Book A Demo

Insights Category: Featured

Starting the new tax year on the right footing

For busy professionals, the smartest wealth decisions happen in April – not next March. Here’s why.

If you’re a high-earning professional, your time is at a premium. Between work, life, and everything in between, financial planning often slips down the list – until deadlines loom. But when it comes to building and protecting your wealth, timing matters.

This guide outlines the key allowances available for the 2025/26 tax year and explains why acting early (with the right support) can generate significantly better outcomes than leaving things to the last minute. Best of all? We do the legwork for you – so you can focus on what you do best.

Save time – receive a no-obligation financial plan, tailored to your circumstances.

Book A Virtual Coffee

What are the key tax allowances and reliefs for 2025/26?

ISA and JISA Allowances
  • £20,000 per adult
  • £9,000 per child

ISA and JISA Allowances reset each tax year, on a use-it-or-lose-it basis. Invest in cash, stocks & shares, or a blend. Enjoy flexible access for mid-term goals. Both growth and withdrawals are free of income and capital gains tax.

St. James’s Place do not offer cash ISAs or JISAs.

Pension Annual Allowances
  • Up to £60,000, or 100% of relevant earnings, per adult
  • Up to £3,600 for non-earners, including children

Pension Annual Allowances reset each tax year, but in some cases, you can carry forward unused allowances from the previous three years. Benefit from tax relief at your marginal rate of income tax. Growth is also tax free, and withdrawals can be made tax efficient.

When sacrificing your salary, you could mitigate an effective 60% rate of tax on income between £100,000 and £125,140.

Your Pension Annual Allowance may be tapered, if your ‘threshold income’ exceeds £200,000 and your ‘adjusted income’ exceeds £260,000; the reduction in allowance halts when ‘adjusted income’ exceeds £360,000, setting the annual allowance to a minimal £10,000 for pension savings that receive the full benefit of tax relief.

Capital Gains Tax Exemptions
  • £3,000 per person, including children

Capital Gains Tax Exemptions reset each tax year on a use-it-or-lose-it basis, and apply to everyone, whether adult or child, earning or not.

It is crucial to capitalise on the CGT Exemption when rebalancing your portfolio, or exiting positions, to realise gains in the most tax efficient way.

A financial adviser can also help you with tax loss harvesting – an investment strategy for generating capital losses to gain a tax advantage.

Dividend Allowances
  • £500 per person, including children

Dividend Allowances reset each tax year on a use-it-or-lose-it basis, and apply to everyone, whether adult or child, earning or not.

Particularly relevant for company directors, and for investors, utilising Dividend Allowances can provide a small additional tax-free income.

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.

Why acting now, rather than in March next year, could yield thousands.

For busy professionals, the smartest wealth decisions happen in April – not next March. Leaving everyone else to scramble at the 11th hour of the tax year end deadline, you’ll have already taken control, and put your capital to work from day one.

  1. More time in the market = greater potential for growth
    Time in, not timing the market. The earlier you invest, the longer your money benefits from tax-efficient compounding. Example: Investing £20,000 into each ISA in April, instead of next March, could add £1,200+ to your long-term returns, based on 6% net annual growth. Do that year after year, and the difference compounds into five figures.

    This figure is for illustrative purposes only. You may get back more or less than the figure shown. How your investment grows will depend on the fund choices made, the taxation of the funds selected and the charges attributed to your plan.
  2. Less stress, better strategy
    Trying to rush through financial decisions next March, meeting deadlines at the same time as juggling end-of-Q1 pressure at work, means crucial planning could get missed – rarely resulting in the best outcomes. Starting early gives you time to plan your cashflow, and space to think thoroughly about your investment decisions; supported by an expert financial planner, who curates your approach according to your unique goals and objectives in life.
  3. Proactive utilisation of all the tax allowances and reliefs available to you and your family
    By starting early, you can allocate pension contributions according to regular income, plan lump-sum investments around bonus and maturity dates, and engage your spouse and children in taking a holistic approach to your family’s finances.

We make it effortless.

