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How to pay yourself as a business owner tax efficiently

Introduction

There are three primary methods through which you can pay yourself as a business owner tax efficiently. This involves withdrawing profits from your limited company: salary, dividends, and pension contributions (though the latter involves setting aside funds from the company for future use). Alternatively, profits can be retained within the company and later accessed through the sale proceeds or dividends.

The primary consideration in choosing among these methods is the net benefit to the owner in terms of payment structure. While nobody enjoys paying taxes or national insurance, optimising these payments to maximise benefits is prudent. Paying taxes isn’t necessarily negative if it results in more money in your pocket when you need it.

For instance, a basic rate taxpayer making a pension contribution provides a straightforward illustration of net benefit. By receiving tax relief on the contribution, they effectively turn an £80 net contribution into an £85 net benefit, taking into account tax relief, and future tax paid. Given this, one must decide whether to retain 100% of the £80 in their bank account or make a pension contribution to receive 85% of £100 at a future date.

However, for the owner of a limited company, the decision is more complex, considering various factors beyond simple tax implications.

Taxation applying to extracting profit

Corporation Tax

Corporation tax is a levy imposed on the profits of a registered business entity.

The primary corporation tax rate is now 25%, applicable to profits exceeding £250,000. Small businesses, defined as those with profits below £50,000, continue to be taxed at the small profits rate (SPR) of 19%.

For companies earning profits above £50,000 but below £250,000, the full main rate will apply, yet they will receive marginal rate relief. This means their actual corporation tax rate will gradually increase from 19% to a figure between the small profits rate and the main rate.

The SPR does not extend to close investment-holding companies, such as those controlled by a small group of individuals not primarily engaged in commercial trading or land investment for letting purposes. For instance, a Family Investment Company may not qualify for the SPR.

Before calculating profits, business expenses such as employee salaries (including those of business owners acting as employees), employers’ National Insurance contributions, and pension contributions (subject to the “wholly and exclusively” rule) are deductible.

Employers National Insurance Contributions

Employers are obligated to pay National Insurance contributions for their employees once their salary surpasses specific thresholds. Typically this is at a rate of 15% on weekly income above £96 (equating to annual income above £5,000).

Be aware that the employment allowance, which provides up to £10,500 per year towards a company’s National Insurance contributions, may not be applicable to company owners unless they employ additional staff.

When paying yourself as a business owner, you cannot utilise the employment allowance if you are the director and the sole employee earning above the Secondary Threshold, or if you operate as a service company subject to ‘IR35 rules’, and your sole income comes from the intermediary (e.g., your personal service company, limited company, or partnership). If you are part of a group, only one company or charity within the group is eligible to claim the allowance.

Income Tax and Employee NI

Income will be taxed in line with standard employee taxation. When paying yourself as a business owner, you’ll receive a personal allowance, which currently stands at £12,570 per annum. However, it’s important to note that there’s a reduction for individuals with adjusted net income exceeding £100,000.

Similar to employer contributions, the rates and amounts of employee National Insurance (NI) contributions can vary. However, for most employees, NI is charged on weekly income between £242 to £967 at 8%, and on income above £967 at 2%.

Dividends

Dividends represent payments made from company profits to its shareholders and can be an important element to paying yourself as a business owner. They are subject to taxation in a consistent manner across dividends received from companies, unit trusts, and open-ended investment companies.

Since the 2016/17 tax year, the previous dividend taxation system underwent significant changes. The dividend tax credit was eliminated and replaced by the structure outlined below.

Each individual is entitled to an annual Dividend Allowance of £500. Subsequent dividends are taxed as follows:

  • Basic Rate: 10.75%
  • Higher Rate: 35.75%
  • Additional Rate: 39.35%

It’s crucial to note that the 0% rate serves as a starting point for dividend taxation and not a deduction from the dividend amount received. For instance, if an individual exhausts their personal allowance, falls £500 below the higher rate threshold, and receives £1,000 in dividends, £500 of those dividends would be subject to higher rate dividend tax.

