Just over three months after her lengthy Autumn Budget, chancellor Rachel Reeves has addressed the House of Commons and delivered the government’s 2026 Spring Statement.

Ahead of the Statement, Reeves reinforced the government’s commitment to “one fiscal event, one Budget, a year”. So, it will come as a relief to many, including business owners, that the Spring Statement included no additional tax-raising measures. Furthermore, no changes to pensions or Individual Savings Accounts (ISAs) were announced.

Reeves also said that household disposable income is set to grow at twice the rate that was forecast in the Autumn Budget – leaving the average person £1,000 better off each year by the next election.

That being said, previous announcements, including changes to the tax regime, remain in place, and may affect personal finances and business owners in 2026/27 and beyond.

Reeves gave an overview of the Office for Budget Responsibility’s (OBR) economic forecast for the years to come. Notably, the OBR’s forecasts and the Statement as a whole made no mention of the potential economic impact of the unfolding situation in the Middle East, which may contribute to increased oil and gas prices that could prove inflationary and cause stock market volatility.

The chancellor confirmed the changes announced in the 2024 and 2025 Budgets

In an effort to reduce speculation and prevent a chop-and-change approach, the chancellor confirmed that key tax measures, announced in the Autumn Budgets of 2024 and 2025, will remain in place.

Among the key changes that have been reconfirmed and will affect personal finances are:

• Inheritance Tax (IHT) will be levied on most unused pension benefits from April 2027. It’s estimated that this change will result in an additional 10,500 estates being liable for IHT in 2027/28. This will contribute to a predicted rise in IHT receipts to £15 billion by 2030.
• Tax on income earned from property will rise by two percentage points from April 2027, increasing tax liability for landlords.
• There will also be a two percentage point increase in the basic and higher rates of Dividend Tax from April 2026, which may affect business owners and investors.
• Key tax thresholds, including those for Income Tax and the IHT nil-rate bands, will remain frozen until April 2031.

The lack of any tax-raising measures in the Spring Statement will be welcome news for many people. However, the previously announced changes could mean a review would still be beneficial.

The Office for Budget Responsibility has updated its forecasts for GDP growth, inflation, and house prices

The OBR has updated its real-terms GDP forecast every year between 2026 and 2029 when compared to the estimates it made in the 2025 Autumn Budget. The organisation now expects the economy to grow by:

• 2026 – 1.1% (a decrease of 0.3%)
• 2027 – 1.6% (unchanged)
• 2028 – 1.6% (an increase of 0.1%)
• 2029 – 1.5% (unchanged)

The OBR expects inflation to be at or around the Bank of England’s (BoE) 2% target over the next five years. Inflation easing would improve household spending power, which, in turn, could provide a boost for the economy and businesses. Indeed, real household disposable income is expected to grow by between 0.6% and 0.9% each year until 2030.

The BoE has already cut its base interest rate several times since the current government formed in July 2024, as inflationary pressures eased. If the OBR’s forecast is accurate, the BoE is likely to make additional cuts, which would reduce the cost of borrowing for households and businesses.

The OBR expects unemployment to rise from 4.75% in 2025 to a peak of 5.33% in 2026, driven by weaker demand for labour. After peaking in 2026, unemployment is expected to fall to 4.1% in 2030.

It also forecasts that house prices will rise by between 2.4% and 2.9% each year between 2026 and 2030.

The government reinforced its ongoing commitment to two key fiscal rules

In her speech, the chancellor confirmed the two fiscal rules set out in the Budget:

• Stability rule – Not to borrow money to fund day-to-day public spending by the end of this parliament (2029/30).
• Investment rule – To reduce government debt as a share of national income by 2029/30.

Addressing the stability rule first, although the cost of borrowing has risen during this period of heightened uncertainty, the chancellor vowed that the steps taken in the Statement will restore its headroom.

Turning next to the investment rule, Reeves also stated that this commitment will be met two years early, with net financial debt predicted to be 82.9% of GDP in 2025/26.

