet the market prices the combined entity at a steep discount to the price that other similar businesses have been acquired for. This allows investors to buy a highly scalable fintech at a bargain valuation, long before the compounding earnings force a market rerating.

Software Circle (LSE: SFT) aims to generate structural growth via a disciplined consolidation strategy. It is actively buying up niche software businesses within highly fragmented sectors across the UK. Operations are at an early stage, but management is progressing sensibly, securing acquisitions at very attractive multiples while maintaining a lean head office and a decentralised operational structure. This playbook closely mirrors the model of other firms that have generated immense long-term wealth. Though tiny today, this firm has all the traits necessary to deliver exceptional multi-year shareholder returns.

Amcomri Group (LSE: AMCO) operates a strict buy, improve, build strategy across the fragmented UK engineering and manufacturing sectors. The business targets high-quality industrial firms facing the owner's retirement, acquiring them at low single-digit multiples before driving organic margin improvements. This roll-up model generates highly predictable structural growth completely independent of the wider macroeconomic backdrop. Recent final results confirm this operational formula is working, with pre-tax profits significantly ahead of market expectations.

Vanquis Banking Group (LSE: VANQ) is a cyclical recovery play. Formerly a FTSE 100 stock called Provident Financial, the lender shrank into a micro-cap minnow after major operational disasters. Management has finished cleaning up the wreckage, yet the market still prices the shares as if collapse is certain. Vanquis provides credit cards and vehicle finance to millions of sub-prime borrowers that mainstream banks ignore. Management targets mid-teens returns on tangible equity by 2027. If they deliver, the shares will be unbelievably cheap and a sharp market rerating should drive the share price up to reward investors who timed the recovery correctly. The bank operates as a far better business than its depressed price reflects.

Focusrite (LSE: TUNE) is a clear case of a former stockmarket darling caught at a cyclical low. The audio-products group enjoyed an unprecedented sales boom during the pandemic. However, as global demand normalised, the business wrestled with severe inventory overstocking and costly distribution headaches that clouded performance for several years. Recent trading updates indicate that these operational problems are finally clearing. Trading on a low multiple of its current depressed earnings, Focusrite offers massive upside. As underlying profits recover toward historic levels, this corporate recovery could trigger a rise to a much higher share price.

Marshalls (LSE: MSLH) serves as another example of a business hitting a cyclical low, operating as a highly respected supplier to the struggling UK building industry. High interest rates, inflation and uncertainty about policy have brought domestic construction to its knees, dragging the business down with it. This company once commanded a premium valuation as a well-known mid-cap, but it has now fallen into obscurity. The shares historically traded at a multiple to book value, yet they currently languish at a clear discount. When building activity inevitably recovers, Marshalls will benefit immensely, potentially driving a sharp recovery in its share price.

Capita (LSE: CPI) is another cyclical recovery play, a fallen angel offering massive potential for recovery. The outsourcing giant once sat in the FTSE 100 before a collapse dragged it down to micro-cap levels. New management has aggressively cleaned up the balance sheet, selling non-core software assets to eliminate debt. The business still generates more than £2.4 billion in annual revenues, yet trades at a deeply depressed valuation. This turnaround relies entirely on internal cost-cutting rather than macroeconomic growth. As administrative cost-cutting leaves more free cash in the bank, the shares could enjoy a substantial and justified market rerating.

Funding Circle (LSE: FCH) is an underappreciated growth story driven by massive operational gearing. The digital platform matches small business borrowers with institutional lenders. This matching model requires very few incremental cost rises to service new volume. This structural efficiency allows expanding revenues to drop straight to the bottom line. Pre-tax profits recently surged from £3.4 billion to £20.3 billion and are on track almost to double again to £35 million this year. The wider market remains blind to this compounding scaleability, mispricing a high-margin financial matchmaker as just another lender.

SDI Group (LSE: SDI) offers a double whammy by combining structural growth with a cyclical margin recovery. The company runs a highly disciplined buy-and-build strategy, acquiring niche scientific-instrument businesses that specialise in optics and photonics for laboratories. This consolidation model delivered excellent long-term returns until a recent downturn in its core scientific end markets depressed the group's earnings. This temporary pain leaves the shares trading at a very cheap valuation. As laboratory budgets normalise and operating margins recover, investors could capture the combination of compounding growth and an explosive rebound.

The best specialist funds in the sector

Picking individual micro-cap stocks requires patience and knowledge, and is certainly not for everyone. For investors who prefer to delegate the task, backing a specialist fund manager with a proven record is sensible. Two specific investment trusts have proved their ability to navigate these markets with skill. The lead manager of Rockwood Strategic (LSE: RKW), Richard Staveley, has more than 25 years of experience and runs a concentrated portfolio of undervalued businesses. He engages directly with boards to unlock value, a strategy that has delivered a stellar record. Staveley targets unloved, mispriced assets and drags them through a turnaround process until the wider market is forced to pay attention.

For those looking even further down the market scale, Onward Opportunities (LSE: ONWD) provides exposure to some of the smallest companies listed in the UK. Lead manager Laurence Hulse launched the trust in March 2023 on the Aim junior market and took it to the main market in April 2026. He deliberately operates in the smallest, most illiquid territory and his execution has been outstanding, delivering a very good performance since the trust's inception.

For those selecting individual stocks today, three of the stocks mentioned above look particularly interesting. Focusrite is a cyclical recovery play that has finally cleared some post-pandemic hurdles and positioned its manufacturing operations for a strong earnings recovery. Vanquis Banking Group remains absurdly mispriced, trading at a steep discount to its underlying net asset value while the market completely ignores its mid-teens profitability targets. And Software Circle provides an underappreciated growth story with a disciplined, decentralised model for integrating niche acquisitions efficiently. Investors who back these stocks will gain direct exposure to tangibly improving businesses.

For investors who prefer to delegate the stockpicking, Rockwood Strategic is the ideal vehicle. It has a long record of active engagement by the board and offers instant diversification across a concentrated basket of deeply undervalued turnaround plays.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.