Category: news

Financial planning is all about helping you to reach your life goals. Ultimately, the objective is for your wealth to allow you to achieve all the things you want to do now and in the future.

That might be as simple as being able to relax and enjoy a comfortable retirement or helping your children through education or onto the property ladder. Alternatively, you may want to start a business, retire abroad, or leave a legacy to causes you care about.

When making a financial plan, you could be looking several decades ahead. During that time, a variety of unknowns could crop up, altering your ability to meet your goals.

Unfortunately, there’s no such thing as a crystal ball. However, when it comes to your finances, cashflow planning could help you visualise how your wealth may fluctuate as you progress through life, and reveal answers to a variety of “what if” questions.

Find out more in this insightful guide, which covers:

• How cashflow planning works
• How cashflow planning could ease your financial concerns
• Examples of when a cashflow model might help you forecast your financial future
• The advantages and disadvantages of using a cashflow model as part of your financial plan.

Download your copy here: ‘How financial planning could help you answer essential “what if?” questions’ to find out how cashflow planning could help you answer questions, ease worries, and give you confidence in the future.

Please get in touch if you’d like to speak to one of our team about how we could work with you. 

Please note: This guide is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate cashflow planning.

This month, we’re delighted to share the details of two exciting events.

First up, the Blue Wealth team has been busy planning a brand-new summer social, and we’d love you to join us.

Also, we’re proud to announce that Adrian Thorley will be taking part in a triathlon this month. He’ll be raising funds for our charity partner, Community for Purpose, and would love your support.

Keep reading to find out more.

Join us on a summer boat trip this July

We love meeting up with our clients both in and outside the office. There are some staples in the Blue Wealth calendar, such as the annual golf day, but we also enjoy coming up with new ideas.

So, this summer, we’ve planned our first summer boat trip from 5 pm to 7 pm on Thursday 3 July.

The evening will begin at Princes Wharf, where we’ll board The Matthew, Bristol’s historic floating harbour.

The ship is a fabulous and faithful reconstruction of the vessel used by explorer John Cabot when he sailed from Bristol and discovered Newfoundland in 1497.

Once everyone’s aboard, we’ll set off on a gentle one-hour trip around Bristol harbour, during which you can catch up with the team over a drink or two.

After docking, there will be another hour to relax and chat, with food provided by The Jolly Hog.

It’s going to be a fabulous evening, and we’d love to see you there.

If you’d like to book your place or if you have any questions about this event, please email your adviser.

Adrian is taking part in a triathlon to raise funds for our charity partner

When he’s not busy supporting clients at Blue Wealth, our financial planner, Adrian Thorley, loves keeping fit.

Over the past few months, he’s been training hard for the First Tri Lydney Olympic triathlon, which will take place on Sunday 27 April in the Forest of Dean.

This challenging race includes a 750-metre swim, a 43-kilometre cycle, and finally, a 10-kilometre run.

What’s more, this is just the first of a series of sporting events Adrian will be taking part in this summer – watch this space for more updates!

Get in touch

If you’d like to find out more about getting involved with the boat trip or supporting Adrian in his charity triathlon, we’d love to hear from you.

And as always, if you have any questions about Blue Wealth and how we can support you with all your financial planning needs, please get in touch.

Please email hello@bluewealth.co.uk or call us on 0117 332 0230.

Please note

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

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

Do you consider yourself wealthy? How about the man next door, or the woman over the road?

While we might see a neighbour with a fancy car and assume they’re rich, we don’t know anything about their underlying circumstances. It can be very easy to jump to conclusions about others’ “wealth” and often compare our own financial circumstances unfavourably.

In fact, according to an HSBC report, the UK has a “wealth perception gap”, with individuals in every wealth bracket consistently underestimating their earnings compared to others.

Keep reading to find out more.

High earners may not consider themselves wealthy as they compare themselves to others

In the report, ‘Your Money’s Worth: Defining Wealth in 2025’, findings reveal that the majority of those earning £100,000 a year don’t consider themselves affluent. The threshold for “wealthy” is actually perceived to be an annual salary of £213,000.

For comparison, according to the Office for National Statistics (ONS), this is more than six times the national average salary.