4 key Spring Statement measures

1. Boosting defence spending

At a time of growing worldwide tension, the chancellor announced increases to defence spending, aimed at making the UK a “defence industrial superpower”. Defence spending is set to reach 3.5% of GDP by 2035.

Defence innovation will include harnessing AI and drones, creating employment opportunities for engineers in the devolved nations, while a previously announced Defence Growth Board is also being created to support £400 million for defence innovation.

2. Tackling youth unemployment

The chancellor reconfirmed her commitment to getting those in Britain who can work into work. She stated that 1 in 8 young people is currently not in employment, education, or training.

The chancellor confirmed that reforms to the welfare system will produce welfare savings of £4.8 billion between 2026 and the end of the forecast period (2029/30).

3. Increasing property revenue

Previously announced property planning reforms will go ahead.

The reforms are expected to increase real levels of GDP by 0.2%, the equivalent of £6.8 billion for the economy, by 2029/30. Over 10 years, this is expected to increase to 0.4% of GDP (£15 billion). Reeves said this represents the biggest growth forecast for a policy with no fiscal cost.

4. Making government more efficient

The abolition of NHS England was announced back in March 2025 as part of wider efforts to increase NHS efficiency and productivity, and to cut spending. These measures will also include reducing costly agency outsourcing.

More widely, Reeves confirmed the £3.25 billion of investment in a new “transformation fund” that will drive modernisation across the public sector through digital reform and the adoption of AI. It’s hoped that these changes will result in a “leaner” and more efficient public sector.

After announcing a raft of changes in the Autumn Budget, the Spring Statement acts as a fiscal pitstop, upholding the government’s commitment to one significant fiscal event a year.

Please note

All information is from the chancellor’s speech, the gov.uk website, the Spring Statement press release and the Autumn Budget documents published by HM Treasury.

The content of this Spring Statement summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.

While we believe this interpretation to be correct, it cannot be guaranteed, and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement. 

The Financial Conduct Authority does not regulate tax planning.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

On 5 April 2026, the current tax year will end, and the new one will start the following day. Making a note of the deadline in your calendar could help you make the most of tax breaks as part of your financial plan.

Here’s why the start of a new tax year might matter to you.

1. 5 April 2026 may be your last opportunity to use 2025/26 allowances

When a tax year ends, many allowances reset. Consequently, the coming weeks might be your last chance to use some of them.

For example, you can add up to £20,000 into ISAs in 2025/26. ISAs provide a tax-efficient way to save or invest, which might reduce your overall tax liability. You cannot carry forward your unused ISA allowance, so 5 April 2026 might be your last opportunity to use the 2025/26 allowance.

In some cases, you are able to carry forward unused allowances, but they still have a date by which you must use them.

The annual exemption allows you to pass on up to £3,000 without worrying that it may be included in your estate when calculating Inheritance Tax (IHT). So, if your estate could be liable for IHT, it may provide a valuable way to pass on some of your wealth now.

You can carry forward any unused allowance for one tax year. As a result, this may be your last chance to use your 2024/25 allowance if you haven’t already done so.

Arranging a meeting with your financial planner can help you understand how you’ve used allowances and exemptions so far this year. It could also identify other opportunities that may make sense as part of your wider financial plan.

2. You can make a tax-efficient strategy for 2026/27

Planning how you’ll use allowances and exemptions throughout the year, rather than waiting until the deadline approaches, might be useful.

The pension Annual Allowance is the maximum amount you can contribute to your pension during the tax year while still receiving tax relief without incurring an additional charge. It covers contributions made by you, your employer, and any third parties. You can only claim tax relief up to 100% of your annual earnings.

For the 2026/27 tax year, the pension Annual Allowance is £60,000 for most people.

Deciding how much you want to contribute in 2026/27, and making monthly contributions, could be easier to manage than discovering a shortfall at the end of the tax year and needing to contribute an additional lump sum.