Our core expertise is in helping time-poor professionals – investment bankers, lawyers, consultants, founders – take full advantage of every tax planning opportunity, with zero hassle. Benefit from;

  • A dedicated, expert Private Wealth Adviser, who remains your single point of contact and understands your unique requirements
  • Support from your Adviser’s team of qualified Associates, Paraplanners and administrative staff – working tirelessly to bring your financial objectives to life
  • A bespoke strategy report each year, complemented by advanced cashflow modelling and scenario planning

Your holistic financial roadmap will also encompass important frameworks for preserving your wealth, asking questions like;

  • Is your insurance coverage (e.g. critical illness, key person) sufficient, based on your lifestyle and that of your dependents?
  • What is your mounting inheritance tax liability, and how can your estate be structured to enable as much of your wealth as possible to be passed on to your beneficiaries?
  • Do your investments remain suitable for your objectives over time? Is there a rebalancing need? And most of all, is the asset location optimal for tax efficient accumulation?
The Value of Advice

Start by creating your action plan today.

Let’s Get Started

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

Contact Us

Legacy Planning Redefined: Navigating the new Inheritance Tax landscape for Pensions

Pensions set to be brought inside of Estates for Inheritance Tax (IHT) purposes from April 2027

One of the most surprising announcements in Labour’s first Budget, was the Chancellor’s decision to subject pensions to Inheritance Tax (IHT). This policy reverses George Osborne’s 2015 decision to exclude pension pots from an individual’s Estate for IHT purposes. Although this change won’t take effect until 2027, it has already faced criticism as a “cruel blow” for grieving families.

This guide will outline the key changes and actions you can consider.

Take Your Autumn Statement Impact Assessment

Start Now

What’s changing?

Currently, private pensions are not counted as part of an Estate, and are free from Inheritance Tax. If you inherit a private pension from someone who died aged 75 or older, you’ll pay income tax on it; however, if they died younger than 75, it’s tax-free, unless taken as a lump sum after two years.

From April 2027, pensions will be counted as part of the Estate. This shift might deter individuals from saving into their pensions.

When Osborne initially allowed pensions to be passed on tax-free, it was part of broader reforms, including scrapping the 55% charge on certain inherited pensions. Along with Jeremy Hunt’s abolition of the pension Lifetime Allowance (LTA), pensions became an attractive legacy planning tool. Now, however, the Government says it is “removing the opportunity for individuals to use pensions as a vehicle for Inheritance Tax planning.”

The Government has opened a consultation on implementing this change, as experts warn of complex administration challenges.

Families may need to rethink their Estate planning under this new policy.

It’s worth noting that pensions left to a spouse or civil partner remain inheritance tax-free. The inheritance tax spousal exemption allows married couples and civil partners to transfer their estate to one another tax-free upon death. In contrast, benefits passed to an unmarried partner may be subject to inheritance tax. Surviving unmarried partners could face reduced income and, as a result, a lower standard of living in retirement.

Explore your options, with a no-obligation financial planning consultation.

Book A Demo

Double taxation

Families may now face an effective 67% rate of tax on inherited pension funds following the rule changes; with a ‘double hit’ from the combined effects of Inheritance Tax and Income Tax.

The removal of the Inheritance Tax exemption effectively imposes a double tax on death benefits that don’t qualify for an Income Tax exemption, particularly for those who pass away after age 75. When the entire pension fund is subject to 40% Inheritance Tax, and beneficiaries are then taxed at their marginal rate of Income Tax on the remaining amount, this can lead to a combined tax rate of up to 67% on the pension’s death benefits.

Even basic-rate taxpayers could face a 45% marginal rate of Income Tax, depending on how they choose to withdraw the funds. Beneficiaries may choose between receiving a lump sum or ongoing income, which affects their tax rate. For example, a lump sum might push them into a higher tax bracket. These changes could leave families with less than a third of the original pension pot.

Key planning actions

Drawing the tax-free Lump Sum Allowance

Despite pre-Budget speculation, the Lump Sum Allowance (LSA) remains consistent, at one quarter of the previous LTA, or £268,275.

Withdrawing the LSA and using it during one’s lifetime, to fund spending, or make gifts to family members, could offer an efficient way to reduce the value a pension subject to Inheritance Tax.

Usual gifting rules apply; for instance, surviving seven years from making the gift.

