What makes an Olympian? Natural talent or the hours put into training might be the first things that come to mind. However, their approach and mindset play an important role in their achievements too.

An athlete’s mentality will have a huge effect on how they pursue goals and their ability to perform well when it matters most. Getting in the right frame of mind for success could mean the difference between making the Olympic team and missing out.

With Paris hosting the Olympics in 2024, now is the perfect time to look at what you could learn from Olympians when it comes to managing your finances effectively, such as:

• Being goal-oriented
• Breaking down your performance
• Keeping your emotions in check
• Working with professionals.

Download your copy of ‘How an Olympic mindset could help you manage your finances effectively’ to discover how you could benefit from adopting an Olympic mindset.

If you’d like to talk to us about your financial plan, please get in touch.

In a decisive and historic victory, the Labour Party won the 2024 UK general election with a significant majority and Keir Starmer has become the UK prime minister after 14 years of Conservative government.

The new chancellor, Rachel Reeves, has already pledged to “fix the foundations” of the British economy in a bid to drive growth.

Read on to find out what a Labour government could mean for your finances.

National Insurance, Value Added Tax (VAT), and Income Tax set to remain the same

In their 2024 manifesto, Labour said they would not “increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT”.

Despite this, millions of people seem likely to face a higher Income Tax burden over the next five years as a result of fiscal drag. The party are set to continue the Conservatives’ freeze of the Personal Allowance and the thresholds at which higher- and additional-rate Income Tax are charged.

Notably, the party has offered no assurances about Stamp Duty, Capital Gains Tax (CGT) and Inheritance Tax, other than ruling out applying CGT to primary residences. Consequently, there is the potential for reforms or tweaks to these in the administration’s first Budget.

Indeed, Keir Starmer has already indicated that he will let the temporary increase in the Stamp Duty threshold for first-time buyers return to its previous level of £300,000 in April 2025 (it is currently £425,000).

What Labour are likely to do in the first Budget is to address what it calls “unfairness” in the tax system, and these could be some of the measures Rachel Reeves presents:

• Abolishing non-dom status and replacing it with a modern scheme for people genuinely in the country for a short period.
• Ending the use of offshore trusts to avoid IHT.
• Ending private schools’ VAT exemption and business rate relief. They plan to use this additional tax revenue to train more teachers, citing an estimated shortage of 6,000.

With Labour keen to increase investment in the UK economy, Jeremy Hunt’s proposal for a “UK Individual Savings Account (ISA)” could potentially make an appearance in the Budget too.

Maintaining the State Pension triple lock, and a likely “pensions review”

Labour has committed to keeping the State Pension triple lock in place.

The triple lock ensures that the State Pension rises each year by the highest of:

• Inflation, as measured by the Consumer Prices Index (CPI) in the September of the previous year
• Average increase in wages across the UK
• 2.5%.

The commitment means that the policy is likely to stay in place until at least 2030 at least.

During the election campaign, Labour also confirmed that, in a change from their previous stance, they have no plans to reintroduce the pension Lifetime Allowance (LTA).

The LTA capped the amount you could hold in your pensions without paying an additional tax charge when you accessed the funds. Chancellor Jeremy Hunt removed the additional LTA tax charge in April 2023, before abolishing the LTA altogether in April 2024.

Labour has said it will not reintroduce the charge to provide certainty for savers, and because they say it would be too complex to bring back the former rules.

On private pensions, the party has been more vague, promising reform after a review is conducted into the current system. Labour could well announce this review in the next few weeks – perhaps even in the first King’s Speech.

While Labour hasn’t outlined a detailed vision for change, its manifesto said the new system would be centred around delivering “better outcomes” for savers and retirees, as well as bolstering “security in retirement”.

This means there could be reforms further down the line, although these are unlikely to take place before the start of the 2025/26 tax year at the earliest, depending on the scope of the review.

Labour have said that they will act to increase investment from pension funds in UK markets.

The party plans to adopt reforms that “will ensure that workplace pension schemes take advantage of consolidation and scale, to deliver better returns for UK savers and greater productive investment for UK PLC”.