Furthermore, it’s essential to understand that the entire dividend payment is considered in the tax calculation, not just the portion exceeding £500. While the initial £500 enjoys a 0% rate, any surplus is taxed according to the respective tax band. Dividends can offset any unused Personal Allowance before applying the £500 allowance. Consequently, an individual with no other income can receive dividends up to £13,070 before incurring tax liability.

What’s the most tax-efficient method for extracting profits from your business?

When paying yourself as a business owner, a straightforward solution to improve tax efficiency is to make pension contributions. As previously explained, these contributions are not subject to corporation tax or National Insurance when made by the business. Moreover, upon benefiting from these contributions, 25% is typically tax-free, with subsequent amounts taxed at marginal rates and no National Insurance to pay.

However, while pension contributions may be the most tax-efficient option, they might not always be the most practical. Individuals under 55 require accessible income for day-to-day living expenses. Even for those over 55, immediately vesting pension contributions could technically cover living expenses. However, in reality, this may not be feasible due to potential complications with recycling rules.

Moreover, accessing pensions beyond any tax-free cash can trigger the Money Purchase Annual Allowance (MPAA), limiting the ability to fund a Defined Contribution pension beyond the MPAA threshold.

Given the favourable tax treatment of pensions, it’s worth considering whether pension funds should be utilised to meet retirement needs rather than immediate financial requirements. It’s then important to explore how you can withdraw funds from your business to cover day-to-day living expenses both presently and in the future, when paying yourself as a business owner.

Dividends often outperform salary when it comes to meeting immediate daily needs, especially when considering all available allowances. However, the interplay between allowances and National Insurance (NI) thresholds can significantly influence this comparison. For instance, while you can draw a salary up to the personal allowance of £12,570 without incurring income tax, employers’ NI contributions become payable from £5,000.

Ultimately, the business owner must extract sufficient profit for livelihood. Therefore, determining the “sweet spot” for taking a combination of salary and dividends becomes crucial. Could the optimal approach entail taking a salary of £12,570, with the remaining amount as dividends? Perhaps. However, given the intricate nuances of taxation rates, thresholds, and allowances, the answer may be more nuanced and dependent on individual circumstances.

Once the immediate income needs have been met and any remaining profit is surplus to the business’s requirements, considering pension contributions becomes prudent.

Indeed, while there are many options for paying yourself as a business owner and extracting company profits, each carries its own tax and National Insurance implications for the business owner, considering both their employer and employee roles.

Despite the technical complexity involved, the planning approach can be fundamentally simple. The goal is to withdraw the minimum profit necessary to cover immediate needs, ensuring that the rest is directed towards the pension to optimise future financial security. An expert wealth adviser can help you determine the optimal strategy for your individual circumstances.

Advice around your remuneration structure is ultimately the responsibility of your company’s accountant.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.

SJP Approved 11/06/2026

Should you require more information or have particular questions, we invite you to contact us at your convenience.

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Using a Life Cover Insurance Plan Written in Trust to Meet an Inheritance Tax (IHT) Liability

Introduction

Inheritance Tax (IHT) can be tricky to understand, but its impact can mean less money ends up in the pockets of your loved ones. This is even more so the case as most unused pensions and death benefits will form part of your estate from 2027. A solution could be to write a Life Cover Insurance Plan into Trust.

Tax allowances such as the residence nil-rate band (RNRB) begin to fall away for estates valued in excess of £2 million. In the case of the RNRB, this is tapered by £1 for every £2 an estate exceeds £2 million.

What is a Life Cover Insurance Plan?

Life insurance offers a tax-exempt payout to a chosen beneficiary upon your death.

This insurance comes in two forms; term assurance and whole of life assurance.

Term assurance covers you for a set duration. It is often chosen to safeguard against debts that will diminish or conclude over time, like a mortgage repayment, or to ensure there is a fund available for specific future expenses, such as your children’s education costs.

