Supporting a charity could give you that feel-good factor and provide a sense of purpose. When you’re looking at the benefits from a tax perspective, it might make financial sense in some circumstances too.

Indeed, according to a June 2025 article published by Professional Adviser, more people are leaving a charitable legacy in their will as a way to reduce a potential Inheritance Tax (IHT) bill. 

The first step to making your charitable efforts tax-efficient is to make them part of your financial plan. By viewing donations alongside your other priorities, you may be able to work with your financial planner to find the most tax-efficient ways of supporting the causes that are important to you.

Read on to find out why naming a charity as a beneficiary in your will might form part of your estate plan.

1. Claim tax relief through Gift Aid

If you’re a taxpayer, one of the simplest ways to donate to charities tax-efficiently is to use Gift Aid. 

By making a Gift Aid declaration, the charity you support can reclaim the basic rate of Income Tax you’ve already paid. As a result, if you donate £100 to a charity, the organisation will benefit from a £125 boost. 

In addition, if you’re a higher- or additional-rate taxpayer, you can claim the difference by completing a self-assessment tax return. So, if you pay Income Tax at 40%, you can claim back 25p in tax relief for every £1 you donate. 

2. Make donations from your income 

Some employers allow you to make regular donations directly from your income through a Payroll Giving scheme. 

The donation would be made from your gross salary, before your taxes and other deductions are made, which can make it tax-efficient. Similar to Gift Aid, it’s an option that could increase your charitable support and make sense from a personal tax perspective. For example, you might make donations from your income to avoid moving into a higher tax bracket and potentially losing other tax breaks. 

3. Donate land, property, or shares

When disposing of certain assets, including investments and property that isn’t your main home, you’ll typically be liable for Capital Gains Tax (CGT) if the profits exceed £3,000 in the 2025/26 tax year. 

However, you may receive CGT relief if you donate land, property, or shares to a charity. When making this type of donation, a charity may ask you to sell the gift on its behalf, and you can still claim tax relief on this donation. 

Be sure to keep an accurate record of the donations, including any requests from charities to sell the assets on their behalf. 

4. Leave a charitable legacy in your will

Leaving a charitable legacy in your will could reduce the rate of IHT your estate pays.

In 2025/26, the nil-rate band is £325,000. If the value of all your assets, known as your “estate”, is below this threshold, no IHT is due. If the value of your estate exceeds the nil-rate band, IHT could be due, but there are often other allowances and steps you could take to mitigate a potential IHT bill.

An estate plan could help you understand if your estate could be liable for IHT.

The standard rate of IHT is 40%. However, if you leave at least 10% of your estate to charitable causes when you pass away, the rate falls to 36%. 

So, for some estates, leaving money to charity could be a win-win – your beneficiaries might inherit more while also supporting a good cause. 

As assets left to charities aren’t liable for IHT, you might also leave assets to them in your will to bring the value of your estate under the IHT threshold.  

Contact us to talk about your charitable giving 

There are many reasons why you might want to make charitable giving a priority when creating a financial plan. If you’re keen to support good causes now or in the future, we could work with you to understand how you might do so tax-efficiently. 

Please get in touch to arrange a meeting. 

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

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

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.

The Financial Conduct Authority does not regulate estate planning, Inheritance Tax planning, or will writing.

Cash can be comforting. It’s familiar, it’s accessible, and it’s tangible. But while cash savings can be part of a well-balanced financial plan, they’re not always the best-performing asset. 

Data shows that many UK adults are reluctant to depart from cash. In an update reported by MoneyWeek, the Financial Conduct Authority (FCA) reported that 61% of adults with £10,000 or more in investible assets are holding at least three-quarters in cash. 1 in 5 adults have cash savings of £25,000 or more, and around 1 in 10 have savings exceeding £50,000.

The regulator warned that holding such a large proportion of assets in cash could mean UK adults are missing out on the longer-term returns potentially available from investing, even when savings interest rates are high. 

Read on to find out alternative options to cash, how to begin moving into other investments, and the times cash might be a more appropriate choice.