So, why is there such a big discrepancy between what we earn and what we consider to be wealthy? According to the report, the answer could be psychological. Key findings include that:

• It’s very common for us to compare our finances unfavourably to those of others.
• We can confuse big spending with affluence, not digging deeper into the fact these “wealthy” people may have got into debt to fund purchases.
• People often start valuing non-material possessions when they realise material things didn’t buy them happiness.

Perceptions of wealth can become distorted over time, with higher earners often spending more on clothes, travel, homeware, and organic food than their average-earner counterparts. As these spending habits become routine, though, they are normalised. The expenditure might continue, but it’s no longer linked to a perception of affluence.

Younger generations increasingly see lifestyle and wellbeing as a symbol of wealth

The way we measure wealth today is shifting. Traditionally associated directly with income, there has been a significant move towards seeing lifestyle and wellbeing as better indicators.

This is particularly the case for younger demographics. Almost half (49%) of Gen Z view wealth in non-material terms, and a third of 18–24-year-old high earners believe that having a good work-life balance is a signifier of wealth.

Younger generations are also much more comfortable openly discussing their finances. Half of 18–24-year-olds said they like discussing money, compared with just 3% of over-55s.

Taking a leaf out of their books could help you find value outside of wealth creation, learn to openly discuss wealth and what it means to you, and shift your perceptions of what it is to be “wealthy”.

With this in mind, when do you stop wealth building and start looking at how to use your money, now and throughout retirement?

Shifting your perception from constantly amassing wealth to working out how to use it wisely can be more easily achieved by working with a financial planner.

3 ways a financial planner can help you change your perception of wealth to live a happier life

1. Introducing you to the concept of “enough”

“Enough” means something different to everyone. Realistically, you want to be able to pay your bills while funding your chosen lifestyle throughout your retirement.  A financial planner can help you devise a plan to support this and to manage your expectations.

Constantly chasing after wealth can start to become wearing, especially as you near retirement.

It’s about finding the balance between having “enough” without compromising on what you want out of life.

2. Helping you understand your position right now and looking at your aspirations for retirement

Where are you now? How do you live, and is there anything stopping you from doing the things you want to do? And when you retire, what are your plans? Travel, looking after grandchildren, moving abroad?

There’s not a one-size-fits-all answer, which means there’s not a one-size-fits-all solution. You could have a small pension pot and be perfectly happy staying at home and enjoying time with family.

Or, you might have an overflowing pension and still feel unfulfilled because you’re not spending enough time at home, or spending money in the “wrong” places. Once you’ve uncovered your own aspirations, you can plan accordingly.

3. Teaching you to focus on your financial goals without comparing yourself to others

As you can see from the report, wealth perception is subjective. All too often, you might find yourself looking to others’ material possessions as an indicator, comparing yourself unfavourably if you have a smaller house or older car, for example.

A financial planner will help you keep your focus on your own circumstances and goals, gently discouraging you from looking around you and instead guiding you along your own path.

Get in touch

Resolutely focusing on your own finances without getting sidetracked by what others have – or what you perceive they have – means shifting your mindset around what is “enough”.

We can help you work out what your goals are, now and in the long term, to help you understand how to achieve these aspirations.

Please email hello@bluewealth.co.uk or call us on 0117 332 0230.

Please note

The content of this newsletter is offered only for general informational and educational purposes. It is not offered as, and does not constitute, financial advice.

Blue Wealth Ltd is not responsible for the accuracy of the information contained within linked sites.

Blue Wealth Ltd is an appointed representative of Best Practice IFA Group Ltd, which is authorised and regulated by the Financial Conduct Authority.

Approved by Best Practice IFA Group: 28/4/25

After Rachel Reeves’ impactful first Budget in autumn 2024, you might have been concerned about the announcements that would be included in her Spring Statement on 26 March 2025.

Reassuringly, the major headline from this year’s springtime fiscal event is that Reeves made few announcements that are likely to affect you and your personal finances directly. Although, it did reveal that none of the changes made in the Autumn Budget would be overturned. However, one significant change has been made to the High Income Child Benefit Charge, which could affect you or your family.

The chancellor did announce that, due to global uncertainty and after the economy declined in January, the Office for Budget Responsibility (OBR) has downgraded its 2025 forecast for UK growth from 2% in October 2024 to 1% as of March 2025. She also noted the OBR’s long-term forecast, indicating that growth would increase for each year remaining in this parliament.

In addition to growth figures, the chancellor’s Statement introduced a range of measures designed to increase economic activity in the UK, as well as cost-saving initiatives, predominantly at state level, to reduce government debt.