Gifting

One could gift part of their pension pot to avoid the added levy. Regular income gifts may also help you avoid the seven-year rule: for example, taking £50,000 from drawdown each year, but only spending £30,000, allows you to gift £10,000 annually to a child’s pension or a grandchild’s ISA if done regularly and without diminishing your lifestyle.

Relocating into tax wrappers

Some savers may choose to withdraw from their pensions and pay income tax, to reallocate the funds into tax-efficient vehicles like ISAs. The decision comes down to a trade-off: either keep funds in your pension, or withdraw and pay tax to invest them in a more tax-efficient structure. Obviously each person’s circumstances will differ.

Still have questions?

Following the biggest set of tax increases in modern history, it’s an opportune moment to evaluate your family’s financial situation and objectives.

We encourage you to contact us, to ensure you are fully utilising all available allowances this year, and that you are adequately protected from risk, as far as possible, including any risk resulting from these changes.

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.

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

Contact Us

Paying For Private School Fees: Start Planning Early And Optimise For Tax Efficiency

Introduction

More children than ever before are attending private schools for a higher quality education, smaller class sizes, more abundant resources, and specialised academic and vocational programmes. The number of pupils attending private school has steadily increased over the past decade, with a record 556,551 pupils now attending 1,411 Independent School Council (ISC) member schools across the UK, the highest level since records began in 1974.1

However, giving your children the best possible education comes at a cost, and the expense was already a barrier for many families – before Labour won 2024’s general election. Now, the new government intends to introduce VAT on school fees at 20%, as early as January 2025.

While the cost of tuition fees can vary widely depending on the school and location, sending your child to a private school as a day pupil currently costs, on average, £23,925 per year, rising to £42,459 for pupils who board.2 However, fees at some private schools can be considerably higher. Unless schools absorb some of the increasing costs, the changes about to be enacted by Labour could bring the average day fee to £28,710, and the average boarding fee to £50,951, overnight.

1, 2 ISC Census and Annual Report, January 2024

At a glance

  • Parents could face around £460,000 in day pupil fees or £815,000 in boarding fees for each child.
  • ISAs and Investment Bonds can be used as tax wrappers to save towards school fees, potentially making tax-efficient or tax-deferred returns on your investment.
  • Unit Trusts and General Investment Accounts (GIAs) may also provide access to investing in various asset classes, with tax treatment dependent on individual circumstances.

Take Your Autumn Statement Impact Assessment

Start Now

Average boarding school fees to hit £50,000 per year

Taking a tax-efficient approach to saving towards private school fees…

Let’s assume that school fees increase by 3.5% a year. This would be the lowest increase seen over the course of a 14-year education, particularly in comparison to an 8% uplift from 2023 to 2024. Based on the average costs, parents could face around £460,000 in day pupil fees or £815,000 in boarding fees for each child.

However, while these figures are considerable, the sooner you start saving towards your child’s school fees, the better.

By starting early, saving regularly, and investing, parents could build up a substantial sum over time to help cover the costs of private education.

Taking a tax-efficient approach to school fees can help make private education much more accessible.

Key tax-efficient solutions

Individual Savings Accounts (ISAs)

An ISA is a tax-efficient investment vehicle that enables parents to put aside a certain amount each year, without incurring any income or capital gains tax (CGT) on the interest or investment returns earned on the savings.

If both parents make monthly contributions that fully utilise their ISA allowance (£20,000 per person in the 2024/25 tax year) from the child’s birth, this could accumulate to a sum of £585,000 by the time the child is 11 years old, based on 5% net annual growth after fees, compounding monthly.* Withdrawals from an ISA are tax efficient, so parents can extract funds as needed to pay for school fees without incurring any capital gains or income tax liability, or invest in other options, such as stocks and shares.

*These figures are examples only and they are not guaranteed – they are not minimum or maximum amounts. What you get back depends on how your investment grows and the tax treatment of the investment.

The value of an ISA 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 you invested.

The favourable tax treatment of ISAs may be subject to changes in legislation in the future.

On- and Offshore Investment Bonds

An Investment Bond is a tax-efficient investment wrapper that allows parents to save and invest to pay for private school fees. An Investment Bond invests in a range of assets, such as stocks, shares, bonds, and funds. You can invest a lump sum or make regular contributions.