Global economic uncertainty saw more investors turning to cash, but history tells us markets do rally

Part of the appeal of cash currently can be attributed to market volatility that spooked investors in the early months of 2025, with President Trump’s tariff announcements causing widespread uncertainty.

According to a May 2025 report from MoneyAge, this caused a rise in the number of DIY investors – those who manage their own portfolio – turning to cash. Between February and April, 56% increased their exposure to cash, a 10% increase compared to investors who switched to cash after the 2024 Autumn Budget. 

It’s understandable for you to want your wealth kept safe, and for global turbulence to drive you to think about cashing in. But history tells us that volatility is to be expected. While we can’t rely on past performance as an indicator for the future, we can also see that markets bounced back quickly from events such as the 2008 financial crisis, the pandemic, and the beginning of the conflict in Ukraine. 

The below graph from NatWest covering the period between 2003 and 2023 highlights this, showing the return on global equities (shares), bonds, and cash at critical points in history. Although cash remains relatively level, the eventual returns from bonds and equities would have been higher. 

Rising inflation could have a negative effect on your purchasing power

Inflation is always another key consideration with cash savings. Unless your savings interest rate is consistently above the rate of inflation, the real value of your money could remain the same, or even go down. 

Ultimately, this could dent your purchasing power in the long term. 

Consider this example. You have £100, which can buy £100 of goods and services today. If you save your money in a bank account with 1% interest, you’ll have £101 next year. But if inflation is 5%, those same goods and services will cost £105 next year. With £101, the money in the bank would no longer be enough to buy it – it has lost value in real terms.

Historically, shares and bonds have always outperformed cash. According to Vanguard, data from 1901 to 2024 shows that average annual returns after inflation were: 

• 5.34% for global shares

• 1.36% for bonds

• 0.89% for cash. 

So, you can see the argument for investing at least some of your wealth, helping it keep pace with the rising cost of living.

Considering your goals and risk approach can help design a suitable investment portfolio for you

Shifting some of your cash savings into investments could help you see better returns. But before you do this, the first thing to consider is your goals. For example, are you hoping to receive an income from your investments, or are you investing for long-term growth? 

This can help you determine the right place for your wealth. You also need to consider your approach to risk: do you want a low-risk option that will pay out less, or a higher-risk alternative with potentially higher returns? 

Talking with a financial planner can help you establish your own financial strategy, based on your aspirations, risk tolerance, and preferences. They can work with you to build a diverse portfolio, meaning that if you see losses in one area, these could be mitigated in others. 

Some of the most common types of investments you could consider include: 

• Stocks and shares. These are a stake in a company, and are traded on a stock exchange. The price of shares can go up or down. 

• Bonds. Investing in a bond means you’re effectively lending money to a company or government, which they pay back at a fixed rate of interest. They’re a more stable investment than shares, but can be negatively impacted by interest rate fluctuations. 

• Funds. Here, your money is invested along with other people’s to buy a range of assets, which can include shares and bonds, helping to diversify your investments. As they’re also spread across different markets and sectors, poor performance in one area can be offset by others. 

There are other investment options, too, which a financial planner can talk through with you.

Cash is a good option for short-term goals and as an emergency fund

None of this is to say that cash is obsolete. Far from it, cash can be an important part of a well-balanced financial plan. 

It’s a good idea to have a cash reserve in place as an “emergency fund”, which could be three to six months’ worth of your essential outgoings. 

It can also make sense to save for short-term goals and purchases in cash savings. For example, if you’re saving for a holiday in a year’s time, you need to know that you’ve saved enough, without risk, and that it will be accessible when you need it. 

Get in touch

Talk to us about how to strike the right asset balance, including cash, for your wealth portfolio. 

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

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.

High earners striving to build wealth, dubbed “Henrys” (high earner, not rich yet), may find their tax position changes drastically as their income grows. Being aware of your tax liability now and in the future could allow you to create a financial plan that helps you get more out of your money by potentially reducing your tax bill. 

There isn’t a clear definition of how much you need to earn to be a Henry or what constitutes being “wealthy”. A huge range of factors could affect your financial position, from where you live in the UK to your long-term goals. 