It’s also important to note that some allowances and tax rates will change in the new tax year.

For instance, from 6 April 2026, the basic and higher rates of Dividend Tax will both increase by two percentage points, which may affect business owners and investors. Being aware of these changes could influence the financial decisions you make now.

In some cases, you might benefit from looking even further ahead.

The ISA allowance is set to change for under-65s on 6 April 2027. While adults will still have a £20,000 ISA allowance, only £12,000 can be placed in a Cash ISA each tax year, with the remaining £8,000 reserved for investments. You’ll still be able to contribute the full ISA allowance into an investment account if you choose to.

With this in mind, you might change how you use your ISA allowance in 2026/27.

Contact us if you have questions about your tax strategy

It can be difficult to keep up with tax changes and understand what they mean for you. If you have any questions about your tax strategy for the current tax year and beyond, please get in touch. We can help you make the most of allowances and exemptions to improve your tax efficiency.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning.

Cryptoassets are not regulated financial products so please be aware that trading them carries a considerable amount of risk for your capital. Cryptocurrencies are also not covered by existing consumer protection laws and are not suitable for the majority of investors.

Cryptocurrency has become a common investment for people in recent years. Indeed, more people are choosing to invest in digital currencies such as Bitcoin and Ethereum.

The Financial Conduct Authority (16 December 2025) reports that roughly 8% of the UK’s population were cryptoasset owners in 2025.

However, with this rise in crypto interest comes more risk. Scammers have been developing increasingly sophisticated ways to exploit a lack of familiarity with how cryptocurrencies work.

According to the Guardian (24 October 2025), the amount lost to investment scams in the UK increased by 55% in 2025, with fake cryptocurrency schemes topping the list. Worryingly, losses to investment scams reached £97.7 million during the first six months of 2025 – more than £500,000 each day.

It’s vital to remember that cryptocurrencies are risky and tend to be volatile, meaning they aren’t suitable for everyone. Still, if you’re considering investing in cryptocurrency, understanding the difference between a scam and a real opportunity could protect your wealth.

Here are six of the most common ways fraudsters might take advantage of the hype around crypto and attempt to lure you in.

1. Enticing you with social media adverts and fake endorsements

Social media has become one of the main tools fraudsters will use to commit cryptocurrency crimes.

Scammers will often use professional-looking adverts on platforms such as Instagram or YouTube to promote investment opportunities.

Some adverts feature fake celebrity endorsements, or even “deepfakes” – which are AI-generated videos that impersonate real people – to show well-known figures supporting a cryptocurrency.

These clips are usually very convincing, and even experienced crypto investors can be fooled.

In reality, the celebrities in the videos often have absolutely no involvement in any investment opportunities related to the currency. Regardless, these deepfakes often succeed in instilling trust and getting social media users to hand over personal details.

Fraudsters also use social media adverts to entice their victims. With them, they often downplay the risks or make it seem like everyone is investing in crypto.

2. Building confidence with small early “profits”

Scammers will also attempt to persuade you to make smaller initial investments to draw you in.

Scammers won’t always ask you for a large investment straight away. Instead, they could attempt to gain your trust by suggesting smaller investments to begin with.

Yet, once you’ve done so, they will then try to show that you’ve already turned a “profit”.

Of course, watching your investments rise in value can make any scam seem authentic. You may even decide to contribute more to the scam.

Then, when you attempt to withdraw funds, scammers might discourage you by imposing additional fees. Or, in the worst-case scenario, disappear altogether with your money.

3. Creating a false sense of urgency

Many scams, including those involving cryptocurrency, rely on pressuring you to act quickly.

You may be told that an opportunity will be available for only a short period, or that the market is about to rise significantly. This could prompt you to act now to secure any returns.

However, these pressure tactics are designed to prevent you from stopping, thinking, or even seeking professional advice.

You should remember that genuine investments typically don’t require instant decisions, and being rushed is usually a red flag that you’re walking into a scam.

