It feels increasingly challenging to keep pace with today’s volatile news cycle. The year began with ongoing conflicts in Ukraine and Gaza, Donald Trump’s return to the White House, and the UK government struggling with its predecessors’ economic legacy following a consequential Autumn Budget. Unfortunately, the past quarter hasn’t delivered the improvements many hoped for.

The economic growth that underpins the Chancellor’s planning remains sluggish. At the same time, across the Atlantic, the Trump administration’s rapid implementation of federal cuts, tariffs, and territorial assertions has created significant international tension.

Tax year planning 2025

The potential ripple effects of US tariff disputes on the UK economy remain uncertain. However, forecasts suggest relative stability for our domestic economy this year, with inflation expected to hover near 2%. Nevertheless, as we transition into a new tax year, the government and taxpayers face persistent challenges.

In our Spring newsletter’s feature article, we explore upcoming changes for 2025/26 and recommend strategies to maximise early tax year planning benefits. Tax year planning 2025 – We assess whether you might be affected by frozen tax thresholds, set to remain unchanged for another three years, which have pushed increasing numbers of people into higher tax brackets. With potential modifications to how pension death benefits are treated for inheritance purposes, it’s worth reconsidering your retirement spending plans rather than reserving pension funds solely for inheritance.

Knowing your exact State Pension Age (SPA) is crucial for those approaching retirement. A recent survey revealed that an alarming proportion of 54-64 year-olds were unaware of when they would become eligible for their State pension. The State retirement age is transitioning to 67 over two years beginning April 2026, meaning your pension eligibility date will shift according to your birthdate during this period. Since the State pension forms a fundamental component of most retirement plans, ensure you know your eligibility date, particularly if it falls during this transition phase.

Upon retiring, you must determine how to utilise your pension pot and fund your living expenses. In the decade since pension flexibility was introduced, many individuals have opted to withdraw lump sums and take greater control over their pension disbursements. Although annuities declined in popularity, especially when return rates were low, they’ve become significantly more attractive over the past six months, offering improved returns and providing the regular income that many retirees seek for stability.

Please refer to our spring newsletter for further updates on these and other issues affecting your financial planning. We’ll be in touch again in June, when we should better understand how broader geopolitical developments impact the economic landscape.

Other stories in this edition include: 

• The case for early ISA investment – The usual end-of-tax-year rush to open ISA accounts was exacerbated by rumours that the government wants to cut the annual allowance. Still, it pays to invest early in the tax year, after carefully considering your options.

• Annuities lock in peace of mind –Changes to long-term interest rates and government plans to make pension death benefits subject to inheritance tax make buying an annuity increasingly attractive in 2025. 

• The lessons of March 2020 – Unexpected incidents, whether the Covid-19 pandemic or changes in circumstances unique to you or your family, teach us that having some basic plans in place, such as wills and rainy day savings, are extremely helpful when you need to respond to a crisis.

The impact on individuals and businesses will vary. To understand how these changes may affect your specific financial situation, it’s essential to seek professional advice.

Godiva Wealth Management is here to help. Our team of experts can provide tailored guidance and support to navigate the complexities of the new tax landscape. Contact us today to discuss your financial goals.

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