Whole of life assurance, on the other hand, guarantees a payout at the time of death, as long as the premiums have been consistently paid throughout the policy’s term.

Whole of life policies are generally aimed at addressing financial responsibilities that will arise at your death, regardless of its timing, like covering an inheritance tax bill or enhancing the inheritance you leave behind. These plans are suitable when the need for coverage is indefinite or unclear.

How can a Life Cover Insurance Plan help pay towards an Inheritance Tax (IHT) bill?

Over and above gifting sufficient assets to reduce your gross estate value to within £2 million, if you have excess income during your retirement, it might make sense to consider a Life Cover Insurance Plan written in trust, to meet the eventual IHT liability, which could be as high as £400,000 on an estate valued at £2 million.

It is important that the Life Cover Insurance Plan is written into Trust, and that the premiums are paid using excess income, rather than from assets – otherwise, the premiums paid could be treated as a chargeable lifetime transfer (CLT).

Note that probate is required to release estate assets, and IHT needs to be paid before probate is granted. Therefore, an estate’s assets cannot be directly used to meet IHT liability, and an alternative solution such as life cover in trust provides the funds required.

How much might a Life Cover Insurance Plan cost?

As of June 2026, a guaranteed whole of life joint plan with a sum assured of £400,000 would cost £6,572 per annum, assuming a 65-year-old male non-smoker and 65-year-old female non-smoker insured through Vitality, and not including ‘waiver of premium’ as an additional option. These figures are based on guaranteed premiums, meaning the provider cannot change the premium as you get older.

Guaranteed whole of life cover provides certainty; if the premiums are paid until death, then the sum assured will pay out. To put the figures in perspective, a 65 year old woman has a life expectancy of 24 years. By the time she is 89, she would have paid around £158,000 in premiums, but the payout from the plan would be £400,000 on second death. If the woman lives to 100, she will have paid £230,000 in premiums, and the payout from the plan would still be £400,000 on second death.

The value of financial advice and Inheritance Tax (IHT) planning

IHT is a highly complex area and very few people know every rule, exemption and allowance, or how to use them.

As your assets increase or decrease in value, your IHT liability will change and regular reviews of your financial position will therefore be important. It’s always a good idea to get in touch with a financial adviser whenever you buy or sell property too, or if you’re thinking of doing so. They can help make sure the choices you make will be tax-efficient for you – and those you leave behind.

Making confident decisions about Inheritance Tax planning while you’re still fit and healthy helps to create a better world for everyone you care about.

Appointing an expert wealth manager may enable you to capitalise on tax efficiencies such as these, mitigating paying unnecessary tax in your retirement and in the event of your death.

The levels and bases of taxation and reliefs from taxation can change at any time.

Tax relief is generally dependent on individual circumstances.

Trusts are not regulated by the Financial Conduct Authority.

SJP Approved 11/06/2026

Should you require more information or have particular questions, we invite you to contact us at your convenience.

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Giving Your Children and Grandchildren a Head Start

Introduction

While money isn’t the be all and end all, it undeniably offers children a significant advantage. A nest egg can contribute towards their education, grant access to diverse opportunities, and give them a head start in their adult lives.

Saving now provides them with greater flexibility to pursue their desired paths when the time comes. It’s another avenue through which you can afford them the best possible start in life.

The cost of growing up

Raising children can be financially challenging. While families may cover many of the costs of raising young children through their income, having a financial reserve as adulthood nears can be invaluable.

As young adults approach major milestones such as purchasing their first car, attending university, or buying their initial home, significant expenses arise.

By providing support, you can assist them in pursuing their aspirations. Starting to save early ensures they’ll have greater opportunities as they grow older.