Interest rates set to fall, and ambitious housebuilding targets

One piece of good fortune the new Labour government will benefit from is that there will likely be a cut in interest rates within their first few weeks of office.

With inflation having finally reached the Bank of England (BoE) target of 2%, the BoE is predicted to cut interest rates at its next policy meeting in August. That will likely reduce the cost of your personal and business borrowing if you’re on a tracker- or variable-rate deal.

While you won’t immediately benefit from any cut if you’re on a fixed-rate mortgage, this could help you secure a cheaper deal when you come to next take out a home loan.

To tackle a property shortage, Labour has pledged to ensure that 1.5 million homes are built over the next five years.

The party wants to allow local authorities to earmark more green belt land for homes, while other planning policies the new government have outlined include:

• Reintroducing mandatory local housing targets scrapped by the Conservatives
• Funding additional council planning officers
• Reviewing green belt boundaries to prioritise brownfield and “grey belt” land to meet housebuilding targets
• Publishing new design codes, to try to raise the quality of the properties built.

One key pillar of the Labour manifesto was to help more young people onto the property ladder.

They say that they want to “give young people first dibs” on new housing developments and introduce a permanent Freedom to Buy mortgage guarantee scheme.

This permanent mortgage guarantee scheme will help prospective homeowners who struggle to save for a large deposit. Labour says their plans would support 80,000 young people to get on the housing ladder over the next five years.

Enhancing employee rights and the minimum wage could affect your business

If you own or run a business, Labour has confirmed a “new deal for working people” and says it will introduce legislation within the first 100 days of office. These plans include:

• Banning zero-hours contracts
• Ending “fire and rehire”
• Introducing parental leave, sick pay, and unfair dismissal rights from day one.

Labour also intends to reform the minimum wage, so it becomes a “genuine living wage”. Additionally, they plan to remove the age bands, so every adult is entitled to the same rate of minimum wage – potentially pushing up your salary costs if you employ under 21-year-olds. Note that there has been no clarification on whether an “adult” includes over-16s or over-18s.

An Autumn Budget?

The first significant date in the new government’s calendar will be the King’s Speech on 17 July. This will set out the next government’s legislative agenda and is when you’ll find out exactly what the new administration’s policy priorities are for the coming year.

Labour has previously said it would not deliver a Budget without forecasts from the Office for Budget Responsibility (OBR). Considering that it takes around 10 weeks for the OBR to assess the economic impact of policy announcements and produce a report, the earliest that the Budget could take place would be mid-September.

However, the Labour Party Conference will take place from 22 to 25 September, with the Conservative conference following between 29 September and 2 October.

Consequently, an October or November date is perhaps more realistic for the party’s first Budget. Rachel Reeves has confirmed she will set the date before the summer parliamentary recess.

Labour has also committed to one major fiscal event a year, giving families and businesses due warning of tax and spending policies.

It seems likely that, whatever reforms the party announce in their Autumn Budget, the timetable means that these will come into force at the start of the 2025/26 tax year. This should give you the opportunity to plan ahead of any proposed changes.

Markets have historically reacted positively to a change of government

With the likely result of the election already priced into markets, there was little movement in the FTSE 100 as news of Labour’s victory filtered through. The pound was largely unchanged against the dollar.

However, research by AJ Bell suggests that a change of government can be positive news for markets.

On average, the FTSE All-Share has recorded a double-digit percentage gain in the first year after an election result where one prime minister is ejected from office. There are also greater average gains when a government changes relative to when it remains the same.

Markets tend to dislike uncertainty, so a decisive election result could lead to a period of financial stability that may spark renewed investor interest in the UK.

Moreover, if Labour’s pension review leads to greater investment in UK companies, this could further enhance the attractiveness of UK equities.

Get in touch

If you have any questions about how the Labour administration could affect your finances, please get in touch.

The content of this article 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.

Information is taken from the Labour Party manifesto.

As a parent or grandparent, you want the young children in your life to grow up to be happy and successful adults. A solid grasp of finances could set them off on the right track when they get older, but alarmingly, many children don’t receive any lessons on the subject during their formal education.

A Nationwide survey found that 84% of parents say their children haven’t received any financial education at school despite 96% believing it’s important for young people to learn about money.