4. Using overly complex explanations

It’s worth noting that cryptocurrency is new, highly technical, and often unfamiliar to even the most experienced investor. Unfortunately, scammers can use this to their advantage.

Scammers may use confusing jargon, complex charts, or technical explanations to discourage you from asking questions, all while creating the impression that they’re experts.

If you don’t fully understand an investment, it’s essential to pause and think. Legitimate providers should always be able to explain how everything works and the risks involved.

5. Being asked to keep an investment a secret

You may find that fraudsters will tell you not to discuss any investment opportunities with your friends, family, or advisers.

They may even warn you that sharing any details could affect your returns, or that other people won’t understand the opportunity.

This makes it far easier for scammers to manipulate any future decisions you might make, and harder for your support network to raise any concerns.

6. Using fake cryptocurrency wallets or websites

Fraudsters often create fake wallets or websites that might seem like legitimate platforms on the surface.

You could be directed to download an unusual mobile app or visit a website that seems professional.

In reality, these fake platforms can steal your login details, giving scammers access to your financial information.

Then, with this information, the fraudsters could compromise other assets, such as your bank or investment accounts.

Scammers might also offer seemingly legitimate tools you can use for tracking or trading digital currency, only to misappropriate any funds you transfer to them.

As such, it’s important to carefully check any URLs and verify any downloads with the proper provider.

Contact us

It’s always worth speaking to a trusted professional before you make high-risk investment decisions. Please contact us today to find out how we can help.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Cryptoassets are not regulated financial products so please be aware that trading them carries a considerable amount of risk for your capital. Cryptocurrencies are also not covered by existing consumer protection laws and are not suitable for the majority of investors.

Geopolitical tensions and threats of trade tariffs continued to impact global investment markets at the start of 2026. Read on to find out what factors may have affected your investments at the start of 2026.

Markets experienced highs, but geopolitical tensions continue to cause volatility

On 2 January, the first day of trading in 2026, the FTSE 100 – an index of the largest 100 companies listed on the London Stock Exchange – hit a new high and exceeded 10,000 points for the first time, getting the year off to a good start for investors.

On 5 January, headlines about the US’s strike on Venezuela and the capture of the country’s president, Nicolás Maduro, affected markets.

Some investors sought “safe” assets, which led to gold rising by more than 2%, while defence stocks in Europe climbed. In addition, shares in US oil companies jumped, including Chevron (4.4%) and ExxonMobil (2%).

There was good news from UK retailer Next on 6 January. The company beat expectations over the Christmas period, with sales £51 million higher than anticipated. The 2.8% boost in its stock value led to the firm becoming the top riser on the FTSE 100.

The UK’s FTSE 100 wasn’t the only index to perform well at the start of January. The German index DAX hit 25,000 points for the first time on 7 January.

However, rising geopolitical tensions between the US and Europe led to European markets opening in the red on 8 January and losses across the Asia-Pacific region earlier in the day. The fall occurred following meetings between the US and Denmark about the future of Greenland, over which US President Donald Trump has said he wants control.

News of a potential deal between mining giants Rio Tinto and Glencore sent ripples through the London stock market on 9 January. Glencore, which would likely be acquired if a deal went through, saw shares increase by 8%. Meanwhile, Rio Tinto, the likely buyer, saw shares fall by 2.6%.

Trade tariffs and threats of them affected markets throughout 2025, and this trend looks set to continue into 2026.

On 13 January, Trump threatened countries doing business with Iran with a 25% tariff as Iranian authorities cracked down on nationwide protests. Among the top export destinations for Iranian goods are China, the UAE, and India.

The following day, Trump announced further plans to impose new 10% trade levies on goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland from 1 February, which would rise to 25% on 1 June. The president said the tariffs would remain in place until the countries supported his goal to acquire Greenland.