Read on for your summary of the chancellor’s 2025 Spring Statement.

Personal tax thresholds and allowances are set to remain unchanged

Those who were concerned the chancellor would announce sweeping changes that might affect their personal finances will be breathing a sigh of relief as many worries didn’t materialise.

Personal tax

Reeves stuck to a pre-Spring Statement commitment to not increase personal taxes.

So, Income Tax thresholds and rates will remain unchanged, and thresholds are frozen until April 2028. As a result, your Income Tax liability is likely to rise in real terms.

Similarly, the rates and thresholds for paying Capital Gains Tax (CGT) and Dividend Tax will remain the same.

Individual Savings Accounts (ISAs) 

Before the Spring Statement, the government was reportedly considering reducing the amount you can tax-efficiently place in a Cash ISA each tax year to £4,000 in a bid to encourage greater investment.

The good news is the ISA subscription limit will remain at the current level (£20,000) in the 2025/26 tax year. The ISA subscription limit is frozen until 2030.

The Junior ISA (JISA) allowance will remain at £9,000 in 2025/26.

However, the government did note it will continue reviewing ISA reform options to improve the balance between cash and equities to earn better returns for savers, boost the culture of retail investment, and support its growth mission.

Pensions

Last year, the government announced a new Pension Schemes Bill, which will legislate several areas of pension policy. However, further reforms weren’t announced in the Spring Statement.

The Annual Allowance will remain at £60,000 in 2025/26. Your Annual Allowance may be lower if your income exceeds certain thresholds or you have already flexibly accessed your pension.

As usual, there was also speculation that the amount you could withdraw from your pension tax-free would be reduced, but this has remained unchanged. So, when you reach the normal minimum pension age (55, rising to 57 in 2028), you may withdraw up to 25% of your pension (up to a maximum of £268,275) before paying Income Tax.

State Pension

As expected, there were no announcements relating to the State Pension or the triple lock, which guarantees the State Pension will increase every tax year by either the rate of inflation, average earnings growth, or 2.5%, whichever is higher.

As a result, the full new State Pension will pay a weekly income of £230.25 in 2025/26.

High Income Child Benefit Charge reforms will come into place this summer

Although the chancellor did not explicitly announce the change, the Spring Statement document revealed that those who pay the High Income Child Benefit Charge will be able to do so through PAYE from summer 2025.

As it stands, those who pay the charge need to register for self-assessment to do so, even if they do not otherwise need to self-assess. But this year, the government is making it easier for families to pay the charge without needing to submit a tax return.

Inflation is forecast to meet the Bank of England’s 2% target by 2027

After reaching a 40-year high of 11.1% in October 2022, inflation, as measured by the Consumer Prices Index (CPI), has gradually fallen, bringing it closer to the Bank of England’s (BoE) target of 2%.

The chancellor announced in her Statement that in the 12 months to February 2025, inflation rose by 2.8%, down from 3% in January. Now that inflation is better under control, the BoE has cut its base rate three times since the general election, bringing the rate down from 5.25% to 4.5%. These cuts mean borrowers will likely pay less while savers may see their interest payments fall.

It was then announced that, according to the OBR’s forecast, inflation will average:

• 3.2% in 2025
• 2.1% in 2026
• 2% in 2027, 2028, and 2029 – the BoE’s target rate.

The key fiscal announcements from the 2025 Spring Statement

The chancellor’s speech largely revolved around changes to government spending and investment. Some of the key measures and announcements included in the Statement were to:

• Increase defence spending to 2.5% of GDP by 2027, including providing an additional £2.2 billion to the Ministry of Defence next year
• Rebalance payment levels in Universal Credit to incentivise people into work, and review the assessment for Personal Independence Payments, with the OBR stating these changes will save £4.8 billion from the welfare budget in 2029/30
• Crack down on promoters of tax avoidance schemes, as initially announced in the Autumn Budget in October 2024
• Invest £2 billion in social and affordable housing, so housebuilding reaches a 40-year high that helps put the government on track to reach its target of building 1.5 million homes by the end of this parliament
• Introduce a £3.25 billion Transformation Fund to streamline public services using technology and Artificial Intelligence, making the government “leaner and more efficient”. Additionally, government departments will reduce their administrative budgets by 15% by the end of the decade.