In light of data such as this, it might be prudent to take on some of the responsibility and start educating your children or grandchildren about personal finances yourself.

Making the experience as enjoyable as possible could help to engage kids in money conversations. So, read on for three fun ways to pass on essential finance lessons to children as they grow up.

1. Use games to teach kids about money in an interactive way

According to a report from UNICEF, play is one of the most important ways in which young children gain essential knowledge and skills. So, integrating financial lessons into playtime through games could be an effective way to teach them about money. 

Games let kids role-play everyday financial scenarios and learn money fundamentals without any risk. 

There are several fun games you can play with young children using items you have at home:

• The desert island game – get your children or grandchildren to imagine they’re stranded on a desert island and can only bring six items. Through discussing their options, they’ll soon realise it’s sensible to prioritise essentials over fun items when they have limited choice, giving them an introduction to the basics of budgeting.

• Setting up shop – encourage your child to set up a shop selling household objects. Can they set accurate prices and give correct change? Next, flip the game and let them be the customer. Can they buy everything they need without going over budget?

Alternatively, there’s a plethora of fun financial board games you can buy for kids of all ages:

• Money Bags – in this game for ages five and above, players learn to recognise coins and develop their maths skills by completing chores and earning money as they move around the board.

• Pay Day – suitable for children aged eight and older, Pay Day simulates something most people are familiar with – the monthly payday cycle. Players must ensure their pay packet lasts the month and whoever has the most at the end of day 31 wins.

• The Game of Life – this classic board game takes players through an entire lifetime. It can teach children the financial implications of saving, further education, retiring and more, all in a family-friendly package.

The best money games reward kids for making decisions that would also benefit them in the real world, teaching them valuable lessons in a fun, interactive way. Playing these games is also a lovely chance for quality time together, so it’s a win-win all around.

2. Let them be in charge of money on a day out

As your children or grandchildren grow up, it’s important that they begin to understand the value of money.

While you will no doubt enjoy treating your loved ones, it can be hard for children to grasp how far money goes when adults buy things for them. Finding interesting ways for youngsters to practise spending money helps them understand exactly how much items and activities cost. 

One fun way to do this is to let them be in charge of the family budget on a day out.

For example, say you’re visiting a castle. Before you arrive, give them £100 and explain that this money must pay for everything you do that day.

When you arrive, they’ll have to pay for entry. This might leave them with, say, £50.

After exploring the castle, your child might be tempted to buy something from the gift shop. However, if they buy a toy or book, they might not have enough money to pay for lunch.

They’ll need to carefully consider what’s more important. Hopefully, they’ll realise that food takes priority over souvenirs. If not, they’ll have to face the consequences of their actions and skip lunch.

Perhaps it would be wise to have backup sandwiches in the car to avoid any tantrums on the way home!

3. Books are a fun way to learn for kids of all ages

If your grandchild loves story time, or your bleary-eyed teenager stays up reading until the early hours, you could introduce them to books about money.

You might think personal finance is too dry a topic for children’s literature, but there’s an excellent range of entertaining books on the subject for children of all ages.

The Four Money Bears by Mac Gardner is a wonderful option for younger children. 

Through beautiful illustrations and accessible storytelling, Gardner uses the tale of Spender Bear, Saver Bear, Investor Bear, and Giver Bear to teach kids about the functions of money and instil lessons such as spending cautiously, saving diligently, investing wisely, and giving generously.

For kids aged 8 to 12, Finance 101 for Kids: Money Lessons Children Cannot Afford to Miss by Walter Andal is a fun-to-read crash course on essential topics like earning, saving, investing, and credit. It even touches on more advanced subjects like the stock market, foreign exchanges, and basic economics.

Reality TV-loving teenagers might enjoy Deborah Meaden Talks Money. This insightful book from entrepreneur and TV personality Deborah Meaden features podcast-style interviews with stars including Gary Neville, Sophie Ellis-Bextor, and Joe Lycett. It’s designed to demystify the world of finance and help your children build good money habits in an exciting, relatable way.