The news led to markets falling in Europe when they opened, including the UK’s FTSE 100 (-0.48%), France’s CAC (-2.1%), and Germany’s DAX (-1.35%). Among the sectors hit hardest were European car manufacturers, such as Mercedes-Benz (-6%), BMW (-4.8%), and Volkswagen (-3.5%).

In contrast, defence stocks, such as Germany’s Rheinmetall (3%), the UK’s BAE Systems (2%), and Italy’s Leonardo (3%), were up.

US markets were closed on 14 January to mark Martin Luther King Day, but the Dow Jones dropped by 1.4% when markets reopened on 15 January. Similarly, the S&P 500 and technology-focused index, the Nasdaq, both fell around 1.6%.

After days of uncertainty, Trump pledged not to use force to take control of Greenland on 21 January, and dropped the threat of tariffs, which calmed the markets.

UK

In the 12 months to December 2025, UK inflation increased to 3.4%, which may affect the Bank of England’s decision on whether to lower interest rates in the coming months.

Data from the Office for National Statistics shows the UK economy expanded by 0.3% in November, which was better than economists expected. In addition, figures were revised upwards from -0.1% to 0.1% for September.

Insight from S&P Global’s Purchasing Managers’ Index (PMI) was also positive. UK factories grew at their fastest pace in 15 months in December. Rob Dobson, director at S&P Global Market Intelligence, said the delivery of the government’s Budget in November had helped to end uncertainty that was affecting businesses.

Europe

Data from the European Central Bank shows eurozone inflation dropped to 1.9% in the 12 months to December 2025, just below the bank’s 2% target.

S&P PMI data for the eurozone showed the pace of growth slowed in December, but the bloc still posted its strongest quarterly performance in two and a half years. The economy has now grown for seven consecutive months, and S&P Global said the overall “picture looks good”.

US

US inflation remained unchanged at 2.7% in the 12 months to December 2025.

Figures released in January 2026 show the US trade deficit shrank in October, thanks to a jump in exports and a fall in imports. According to the US Census Bureau, the deficit fell to $29.4 billion (£21.5 billion). That marks a fall of 39% when compared to a month earlier and is the lowest trade deficit recorded since 2009.

While seemingly good news for the US economy, Bloomberg noted there have been larger monthly swings than usual due to the implementation of tariffs.

Updated official figures suggest many more jobs were lost in October than were first estimated. Data now indicates that jobs fell by 173,000, compared to the initial estimate of 105,000. Job losses may suggest a lack of confidence among businesses.

US company Alphabet, the parent company of Google, reached a valuation of $4 trillion (£2.92 trillion) for the first time on 12 January. The news followed a report that Apple had chosen Google’s Gemini as the foundation for its AI model in the future, leading to a boost in its share price.

Asia

Japanese stocks made their strongest start to a year in several decades.

The Topix index and the Nikkei 225 increased by 3.8% and 4.3%, respectively, during the first two days of trading. According to Bloomberg, that’s the strongest start to a new year since at least 1990. The rise is linked to a new prime minister, who, it is hoped, will embrace looser fiscal policy to stimulate the economy. 

There was also good news for Chinese car company BYD. The firm officially overtook Tesla as the top seller of electric cars in the world. In 2025, BYD delivered 2.26 million electric cars, up by 28% when compared to 2024 following aggressive expansion into the European market.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Financial literacy was first introduced into the national curriculum back in 2014, aimed at children aged between 11 and 16.

However, the delivery was inconsistent, as the requirement wasn’t mandatory across all schools.

Now, as part of a curriculum assessment, a stronger approach to financial literacy lessons is being adopted. From 2028, this education will be mandatory in primary schools, reinforced at secondary level, and recommended in post-16 education.

Read on to find out more about the new proposals, what parents can do to support financial literacy in children, and why it’s so important for young people to have a wider financial knowledge.

Boosting children’s financial literacy can benefit both them and the wider economy

Financial education in the national curriculum covers core concepts such as budgeting, debt, interest, mortgages, and pensions, as well as exploring how mathematical concepts can be applied in real-world scenarios.