2024 Autumn Budget changes remain intact

In October 2024, the chancellor announced a series of tax-raising measures during the Autumn Budget, some of which could have affected your personal finances. These included:

• Inheritance Tax (IHT) will be levied on unused pension benefits from April 2027.
• Agricultural Property Relief and Business Property Relief will be reduced from April 2026.
• CGT rates for non-property gains were raised in line with property rates with immediate effect, and Business Asset Disposal Relief and Investors’ Relief were both reduced.
• Employer National Insurance contributions (NICs) will rise from April 2025, from 13.8% to 15%, and the threshold at which employers start paying NICs will also fall.
• Income Tax thresholds will remain frozen until 2028.
• The IHT nil-rate bands will remain fixed for a further two years, until 2030.
• VAT was levied on fee-paying schools, effective from 1 January 2025.
• The non-dom tax regime is set to be abolished from April 2025.
• The Stamp Duty Land Tax surcharge on second home purchases rose from 3% to 5% from 31 October 2024.
• Corporation Tax is now capped at 25% for the duration of the parliament.

While many hoped the chancellor would row back on some or all of these measures, all remain intact.

Please note

All information is from the Spring Statement documents on this page.

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

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

You’ve probably noticed that the Blue Wealth team loves sport, and we’re dedicated to supporting our local community.

So, what better way to combine the two than by sponsoring a local football team?

Keep reading to find out more.

A little bit about Torpedo AFC

Torpedo AFC is a Bristol-based senior football team (for players aged 16 and over) that was established in 1966.

The club is represented by four teams in the Bristol Downs Association Football League, with one team in each of the league’s four divisions. This is a standalone amateur league that was founded in 1905 and sits outside the traditional English football league pyramid.

The league has a unique format where all games are played on the same grounds – Clifton Down and Durdham Down (“The Downs”). We can’t wait to drop by and see the team in action!

Past successes and upcoming fixtures

The club has a long and proud history, and we’re excited to support them. Here are just a few of their many achievements to date:

• Rising through the ranks of the Bristol Downs Association Football League to achieve entry into the First Division
• Winning the Division 1 Championship in the 2015/16 season
• Winning the All Saints Cup in 2023/24.

The club’s promotion to and consistent presence in the top division of their local league shows the level of the players’ commitment and success.

If you’re keen to see Torpedo AFC in action, they play every Saturday (between September and April) on the Bristol Downs. So, when you next have a free weekend, pop by and cheer the team on. If you spot one of the Blue Wealth team on the sidelines, be sure to come and say hello.

The Blue Wealth kit

The Bristol Downs League has been uniting families, friends and the community for the last 120 years. So, when we got the chance to sponsor Torpedo AFC by providing their new kit, we were thrilled.

If you’re lucky enough to see the team play, you might spot the Blue Wealth name on the players’ shirts. As you can see from the photo – it looks great!

Our managing director, Rob Bowers said, “We are keen to support local events including amateur sport. With the Bristol Downs League venue only a 1/4 mile from the Blue Wealth office, supporting one of the teams in this grassroots football league seemed an obvious choice.”

If you’d like to find out more about the wonderfully unique Bristol Downs Football League, check out the fantastic nine-episode BBC podcast, Always at Home: Bristol’s Beautiful Game.

And as always, if you have any questions about Blue Wealth and how we can support you with all your financial planning needs, we’d love to hear from you.

Please email hello@bluewealth.co.uk or call us on 0117 332 0230.

Please note

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

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

The tax year end on 5 April is rapidly approaching , so you have just a few weeks left to make the most of your tax allowances and exemptions for 2024/25.

What’s more, chancellor Rachel Reeves announced significant tax changes for business owners in her Autumn Statement last year, many of which come into effect from 6 April.

It’s important to understand how these new rules could affect your finances so that you can plan for the new tax year and beyond.

Read on to discover three important tasks to check off your to-do list if you want to keep your personal and business finances as tax-efficient as possible.

1. Make the most of your pension Annual Allowance

If you’ve ever uttered the words, “my business is my pension”, and paying into a separate scheme is low on your list of priorities, you’re not alone. According to This is Money, just 51% of business owners pay into a pension each month.

However, relying on your business to fund your retirement might be a risky strategy.

External factors could affect both the income your company generates and how much wealth you walk away with if you sell. For example, planned changes to Business Asset Disposal Relief (BADR) could mean that you incur a higher Capital Gains Tax (CGT) bill if you sell your company after 5 April (more on this later).