01

£48,470

The average debt of a student leaving an English university in 2024
Source: Statista, December 2024
02

£151,731

The average deposit for a first-time buyer in Greater London
Source: UK Finance Key Mortgage Market Data, February 2025
01

£48,470

The average debt of a student leaving an English university in 2024
Source: Statista, December 2024

02

£151,731

The average deposit for a first-time buyer in Greater London
Source: UK Finance Key Mortgage Market Data, February 2025

Start early

You don’t have to allocate a substantial sum each month to establish a solid nest egg for a child. The crucial step is to commence saving as early as possible.

Beginning to save when children are young offers the advantage of time. It’s remarkable how even modest amounts saved consistently can accumulate over time. The power of compounding, combined with prudent investment decisions, has the potential to substantially enhance the value of your fund as children mature.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

Savings that work for everyone

You might choose to save a modest sum monthly, or invest lump sums as it fits your circumstances.

Your choice may be grant the funds to your child/ grandchild at age 18, or you might prefer to maintain control for a longer period of time.

Regardless of your preferences, selecting an investment solution that provides a suitable balance of flexibility, tax efficiency, and accessibility is crucial.

Invest in a Junior ISA

Junior ISAs represent an opportunity for saving towards a child’s future. The funds are inaccessible until the child reaches their 18th birthday.

These accounts can be set up by a parent or legal guardian, however further contributions can be accepted from anyone once the account has been set up. Regular deposits or one-time payments up to the annual limit (currently £9,000) are permitted, with all income and gains being exempt from Income Tax and Capital Gains Tax.

Upon reaching the age of 18, the Junior ISA automatically turns into an adult ISA which offers further flexibility to invest or withdraw funds as desired.

Junior ISAs offer the choice between cash or stocks and shares options. While cash is perceived as lower risk, considering the potentially lengthy investment term of up to 18 years, stocks and shares Junior ISAs typically offer superior returns over time. Although it is possible to spread the risk by subscribing to both a cash Junior ISA and a stocks and shares Junior ISA – provided the annual limit is not exceeded.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and the value may fall as well as rise. You may get back less than the amount invested.

An investment in a Stocks and Shares ISA does not provide the security of capital associated with a Cash ISA.

The favourable tax treatment of ISAs may not be maintained in the future and is subject to changes in legislation.

Please note that St. James’s Place does not offer Cash ISAs.

Set up a trust

Another frequently overlooked option is establishing a bare trust or designated investment account for a grandchild. Typically, the funds are invested in a portfolio of unit trusts, offering the benefits of professional management, risk reduction through diversification, and tax efficiency.

This straightforward legal arrangement of setting up a bare trust is an excellent solution for grandparents seeking to invest money for a grandchild. Until the beneficiary turns 18 and assumes ownership of the investment, the grandparents retain control over the funds. Subsequently, the grandchild can independently make decisions about the plan.

Unlike a Junior ISA, there are no limits to how much you can invest in a bare trust. The assets are held by a trustee, usually the parent or grandparent, for the child’s benefit until they reach 18 (or 16 in Scotland).

As long as the investment is made by someone other than the parents, the assets are taxed as if they belong to the child, which usually means there is little or no tax to pay on any income or gains.

This information applies for bare trusts in England. Bare trusts work differently in other regions.

Payments into bare trusts are considered to be gifts for inheritance tax purposes.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and the value may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

Trusts are not regulated by the Financial Conduct Authority.

Start a pension

While initiating a pension for a child might initially appear unusual, for certain families, it can be a highly astute decision.

These pensions can be established by a parent or legal guardian, with contributions welcomed from anyone once they’re set up.

The blend of tax efficiency and an investment horizon potentially spanning over 60 years presents an exceptional opportunity for wealth growth. Even a single lump sum payment into a child’s pension could significantly enhance their retirement savings and alleviate some financial burdens in adulthood.

Moreover, if concerns arise regarding how a child might utilise the saved funds, there’s the added advantage that the money will remain beyond temptation’s reach until they reach retirement age.

You can put a maximum of £2,880 into a pension for a child each year. Tax relief will boost it to £3,600.