The government recognised the need to instil these skills and knowledge from an early age, including financial education on the curriculum for the first time in 2014.

However, this was shown to be patchy in delivery, with the Curriculum Assessment Review (10 November 2025) finding that only a third of children were able to recall learning about money in school.

The report also cites research that greater financial literacy could boost the UK economy by £7 billion each year by increasing entrepreneurship and business formation.

Children themselves are keen to learn more about finances, with the Young Person’s Money Index (1 August 2024) 2023/24 finding:

• 81% of young people worry about money
• 85% would like to improve their financial situation
• 82% want to learn more about money and finance in school.

The new proposals will operate at three levels of education: primary, secondary, and post-16. Here’s how this education could impact at different levels, and practical things parents can do to support this learning.

Primary school: mandatory

This is the time when money habits are established in children. At this age, they can begin to understand the difference between essentials and luxuries, and why they might choose to save.

Education at this stage is helpful to enable children to:

• Start to develop key life skills, such as problem-solving and critical thinking
• Form good habits, like saving and responsible spending
• Gain confidence in making decisions and talking about money.

Parents can support financial literacy lessons by encouraging more independence at home. For example, by giving your child a set amount of pocket money each week or month and allowing them to choose how to spend it.

This can also be a good age to introduce the concept of waiting for something they really want, and realising that if they save for one item, it will mean not spending on another.

Secondary school: reinforced

Learning at senior school level can build on the foundations laid in primary school, helping children to grasp more complicated topics, such as the effects of compounding, how a mortgage works, and when they might choose to use a credit card.

At this stage, children can start to:

• Understand the concept of budgeting and informed spending
• Learn how to prevent future debt
• Become aware of fraud, financial scams, and online risk.

This is a good age to open a bank account for your children, if they don’t yet have one, to show them how interest works in real life.

If it’s possible, it can also be a good time to talk to them about how investing works, and you could open a Junior ISA (JISA). These can be opened for children under 18 by a parent/guardian, and you can pay in up to £9,000 a year (in 2025/26).

Interest on a JISA is free from Income Tax and Capital Gains Tax (CGT). Your child won’t be able to access the money until they turn 18, when the JISA automatically becomes an adult ISA.

This can introduce them to the concept of thinking about different ways to save their money, rather than using cash savings as the standard option.

Post-16 education: recommended

At this point, teenagers will be thinking about their future and possibly taking out a student loan or saving up for big-ticket items.

As they make their transition into adulthood, this is a good time for them to:

• Learn more about their own personal approach to finances
• Discover the employability benefits of being financially literate
• Understand how they can contribute to the economy.

At this age, teens are often keen to save up for bigger items, such as driving lessons. They may also be working part-time, which can aid their understanding of tax and National Insurance (NI).

Now is a good time to talk about social media, as research from Santander (8 January 2025) shows that almost a third of young people turn to it for financial advice, with 25% of those relying on TikTok. Many of these “finfluencers” lack any formal training, and their advice, however well-intended, isn’t tailored towards individual circumstances.

Having conversations about the value of independent professional financial advice can help your teens to reduce their reliance on unverified sources of advice.

Get in touch

Financial literacy is important at every age. If there’s ever anything you’d like to know more about or would like clarified, please get in touch, and we’ll be happy to help.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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If you’re saving for retirement, you will want to get the most out of what you’re putting into your workplace or private pension.

Fortunately, there are plenty of tax efficiencies when you save your wealth into a pension.

Indeed, any investment returns generated within your fund are typically free from Income Tax and Capital Gains Tax.

Better yet, you can also receive tax relief on your contributions, significantly bolstering the value of your pot over time.

Despite these advantages, many people overlook one of the most valuable benefits pensions offer.

Research from PensionsAge (8 December 2025) found that 44% of UK adults don’t know what pension tax relief is, while just 31% could identify its purpose.

Over time, missing out on pension tax relief could be costly. So, continue reading to find out how pension tax relief works and how it could significantly improve your retirement income.