According to a February 2025 study from HSBC, people in the UK believe you need an average annual income of £213,000 to be wealthy. The figure is around six times the national average income and represents the top 4% of earners. 

However, even people earning below this threshold could find they’re affected by high-earner tax rules. As a result, you may benefit from regular reviews.

If you’re a Henry, here are four tax rules that might affect your long-term finances.  

1. The “60% tax trap” may affect you if your salary exceeds £100,000 

A key tax implication of becoming a high earner is losing the Personal Allowance – the amount you can earn each tax year before Income Tax is due. This could mean you fall into the “60% tax trap”.

While there isn’t an official tax rate of 60% on earnings, tax rules may mean you end up paying more Income Tax than you expect. Indeed, a December 2024 report in the Financial Times suggests the number of people affected increased by 45% between 2021/22 and 2023/24. 

For every £2 you earn above £100,000, you lose £1 of the Personal Allowance, which is £12,570 in 2025/26. So, once you’re earning £125,140 or more, you don’t have any Personal Allowance. 

In real terms, this means for every £100 you earn between £100,000 and £125,140, you pay Income Tax of £40 and lose another £20 because of the tapering of the Personal Allowance. As a result, you’re effectively paying 60% tax on this portion of your income. 

Depending on your circumstances, there are some steps you might take to beat the 60% tax trap, including:

• Increasing your pension contributions 

• Making charitable donations from your salary

• Using a salary sacrifice scheme, where you’d agree with your employer to give up a portion of your salary in return for other benefits, such as higher pension contributions or a company car. However, it is important to note that salary sacrifice is not suitable for all employees. Your pre-tax salary would be reduced, and this may affect your entitlement to state benefits.

It’s important to weigh up the pros and cons of these options, and there might be other ways to manage your Income Tax liability. Please get in touch if you have any questions. 

2. Your pension Annual Allowance could fall to £10,000

The pension Annual Allowance is how much you can tax-efficiently contribute to your pension each tax year. For most people, the Annual Allowance is £60,000 in 2025/26.

However, the Annual Allowance is gradually reduced if you’re a high earner. If your threshold income is more than £200,000 or your adjusted income (your income plus the amount your employer pays into your pension) is above £260,000, you’ll normally be affected by the Tapered Annual Allowance. It reduces your Annual Allowance by £1 for every £2 your adjusted income exceeds the threshold.

The maximum reduction is £50,000. So, if your adjusted income is £360,000 or more, your Annual Allowance would be just £10,000. 

As a result, it could significantly affect how you might effectively save for retirement. 

3. Parents may pay the High Income Child Benefit Charge

Parents claiming Child Benefit may be subject to the High Income Child Benefit Tax Charge, if one of them earns more than £60,000 a year.

Importantly, the tax charge applies if one of the parent’s income exceeds the threshold, rather than the household income. So, if both parents worked and earned £55,000 each a year, the High Income Child Benefit Tax Charge would not be applied.

The Income Tax charge would be 1% of your Child Benefit for every £200 of income between £60,000 and £80,000. The charge will never exceed the amount of Child Benefit you receive and is usually paid through a self-assessment tax return. 

While you wouldn’t receive any Child Benefit if you or your partner’s income exceeds £80,000, you may still claim it for National Insurance (NI) credit purposes. For example, if one partner is not employed because they’re caring for the child, claiming Child Benefit may mean they receive NI credits.

To receive the full State Pension, you usually need 35 years of NI credits on your record. As a result, claiming Child Benefit, even if you exceed the threshold, could be important for your or your partner’s future State Pension entitlement. While the State Pension often isn’t enough to retire on alone, it could still play a valuable role in your long-term financial security. 

4. Inheritance Tax could reduce how much you leave behind for loved ones 

If you’re still building wealth, it might feel too early to think about how you’d like to pass it on to loved ones in the future. Yet, establishing an estate plan now can be valuable and evolve as your wealth changes. 

In 2025/26, the nil-rate band is £325,000. If the total value of your estate is below the threshold, no Inheritance Tax (IHT) would be due when you pass away. 