Teaching your children and grandchildren about money may seem like a challenge now, but when they reach adulthood, all your patience and effort should pay off. You never know, you may even get a belated thank you! 

Contact us to support your children in other ways

Sharing financial knowledge with children is important, but there are other ways you can support their financial future.

We can help you craft a financial plan that supports your children or grandchildren, laying the foundations for the next generation. Contact us to arrange a meeting.

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The tapering of the Personal Allowance means some higher-rate taxpayers effectively pay an Income Tax rate of 60%, sometimes without realising. Fortunately, if you’re affected, there could be ways to reduce your tax bill. 

A report in the Telegraph suggests 1.35 million workers were affected by the 60% tax trap in 2023/24. Collectively, they paid an extra £4.7 billion to the Treasury. Read on to find out if you could unwittingly be paying a higher rate of Income Tax than you expect. 

The tax trap affects those earning more than £100,000

You might think the highest rate of Income Tax is 45%, and officially you’d be correct. Most people pay the standard rates of Income Tax. In 2024/25, Income Tax rates and bands are: 

Please note, that different Income Tax bands and rates apply in Scotland. 

However, the Personal Allowance is reduced by £1 for every £2 you earn over £100,000. If you earn more than £125,140, you don’t have a Personal Allowance and pay tax on all your income. 

For example, if you earn £101,000, on the £1,000 above the threshold, you’d pay £400 of Income Tax at the higher rate. In addition, you’d lose £500 of your Personal Allowance, so this portion of your income would also be subject to Income Tax at 40%, adding up to £200. 

So, out of the £1,000 you’ve earned above the tapered Personal Allowance threshold, you’d only take home £400 – a 60% effective tax rate. It’s led to the tapering being dubbed a “stealth tax” in the media. 

Further compounding the issue is the fact that the Personal Allowance and Income Tax bands are frozen until 2028. 

While the thresholds are frozen, many people are likely to receive wage increases. As a result, more people are expected to be caught in the 60% tax trap in the coming years. 

Don’t forget your salary might not be your only income that’s considered when calculating your Income Tax bill. For example, you could be liable for interest earned on savings that aren’t held in a tax-efficient wrapper. 

Contact us if you’re unsure which of your assets could be liable for Income Tax. 

3 legal ways to avoid falling into the 60% tax trap

If you’re affected by the tapered Personal Allowance, thinking about how you structure your earnings may provide an opportunity to reduce how much you’re giving to the taxman. Here are three excellent options you might want to consider. 

1. Boost your pension contributions 

One of the simplest ways to avoid paying 60% tax if you could be affected is to increase your pension contributions.

Your taxable income is calculated after pension contributions have been deducted. As a result, boosting pension contributions could be used to reduce your adjusted net income so you retain the full Personal Allowance or reduce the proportion you lose.

Increasing pension contributions could help you secure a more comfortable retirement too. However, keep in mind that you cannot usually access your pension savings until you’re 55 (rising to 57 in 2028). 

2. Use a salary sacrifice scheme

If your workplace has a salary sacrifice scheme, it could also provide a useful way to reduce your overall tax liability. 

Salary sacrifice enables you to exchange a part of your salary for non-cash benefits from your employer. This could include higher pension contributions, childcare vouchers, or the ability to lease a car. 

By essentially giving up part of your income, you might be able to bring your taxable income below the threshold for the tapered Personal Allowance. 

You should note that salary sacrifice options vary between employers, so it may be worthwhile to check your employee handbook to see if any options could suit you.  

3. Make charitable donations from your income

If you’d like to reduce your Income Tax bill and support good causes, you could make a charitable donation. Again, by deducting donations from your salary before tax is calculated, you could manage how much of the Personal Allowance you lose. 

Contact us to talk about how to manage your tax bill effectively 

There may be other steps you could take to reduce your overall tax bill. A tailored financial plan will consider your tax liabilities, including from other sources, such as your savings and investments, to highlight potential ways to cut the amount you pay to the taxman.

If you’d like to arrange a meeting, please get in touch.  

Please note:

This blog is for general information only and does not constitute advice. 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. 

An offset mortgage could help you pay less interest overall. However, they’re not the right option for every homeowner and there are some risks you might want to consider.