Pension tax relief is when the government tops up your contributions

When you pay into a pension, the government essentially “tops up” these contributions based on your marginal rate of Income Tax. Looking at it another way, tax relief acts as a “refund” of the Income Tax you have already paid on the money you put in your pot.

As a result, in England, Wales, and Northern Ireland, a £100 payment into your pension would typically cost:

• £80 if you pay basic-rate Income Tax
• £60 if you pay higher-rate Income Tax
• £55 if you pay additional-rate Income Tax.

Please note, Income Tax bands and rates are different in Scotland, which affects pension tax relief.

For most personal pensions, basic-rate tax relief is applied automatically using a system known as “relief at source”. Some schemes use net pay arrangements, where tax relief is applied differently (this article talks about relief at source only).

If you pay higher- or additional-rate tax, you’re usually entitled to relief at your marginal rate. However, this portion isn’t added automatically. Instead, you usually need to claim it through your self-assessment tax return or by directly contacting HMRC.

Many people forget to do this. Standard Life (24 February 2025) estimates that up to £1.3 billion of extra relief went unclaimed between the 2016/17 and 2020/21 tax years.

This can make a considerable difference:

• A £1,250 total pension contribution would cost a basic-rate taxpayer £1,000, as £250 is added by HMRC.
• For a higher-rate taxpayer, the same total contribution would only cost £750 once the extra relief is claimed.

As such, ensuring you claim everything you are entitled to could substantially increase the amount of money you can put towards retirement.

If you believe you have missed out in the past, it’s worth noting that it is possible to backdate your tax relief claims for up to four tax years.

There are limits to the amount you can tax-efficiently contribute to your pension

While the incentives of tax relief are generous, there are limits on how much you can pay into your pension each year tax-efficiently.

You can receive tax relief on any pension contributions worth up to 100% of your earnings for that tax year. But if you surpass the Annual Allowance, your contributions could face a tax charge.

The Annual Allowance sets the maximum amount that can be contributed across all your pensions in a single tax year without incurring a tax charge.

As of 2025/26, this is £60,000. While the Annual Allowance does reset each year, you may be able to carry forward unused allowances from the previous three tax years, provided you were still a member of a pension at the time. You also need to use all of the current year’s allowance before you can carry forward.

It’s vital to note that if you have a high income, you may face the Tapered Annual Allowance.

In 2025/26, this means that when your income exceeds £200,000, and your adjusted income (which includes your pension contributions) is above £260,000, the Annual Allowance falls by £1 for every £2 earned above that level. Just remember that the minimum it can fall to is £10,000.

What’s more, if you’ve already started accessing your pension wealth, you may have triggered the Money Purchase Annual Allowance.

This typically reduces the amount you can tax-efficiently contribute to your pension to £10,000 each year.

Compounding returns over time can make pension tax relief even more attractive

One of the most practical aspects of tax relief is that it’s added straight to your pension, where it is usually invested on your behalf by your provider.

Any growth is reinvested, allowing your savings to benefit from “compounding”. This is the “growth on growth” effect that further boosts your returns over a longer period of time.

Standard Life (21 August 2025) gives an example of how beneficial this can be.

If you contributed £200 to your pension each month from age 25 to 65, and your investments grew at an average rate of 5% each year, your pot could be worth around:

• £29,400 after 10 years
• £73,000 after 20 years
• £232,000 after 40 years.

While you might imagine that your pot would grow from £73,000 after 20 years to £146,000 after 40 years, it would actually increase in value significantly more. This is thanks to compounding returns and long-term growth.

As such, making regular payments, starting early, and making full use of tax relief can all improve your financial security later in life.

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We can help ensure you’re claiming all the pension tax relief you’re entitled to, helping you secure peace of mind for your retirement. Please get in touch to arrange a meeting.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance. 

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Workplace pensions are regulated by The Pensions Regulator.

The Financial Conduct Authority does not regulate tax planning.