Investing the maximum £3,600 each year into a pension fund from birth until a child turns 18 could create a pot worth £1,030,000 by age 65.*

*Assumes an annual growth rate of 5% net of charges.

These figures are examples only and are not guaranteed. What you get back will depend on your investment performance and the tax treatment of your savings. You could get back more or less than this.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.

SJP Approved 10/06/2026

Should you require more information or have particular questions, we invite you to contact us at your convenience.

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Angelo Crisafulli

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Expertise

Angelo takes a holistic approach to his clients’ financial planning, providing support in areas including; investment planning; retirement planning; estate planning; tax planning; and protection. In particular, he works with; high net worth individuals; senior executives; professionals in the investment banking, hedge fund, private equity and asset management sectors; and small business owners.

Experience

With over 25 years’ experience in the financial sector, Angelo began his career as an investment manager for primary asset managers and banks, including Deutsche Bank and Anima SGR; before moving into wealth management.

Coming through the SJP Financial Adviser Academy programme, Angelo joined Apollo Private Wealth at the end of 2017 and has since developed his experience in financial advisory and financial planning.

Qualifications

  • CISI Level 4 Qualification
  • Masters Degree in Economics, Bocconi University
  • MSc in Management Engineering, Politecnico di Milano

Personal interests

Away from work, Angelo enjoys spending time with his family, listening to music, reading a good book, and travelling, when he takes part in outdoor activities such as skiing, sailing and running.

Kabir Virk

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Expertise

Kabir creates long term relationships with his clients, through holistic tax planning and investment solutions, effectively managing their portfolios to maximise their wealth potential. He specialises in working with senior professionals in both private equity and investment banking, understanding the challenges that individuals face in these fields and providing them with the most appropriate solutions.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

Experience

Kabir has been with Apollo Private Wealth since 2018, prior to which he worked for a well-known US wealth management firm. He sees himself as having a metaphorical “seat on a client’s table” as an integral part of their big life decisions, helping them to achieve their goals.

Qualifications

  • Degree in Finance & Economics from University of Reno, Nevada USA
  • CISI Investment Advice Diploma Level 4

Richard Thorne

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Expertise

Within financial planning, Richard’s focus is on tax efficiency, whether someone is in the accumulation phase of wealth building, or whether they’re in drawdown during retirement.

Richard works with his clients to reduce their income tax liability, utilising annual allowances and approved tax efficient investment vehicles, while simultaneously ensuring they have a drawdown strategy ahead of retirement.

Taking a holistic approach, Richard looks to understand clients’ goals in order of priority, then designs a coherent financial plan; holding regular reviews and adjusting where required.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.

Experience

Richard has worked in financial services since 2017, beginning his career in foreign exchange. Subsequently, he chose a career in wealth management as investing interested him from a young age.

Richard believes that financial planning is very important for everyone. He finds it rewarding to alleviate financial stress from his clients, so they can concentrate on other aspects of their lives.

Qualifications

  • Investment Advice Diploma – Level 4
  • BSC Information Management and Business Studies at Loughborough University

Personal interests

Richard likes to keep active and is a regular at his local gym. He grew up in the countryside with lots of walks on his doorstep and still loves hiking. 

Victoria Trapitsyna

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Expertise

Victoria helps clients discover practical solutions to the financial issues that concern them most. She covers a wide range of financial planning elements, including; retirement planning; wealth protection and preservation; savings and investment planning and tax planning.

Victoria places great emphasis on maintaining a long term relationship with clients, and becoming a source of trusted advice as their financial needs evolve over the years.

Experience

Victoria has worked in financial services since 2014, but prior to that comes from a legal background.

Qualifications

  • Chartered Financial Planner
  • MBA, The University of Chicago Booth School of Business
  • Advanced Diploma in Financial Planning

Personal interests

Victoria loves travelling, and spending time with her children.

Saneka Francis-Lawrence

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Expertise

Saneka helps HNW individuals and their families, across the financial planning spectrum including with protection, tax optimisation and estate planning.