Alternatively, it might be difficult to access the funds you have tied up in your business when you retire.

That’s why paying into a pension and making the most of your Annual Allowance can provide valuable peace of mind.

Your Annual Allowance is the maximum amount you can contribute to your pension in a single tax year without facing an additional tax charge.

Most people can contribute up to £60,000 – the Annual Allowance for the 2024/25 tax year – or 100% of their earnings, whichever is lower.

Your Annual Allowance may be lower if your income exceeds certain thresholds or you have already flexibly accessed your pension.

Remember too that you can carry forward unused Annual Allowance from the previous three tax years. So, 5 April could be your last chance to make the most of any unused allowance from the 2021/22 tax year.

2. Prepare for changes to employer National Insurance rates

In her Autumn Budget, the chancellor announced that the rate of National Insurance (NI) you pay as an employer will increase by 1.2% from 6 April to 15%.

The threshold at which you start to pay NI will also be reduced from £9,100 to £5,000 a year from the start of the 2025/26 tax year. This threshold will remain frozen until 6 April 2028 and then increase in line with the Consumer Prices Index (CPI) thereafter.

While the Employment Allowance will increase from £5,000 to £10,500, and become available to all businesses from 6 April, changes to the NI rates for employers could have significant cost implications for your company.

As such, you might want to consider paying any planned bonuses before the April increase.

Additionally, switching to a “salary sacrifice” scheme could help you mitigate the effect of these changes. This means reducing your employees’ cash pay in exchange for a non-cash benefit, such as pension contributions.

The main benefit of salary sacrifice is that both you and your employees are likely to pay less NI, as the rate is calculated based on employees’ earnings. What’s more, your staff could see their take-home pay increase.

So, implementing such a scheme may make financial sense. There could be non-financial benefits too, such as boosting employee morale and helping you attract and retain talent.

3. Dispose of personal and business assets strategically

In the build up to the Autumn Budget, there was widespread speculation that CGT rates would be brought in line with Income Tax rates.

While the chancellor did not go quite this far, she did increase some CGT rates, which took effect immediately (from 30 October 2024).

CGT rose from 10% to 18% for basic-rate taxpayers, and from 20% to 24% for higher-rate taxpayers. There are no longer separate rates for residential property disposals.

Thankfully, the Annual Exempt Amount – which is the amount of profit you can make when you sell chargeable assets before CGT becomes payable – remains unchanged. It stands at £3,000 for the 2024/25 tax year.

So, if you’re planning to sell any of your assets, it might be worth doing so strategically. For example, you could spread sales over several tax years to avoid exceeding your Annual Exempt Amount. Alternatively, you might want to transfer assets to your spouse or civil partner to make use of their Annual Exempt Amount.

As mentioned previously, the chancellor also announced changes to BADR in her Budget.

If you’re eligible for BADR – which allows you to pay less CGT when you dispose of all or part of your business – the rate of CGT will rise from 10% to 14% from 6 April 2025, and to 18% from 6 April 2026.

As such, if you’re considering selling your business or shares in a business, you may want to do so before the new rates take effect.

Get in touch

Professional financial advice could play a key role in helping you manage your business and personal finances tax-efficiently.

If you’d like help preparing for the tax year end or planning for the year ahead, we’d love to hear from you.

Please email hello@bluewealth.co.uk or call us on 0117 332 0230.

Please note

The content of this newsletter is offered only for general informational and educational purposes. It is not offered as, and does not constitute, financial advice.

Blue Wealth Ltd is not responsible for the accuracy of the information contained within linked sites.

Blue Wealth Ltd is an appointed representative of Best Practice IFA Group Ltd, which is authorised and regulated by the Financial Conduct Authority.

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

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

Workplace pensions are regulated by The Pension Regulator.

Approved by Best Practice IFA Group 17/03/25

When a new tax year starts, many allowances reset. So, checking if you could use these valuable allowances before 5 April 2025, when the 2024/25 tax year ends, might help your money go further.

It’s important to understand which allowances fit into your financial plan and suit your goals. So, this guide could help you assess which allowances you might want to use before the current tax year ends.