Read on to discover how offset mortgages work and the circumstances where they could be valuable. 

An offset mortgage links your savings to your mortgage

When you take out an offset mortgage, it’s linked to a savings account. The money held in the savings account doesn’t earn interest. Instead, the money you have saved is used to reduce the total balance you pay interest on each month.

As a result, the more you have in the savings account, the less interest you pay.

For example, if you had an offset mortgage for £150,000 and held £50,000 in the linked savings account, you’d only pay interest on £100,000. Over the full mortgage term, it could save you thousands of pounds and may allow you to pay off your mortgage sooner.   

If you have savings, an offset mortgage might seem like an attractive option, but there are some drawbacks you may want to weigh up first, including:

• The interest rate on an offset mortgage is usually higher than a comparable traditional repayment mortgage. You might want to spend some time calculating how much you could save when compared to other options.
• The money held in the savings account won’t earn interest, so it’s important to factor in this potential loss too.
• There are fewer offset mortgage providers to choose from than if you opted for a standard repayment mortgage, and some may have high fees.

Some will find the advantages of an offset mortgage outweigh the disadvantages, and there are some situations where it can be a valuable option, including these four. 

1. You have savings that are earmarked for a future goal

If you have savings that you’ve set aside for a medium- or long-term goal, an offset mortgage could provide a way to reduce the amount of interest you pay without tying the money up in property. 

For example, you might have a lump sum that you plan to use in your retirement. As it’s intended for a goal, you may not want to use the money to reduce the outstanding mortgage, but an offset mortgage could provide you with some flexibility. 

You can usually withdraw money held in a savings account linked to an offset mortgage when you need to. So, it could be a useful way to hold an emergency fund too if your savings are accessible. However, keep in mind that if you withdraw money the savings you make will decline, and it could mean you end up paying more than you would if you took out a traditional repayment mortgage. 

2. You’re self-employed 

Many self-employed workers build up substantial savings over the year to pay their tax bills. Depending on your circumstances, adding this money to a savings account linked to an offset mortgage could be more valuable than the interest it’d earn if it was in a traditional savings account. 

3. A loved one wants to offer support

First-time buyers are relying on the support of loved ones more than ever. Indeed, according to Legal & General, family members gifted around £8.1 billion to aspiring homeowners in 2023 and played an essential role in more than half of the purchases made by under 35s.  

While gifts that act as a deposit are becoming more common, family members might not be in a position to do this but still want to offer support. If they have savings that they don’t intend to use now, an offset mortgage could offer a way for them to improve your financial circumstances, while still having access to the money for future needs.

Some lenders offer a type of offset mortgage for this purpose, sometimes known as a “family mortgage”. With a family mortgage, your loved one could place a lump sum in a savings account which can act as a deposit and would be used if you didn’t keep up with mortgage repayments. It could be a useful option for buyers who are struggling to save a deposit or meet affordability criteria. 

At the end of the term, assuming you’ve met your mortgage repayments, your family member would regain access to their savings, sometimes with interest added. 

4. You could pay tax on interest from savings 

Interest rates rising has been good news for savers. Yet, it also means that more people are expected to pay tax on the interest their savings earn.

A report in the Telegraph suggests more than 1 million more savers were dragged into paying tax on their savings in 2023/24 as a result – adding up to around 2.7 million people.

If the interest you earn on your savings exceeds the Personal Savings Allowance (PSA), it could become liable for tax. In 2024/25, the PSA is:

• £1,000 if you’re a basic-rate taxpayer
• £500 if you’re a higher-rate taxpayer
• £0 if you’re an additional-rate taxpayer. 

As the savings held in an account linked to an offset mortgage don’t earn interest, it could be a way to reduce your overall tax bill while reducing the amount of interest you pay on your mortgage. So, an offset mortgage could be particularly useful if you’re an additional-rate taxpayer or already have savings that could mean you’ll exceed the PSA.  

Contact us to talk about your mortgage needs

If you’d like help securing a mortgage, including an offset mortgage, please contact us. We can offer guidance about which type of mortgage may suit your needs and lenders that are more likely to accept your application. 

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.