Experience

Saneka joined Apollo in 2024 with over 10 years’ experience in banking and the financial services industry, ranging from the largest life insurance company in the Caribbean, to multinational banks including Santander and Lloyds. Most recently, Saneka was with another St. James’s Place practice for two years.

Qualifications

  • Level 4 Diploma for Financial Advisers (DIPFA) with London Institute of Banking and Finance.
  • BA in History from University of the West Indies

Personal interests

Saneka spends as much time as she can creating memories with her son and their family. She loves to read a good book in her downtime.

Charlie Hannam

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Expertise

Charlie is a Private Wealth Adviser working with high-net-worth individuals, their families, and high-earning professionals to help them achieve their financial goals with clarity and confidence.

He provides holistic, practical advice across all areas of wealth management, including investment and pension planning, tax optimisation, estate structuring, and cash flow modelling. By taking a comprehensive approach, Charlie enables clients to make well-informed decisions that support their ambitions – from securing retirement income to funding education or preserving wealth for future generations.

Qualifications

  • Level 4 Diploma in Regulated Financial Planning
  • First Class BSc Finance and Investment Banking, University of Greenwich

Personal interests

Charlie began his career as a Finance Transformation Consultant at IBM in partnership with BCG, before moving into financial planning with another SJP practice in Hertfordshire. Away from advising, he plays football semi-professionally and follows Formula 1 closely.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up.  You may get back less than you invested. 

Financial Planning Pre- and Post- Divorce

If you’ve taken the decision to divorce, you will need to find a way to untangle your shared finances in the fairest way possible.

We all hope that marriage will last forever, but the truth is that some 42% of marriages in England and Wales end in divorce, according to the Office for National Statistics.1

Unfortunately, divorce is not something that we can insure against. The nearest thing to it is a pre-nuptial agreement, which, although not yet recognised in statute, the UK courts will at least take into consideration when making a settlement.

With the help of a trained mediator or solicitor, couples may be given the opportunity to reach agreement without necessarily going to court. However, lots of break-ups become acrimonious because couples can’t agree how to split the finances; and those cases will often end up being put before a judge.

1 Office for National Statistics, September 2023

Key considerations

What to know when breaking even

Rules of disengagement

The process for separating finances and property on divorce in England and Wales is a discretionary one. That means there is no set formula that the courts follow. However, the divorce courts aim to achieve a fair division of assets and property and there must be no discrimination between the respective roles of breadwinner and homemaker, which are regarded as equal.

When deciding a case, the courts will look at income, earning capacity, property and other financial resources which each of the parties has or is likely to have in the future, as well as future financial needs, obligations and responsibilities. Clearly, where there are dependent children, this will be the first consideration when deciding division of the matrimonial assets.

Property

Your home will likely make up a considerable portion of the value of your assets, but ownership of a property is not reflected in a divorce settlement. It is not unusual for each party to receive an equal share of the equity even if the property was only in the name of one of them. The court can also order a property to be transferred from one party to another.

A court could order the sale of a property and share out the proceeds between both parties in any way it chooses; or it could split the ownership differently so that one party retains an interest in the property until a later date.

For some couples, particularly if there are no children, it will normally just be a question of selling the home and sharing any proceeds equally. For families with children, it is more a case of trying to disrupt them as little as possible, while ensuring that accommodation is in place for the other parent.

Bear in mind that who gets the marital house in a divorce is closely linked to child custody, with the court typically awarding the right to the primary care-giver.

Pensions

You must disclose all your financial assets when coming to a fair settlement in a divorce, including any pensions you have built up or are claiming. This covers both workplace and personal pensions.

Courts can order a pension to be split, with part of the benefit transferred to the other party. Alternatively, the pension assets may be ‘earmarked’, meaning that all or some of the member’s pension will be paid to the ex-spouse or civil partner when it comes into payment.