The guide explains the:

1. ISA allowance
2. Junior ISA allowance
3. Dividend Allowance
4. Capital Gains Tax Annual Exempt Amount
5. Marriage Allowance
6. Pension Annual Allowance
7. Inheritance Tax annual exemption

Download your copy here: ‘7 allowances you might want to use before the end of the 2024/25 tax year’ to find out more now.

If you have any questions about using allowances before the end of the tax year or managing your finances in the new 2025/26 tax year, please get in touch.

On 30 October 2024, chancellor Rachel Reeves announced a number of tax changes as part of her Autumn Budget.

One of the most significant – at least in terms of estate planning – was the inclusion of unused pension funds and death benefits in a person’s estate for Inheritance Tax (IHT) purposes.

Indeed, PensionsAge has reported that more than 150,000 estates may be affected by this amendment to current rules.

While this change is not due to take effect until April 2027, it could have important implications for your pensions and estate plan. As such, it’s worth getting to grips with the new rules and potentially, reconsidering how you want to pass on your wealth to loved ones.

Keep reading to learn more.

Pensions currently offer a tax-efficient way to pass on your wealth to loved ones

Your beneficiaries may face an IHT bill when they inherit your wealth if the value of your estate exceeds the following thresholds:

• £325,000 for most estates – This is your “nil-rate band”.
• £175,000 when passing on a home to your children or grandchild – This is your “residence nil-rate band”. Your residence nil-rate band may be reduced if your estate exceeds £2 million in total.

The government has frozen these thresholds at current levels until 2030.

You could combine these two IHT-free thresholds and pass on up to £500,000 tax-free – or up to £1 million as a couple.

Additionally, you can usually leave assets to your spouse or civil partner without triggering an IHT charge.

Any portion of your estate that you do not leave to a spouse or civil partner or that exceeds the IHT thresholds, is usually taxed at 40%.

However, under current rules, your pension is not considered part of your estate for tax purposes. As such, pensions can provide an effective way to pass on your wealth tax-efficiently.

Yet, it’s important to note that the Lump Sum and Death Benefit Allowance (LSDBA) limits the overall amount that your beneficiaries can take from your pension scheme without incurring a tax charge. This only applies if you die before you turn 75.

Inheritance Tax changes could result in a “double tax” on pensions

From April 2027, pensions will no longer be exempt from IHT. So, if your estate exceeds the tax-free thresholds, any unused pension savings will be included in IHT calculations.

According to figures from the UK government, this change could increase the average IHT bill by £34,000.

What’s more, if you pass away after the age of 75, your beneficiaries will pay Income Tax at their marginal rate when they draw from your pension.

This could mean that any pension savings you leave for your loved ones are diminished by a “double tax” – IHT and Income Tax.

So, if you’re currently relying on using your pension to help mitigate IHT, it might be worth reviewing your estate plan.

3 practical ways to address the planned Inheritance Tax changes

Fortunately, there are several ways you could mitigate a potential IHT bill, in light of the planned changes.

1. Gift some of your wealth during your lifetime

You could reduce the value of your estate and a potential IHT bill by gifting some of your wealth to loved ones during your lifetime.

In the 2024/25 tax year, you are entitled to the following gifting allowances and exemptions:

• Annual exemption – Allows you to gift up to £3,000 to one or multiple people. You can carry forward any unused exemption to the following tax year – but only for one tax year.
• Gifts for weddings or civil partnerships – You can give up to £5,000 to a child, £2,500 to a grandchild or great-grandchild, and £1,000 to any other person.
• Small gift allowance – You can give as many gifts of up to £250 each tax year as you wish (provided that you have not used another allowance on the same person).
• Gifting from surplus income – This rule allows you to pass on money from your income directly rather than gifting from savings. Theoretically, there is no limit to the amount you could gift in this way, although you must meet the strict criteria to qualify for this exemption – payments must be made regularly, you must be able to maintain a reasonable standard of living while giving the gifts, and your gifts should come from surplus income.

Beyond these annual gifting exemptions, most other gifts you give are likely to be “potentially exempt transfers” (PETs).

Any PETs will usually fall outside your estate for IHT purposes, provided that you live for more than seven years after giving the gift. However, if you die within seven years, taper relief rules may apply.

This means that the amount of IHT due will be calculated based on how soon you die after making the gift.

The table below shows how IHT relief tapers for PETs:

Bear in mind that PETs will be the first part of your estate assessed against your nil-rate band. So, if you die within seven years of making PETs that do not exceed your nil-rate band, there will be no taper relief.