During the term of the investment, returns earned within the bond are not subject to income or capital gains tax (CGT), providing significant tax savings over the long term with the option to draw down up to 5% of your original investment per year on a tax-deferred basis. As the 5% allowance is cumulative, any unused allowance is carried forward for up to 20 years.**

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.

**Please note that if the withdrawals taken exceed the growth of the bond, the capital will be eroded.

Unit Trusts and General Investment Accounts (GIAs)

Unit Trusts and General Investments Accounts (GIAs) pool capital from multiple investors into a single fund, which is then invested across various asset classes, such as stocks, bonds, and property. Investors benefit from an annual dividend allowance of £500 in the 2024/25 tax year, and an annual capital gains allowance of £3,000 in the 2024/25 tax year.

Howver, Unit Trusts and GIAs are subject to income tax on any dividends or interests earned, which can reduce the overall tax efficiency of the investment. The tax treatment of these investments can also vary depending on personal circumstances, such as income level and tax bracket.

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.

Gifting Allowance

Under current UK tax law, individuals can give up to £3,000 per year to another person using their annual gifting exemption, including a child or grandchild attending a private school. If you are married or in a civil partnership, you can combine this with your partner’s allowance, resulting in a total annual gifting exemption of up to £6,000 per year.

This offers a tax-efficient way to pay for private school fees. However, financial gifts above £3,000 can be subject to inheritance tax (IHT) if the donor dies within seven years of making the gift. The current nil-rate band for inheritance tax is £325,000 per person.

If a parent has adequate disposable income, this may be utlisied to pay for education costs (including private school fees) under ‘Dispositions for the maintenance of the transferor’s children’ rules.*** A disposition is not a transfer of value for IHT purposes if it is made by one party to a marriage or civil partnership and is both:

– in favour of a child of either party and
– for that child’s maintenance, education or training for a period not ending later than the year ending 5 April in which the child attains the age of 18, or
– after attaining 18, ceases to undergo full-time education

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.

***Further criteria applies within the HMRC IHT Manual IHTM04175 which is subject to change.

Scholarships and Bursaries

Many private schools offer means-tested bursaries to help with the cost of tuition. A third of pupils in private education receive means-tested bursaries,3 which can cover up to 100% of fees.

Bursaries are awarded based on financial need, and can be a valuable way for families who may not otherwise be able to afford private school, to access high-quality education for their children. The amount of the bursary awarded is based on a means test, which considers a family’s income, assets, and other relevant factors.

Scholarships are typically awarded based on merit, such as academic or athletic achievement, musical talent, or artistic ability. Scholarships may not cover the full cost of tuition. The proportion of fees covered will depend on the school and the type of scholarship offered.

3 ISC School Fee Assistance, April 2023

Paying in advance

Paying private school fees in advance can be a way to save money on the overall cost of tuition. Many private schools offer discounts to parents who pay tuition fees in advance, with the size of the discount increasing with the size of the advance payment.

However, parents considering paying fees in advance should carefully weigh the potential gains against the risks associated with tying up a significant amount of capital in pre-payment.

Depending on the investment chosen, there may be potential for higher returns than the discount offered for advance payment, but there is also a risk of capital loss.

Navigating a myriad of options

Private school education can provide children with a vital head-start and opportunities that help them to achieve their goals. However, it’s undoubtedly an expensive commitment, and navigating the options for paying private school fees can be complex and daunting.

Many options are available, including tax-efficient investments, bursaries and scholarships, pre-payment of tuition fees, and a range of capital drawdown routes. It’s important to carefully consider your options and obtain expert advice when planning and funding private school fees.

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 you invested.

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

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

Contact Us
Powered by  GDPR Cookie Compliance
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
Close Search
Suggestions
Popular searches

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

Contact Us
POPULAR SERVICES
WHO WE HELP

Email To Myself

Close

By submitting your details you give consent for Apollo Private Wealth to reach out for marketing purposes. You may unsubscribe at any time.

Apollo Private Wealth together with St. James's Place Wealth Management plc are the data controllers of any personal data you provide to us. For further information on our uses of your personal data, please see our Privacy Policy or the St. James's Place Privacy Policy.

Book a Demo
Close

Your wealth is our priority.