In some cases, the court decides that each person keeps their own pension schemes, but that other assets are used to offset the value. So, for example, if one person has a large pension pot, the other may receive a larger proportion of a share portfolio.

Bear in mind that if each person keeps their own pension, the ex-spouse is unlikely to receive any entitlement under the deceased’s pension after the divorce.

Wills and Lasting Powers of Attorney (LPAs)

Unlike a marriage, divorce does not automatically invalidate a Will.* Instead, anything that you have left to your ex-spouse in your Will would be dealt with as if they had died on the date that your marriage legally ended. Consequently, whatever they were set to inherit would be passed on to the next beneficiary who is entitled to it.

If you have made an LPA** then the effect of divorce will usually mean that the appointment of your spouse as attorney will be revoked. It’s therefore vital that you review your LPA to ensure that someone else can make decisions on your behalf, should you fall ill or lose mental capacity. Provided that you have chosen a replacement attorney (or have appointed more than one attorney to act jointly and severally) your LPA will continue in force with the replacement/remaining attorney able to act if you became mentally incapable.

Although your will does remain valid after divorce, your ex-spouse will no longer be able to benefit from it, unless you have expressly stated otherwise. They will also no longer be able to act as an executor or trustee under your will.

*Will writing and Powers of Attorney involve the referral to a service that is separate and distinct to those offered by St. James’s Place and are not regulated by the Financial Conduct Authority.

Life insurance

Many couples have joint life insurance policies in place, often with the premium being paid by just one of the parties. If that person stops paying or cancels the policy after a divorce, then the other partner could be left without cover.

Therefore, it can be prudent to arrange your own life cover and/or maintain a life insurance policy on your ex-spouse with a benefit amount high enough to replace maintenance income, for example.

Amid all the upheaval, it is all too easy to overlook these issues, but doing so can leave you unnecessarily out of pocket. In any divorce situation it’s not just a lawyer who needs to be engaged. It is equally as important to engage with an experienced financial adviser who can work with your lawyer in reaching the right settlement.

What’s next after divorce?

The time immediately after your divorce is one of the most crucial points in your life during which to seek expert advice.

You’ll likely be eager to embark on a fresh chapter in your life and strategise for your financial future.

You may have obtained a substantial lump sum and/or entitlements to a portion of your former partner’s pension, or you may require guidance on rebuilding your pension savings.

During the preparation for your divorce, you likely outlined your projected budget as an individual. Now that the legal proceedings are concluded, it’s essential to ensure you’ve established everything necessary for your new financial journey, such as:

  1. Saving for retirement
  2. Repaying any outstanding debt
  3. Establishing an emergency fund
  4. Obtaining income protection in case of prolonged illness or disability
  5. Arranging life insurance to safeguard your financial obligations in the event of your premature demise
  6. If you receive child maintenance or spousal maintenance payments (referred to as periodical allowance in Scotland), you may consider acquiring life insurance to protect your ex-partner’s life and their payments

Whether you’re investing a lump sum or just managing your finances, it’s crucial to save your money in a tax-efficient manner.

Each year, the government offers tax allowances for individuals who save money into Individual Savings Accounts (ISAs) or self-invested personal pensions (SIPPs). Both of these products not only enjoy tax-efficient growth but pensions also receive additional contributions from the government in the form of tax relief. There are also Junior ISAs and pension options available for children. Read more about tax-efficient investing.

After your divorce, you might be questioning whether your pension savings are sufficient for your retirement. This is the ideal opportunity to engage a financial planner who can help you save towards your retirement.

Finally, consider cancelling your Marriage Allowance if applicable; updating beneficiaries across your financial portfolio and with any employers; and updating your Will.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time and are generally dependent on individual circumstances.

Will writing involves the referral to a service that is separate and distinct to those offered by St. James’s Place. Wills are not regulated by the Financial Conduct Authority.

Advice given in relation to a Power of Attorney will involve the referral to a service that is separate and distinct to those offered by St. James’s Place and is not regulated by the Financial Conduct Authority.

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