2. Leave your pension to your spouse or civil partner

Any wealth – including pensions – you leave to your spouse or civil partner is usually exempt from IHT. So, passing your pension savings on to them could be an effective way to mitigate your IHT liability.

However, your pension will not automatically transfer to your spouse or civil partner when you die; you need to actively nominate them as a beneficiary.

You can usually do this by contacting your pension provider and completing an “expression of wish” or “nomination of beneficiaries” form.

If you have multiple pensions, it’s important to make arrangements with each provider to ensure that your spouse or partner benefits from your full pension entitlement.

You might also want to update any expression of wish forms you have completed previously, for example, if an ex-partner is named as a beneficiary.

It’s worth noting that while your partner or spouse may not incur an IHT charge if you pass your pension on to them, they will still have to pay Income Tax on any withdrawals they make if you die age 75 or older.

3. Place life insurance in a trust

Calculating your IHT liability and setting up a life insurance policy for this amount may provide invaluable peace of mind.

Your beneficiaries could use the insurance payout to cover a potential IHT bill, which may alleviate some of the stress and financial pressure they may otherwise experience after you’re gone.

What’s more, placing your life insurance in a trust could mean that the payout will not form part of your estate for tax purposes and as such, will not be subject to IHT.

Additionally, your loved ones may receive their inheritance more quickly, compared to going through the probate process which can take months or more.

Get in touch

If you’re concerned about the upcoming changes to IHT and pensions, we can help you review and update your estate plan.

Please email hello@bluewealth.co.uk or call us on 0117 332 0230.

Please note

The content of this newsletter is offered only for general informational and educational purposes. It is not offered as, and does not constitute, financial advice.

Blue Wealth Ltd is not responsible for the accuracy of the information contained within linked sites.

Blue Wealth Ltd is an appointed representative of Best Practice IFA Group Ltd, which is authorised and regulated by the Financial Conduct Authority.

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

The Financial Conduct Authority does not regulate estate planning or tax planning.

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.

Remember that taper relief only applies to gifts in excess of the nil-rate band. It follows that, if no tax is payable on the transfer because it does not exceed the nil-rate band (after cumulation), there can be no relief.

Taper relief does not reduce the value transferred; it reduces the tax payable as a consequence of that transfer.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

Approved by Best Practice IFA Group 11/02/2025

At Blue Wealth, we love what we do and work hard throughout the year to help you achieve your financial and life goals.

So, when December rolls around, we’re ready to let our hair down and celebrate our efforts at the team Christmas party.

Gatsby glad rags

Our end-of-year get-together took place on Friday 13 December, at the newly renovated Delta Hotels by Marriott in the heart of Bristol city centre.

The whole Blue Wealth team and partners turned up to enjoy some festive fun.

Our theme for the evening was The Great Gatsby. If you’ve read this classic novel by F. Scott Fitzgerald or seen one of the many screen and stage adaptations, you’ll know that this gripping story was set in the roaring 1920s.

We had great fun dressing up in suits, flapper-style dresses, sequins and glitz!

Delicious food and first-class entertainment

The party began with an excellent three-course meal, including turkey and all the Christmas trimmings.

We then moved on to a spot of gambling (with novelty money) at the casino tables, before singing and dancing the night away to music performed by an outstanding live band – there were some impressive moves on the dancefloor!

It was a brilliant evening and a great opportunity to get the team together to mark the end of another successful year.

Now that January is in full swing, we’re back hard at work and looking forward to developing Blue Wealth in 2025.

Keep your eyes on your email for news of our next social and charity events.

Get in touch

If you’d like to find out more about the Blue Wealth team and learn how we can help you with your financial planning needs, we’d love to hear from you.

Please email hello@bluewealth.co.uk or call us on 0117 332 0230.

Please note

The content of this newsletter is offered only for general informational and educational purposes. It is not offered as, and does not constitute, financial advice.

January is the perfect time to reflect, set new financial goals, and seek out ways to make positive changes.

While it might be easy to identify unhelpful habits you’d like to adjust, understanding the “hidden” emotions that drive these behaviours could be more of a challenge.

Yet, becoming aware of why you behave in certain ways could unlock your potential for positive change – until you know the problem, it may be hard to find a solution.

Indeed, when it comes to financial decision-making, your subconscious mind might play a significant role.

Read on to find out how overcoming these four common psychological biases – unconscious and systematic errors in thinking – could help you make better financial choices in 2025 and beyond.

1. Loss aversion

According to the Nobel prize-winning psychologist and economist Daniel Kahneman, “losses loom larger than gains”.

This “loss aversion” could skew your perception of risk and lead you to make financial decisions based on your emotions, rather than data and logic.

For example, if there is a downturn in the market and your investments fall in value, your knee-jerk reaction might be to sell your assets to avoid or minimise losses. Yet, this essentially turns a paper loss into an actual one, potentially jeopardising your progress towards your long-term goals.

On the other hand, staying calm and holding on to your investments could allow them to bounce back in value if the markets recover.

Loss aversion might also drive you to favour low-risk investments that limit your returns.

Overcoming loss aversion

• Focus on your long-term goals and avoid reacting to short-term fluctuations in the market.
• Make financial decisions based on data and logic rather than your emotions.
• Seek objective advice from a financial planner who can help you balance risk effectively.

2. The endowment effect

This psychological bias could lead you to place a higher value on assets you own, compared to those you don’t.

If you’re emotionally invested in this way, you might find it difficult to sell your assets, even if this might be the most logical financial decision.

The endowment effect often goes hand in hand with loss aversion – you’re less likely to sell something if you feel this would equate to making a loss.

Indeed, in a classic 1990 study by Kahneman and his colleagues, published by Science Direct, participants who were given a mug were reluctant to trade it for an item of similar value. What’s more, the amount they were willing to pay to purchase an item was typically much lower than the amount they were willing to sell it for.

This shows how the endowment effect can act as a powerful psychological bias that could lead you to make irrational valuations of the assets you own.

Overcoming the endowment effect

• Create a solid investment strategy that includes a clear plan of when to buy and sell assets.
• Regularly review and rebalance your investment portfolio with the help of a financial planner.

3. The sunk cost fallacy

You’ve probably heard of the saying, “throwing good money after bad”. This is the simplest way to understand the “sunk cost fallacy”.

If you’ve ever doggedly continued with a financial strategy that isn’t working, because you’ve invested “too much” time, money, and effort to change course, that’s the sunk cost fallacy at work.

For example, you might continue to pour money into maintaining and marketing a rental property, even though you struggle to find regular tenants who can provide a worthwhile income.

While investing for the long term is often a valid strategy, if you’re continually investing in an asset that is underperforming, it’s important to objectively weigh up your options rather than holding tight for emotional reasons.

Overcoming the sunk cost fallacy

• Set clear goals and track the performance of your investments.
• Look forwards rather than backwards – acknowledge the “sunk cost” but base your decisions on your long-term plan rather than how much you’ve invested in the past.

4. Confirmation bias

Confirmation bias refers to the human tendency to seek out information that supports our pre-existing beliefs.

Perhaps you feel that investing is “too risky” or that financial protection is not for you because you think that insurers never pay out. Confirmation bias might draw your attention to news headlines and loved ones’ experiences that seem to validate these beliefs, such as stories about insurance companies that refused to pay out on a seemingly legitimate claim.

Unfortunately, this kind of irrational thinking could leave you stuck repeating the same financial mistakes over and over again.

For example, you might miss out on valuable investment opportunities that could help you progress towards your long-term goals, or fail to take out adequate financial protection, which could provide a valuable safety net.

Overcoming confirmation bias

• Conduct unbiased research from a variety of sources before making any financial decisions.
• Use your trusted financial planner as an objective sounding board.

Get in touch

Becoming more aware of any psychological biases you might have could be a crucial first step towards more informed financial decision-making.

You may not be able to stop yourself from feeling certain emotions. Yet, understanding the reasons behind your financial behaviours could help you put strategies in place to overcome your biases and make data-driven, logical decisions.

If you’d like an objective perspective on your finances and to learn how to make decisions based on data and logic rather than emotions, we can help.

Please email hello@bluewealth.co.uk or call us on 0117 332 0230.

Please note

The content of this newsletter is offered only for general informational and educational purposes. It is not offered as, and does not constitute, financial advice.

Blue Wealth Ltd is not responsible for the accuracy of the information contained within linked sites.

Blue Wealth Ltd is an appointed representative of Best Practice IFA Group Ltd, which is authorised and regulated by the Financial Conduct Authority.

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

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

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

Approved by Best Practice IFA Group 20/01/25