In addition, some estates may be able to use the residence nil-rate band if the main home is left to direct descendants, such as your children or grandchildren. In 2025/26, this is £175,000. However, the residence nil-rate band is reduced by £1 for every £2 that the estate exceeds £2 million. 

You can pass unused allowances to your spouse or civil partner, so an estate may be worth up to £1 million before IHT is due. Yet, the threshold for paying IHT could be significantly lower if you’re not estate planning with a partner or the estate isn’t eligible for the residence nil-rate band. 

With a standard tax rate of 40% applied to the portion of the estate that exceeds the threshold, your loved ones could face a hefty bill.

The good news is that there are often steps you can take to reduce a potential IHT bill if you’re proactive. So, if you’re a Henry, making estate planning part of your tax considerations now could be useful in the long run and enable you to pass on more to your loved ones. 

Contact us to talk about your tax liability  

Reducing your tax liability now could mean you have more opportunities to invest or build long-term wealth, as well as potentially pass more on to your loved ones. If you’d like to create a tailored financial plan that considers your tax position, please get in touch. 

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

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

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

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

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

One of the retirement challenges many people face is how to handle wealth decumulation. During your working life, you’re typically working to increase your wealth, and this usually shifts as you enter retirement. 

So, if you’re retired or are nearing the milestone, read on to find out more about decumulation dilemmas and how you might manage them. 

Changing your mindset may be the first decumulation dilemma 

You might expect retirement challenges to focus on your money. Yet, one of the first obstacles to overcome is often your mindset.

After decades of saving money or contributing to your pension, it can feel strange to start depleting your assets, even when you’ve built them up to fund retirement.

For some retirees struggling to change how they view their assets, they might spend retirement worrying about their finances, even though they’re secure. Alternatively, they might unnecessarily cut back and miss out on experiences they’ve been looking forward to.

Having a clear financial plan could give you the confidence to use your assets to enjoy retirement. 

You may be responsible for ensuring your pension and other assets last your lifetime 

Many people choose to take a flexible income from their pension to fund their retirement. While this gives you more freedom, you also need to consider how long the money needs to last. If you don’t, there’s a risk you could spend too much too soon.

It’s a common fear among modern retirees. Indeed, according to a January 2025 article in IFA Magazine, half of people over the age of 55, the equivalent of 10.5 million people, worry their retirement savings won’t last their lifetime. Just 27% said they were confident they wouldn’t run out of money. 

It’s easy to see why it’s a concern for so many retirees. Your pension and other assets you use to fund retirement typically need to last for decades.

February 2025 Office for National Statistics data suggests a 65-year-old woman has an average life expectancy of 88, and a 1 in 10 chance of celebrating their 98th birthday. A 65-year-old man has an average life expectancy of 85, and a 1 in 10 chance of reaching 96. 

So, to be certain you won’t run out of money, most retirees need to consider how to create an income for more than 30 years.

As part of your financial plan, a cashflow model can be valuable when you want to understand how to use your wealth in retirement. A cashflow model will show you how the value of your assets will change depending on certain assumptions, such as potential investment returns and the decisions you make. 

You might use a cashflow model to answer questions like:

• Do I have enough to retire five years earlier than planned?

• Could I afford to increase my retirement income by £10,000 a year?

• What would happen if I faced an unexpected expense and needed to withdraw a lump sum?

So, it could help you understand if you have “enough” and if you might run out of money during your lifetime.

It’s important to note that the outcome of a cashflow model cannot be guaranteed, and regular reviews are essential. However, it can be a valuable indicator of whether your plan may provide financial security throughout your life or if you could benefit from making adjustments. 

Inflation could affect your income needs during retirement 

Your income needs during retirement are unlikely to remain static. As well as your lifestyle plans, you might benefit from understanding how inflation could affect you. 

The Bank of England’s (BoE) inflation calculator highlights the effect rising prices could have on your income needs throughout retirement.

Imagine you retired in 2014 and calculated that you needed your pension to provide an annual income of £25,000. A decade later, your income will need to have increased to more than £33,000 simply to maintain your spending power.

So, if you hadn’t considered inflation when reviewing your pension, you could unexpectedly find your income falls short in your later years or that you run out of money sooner than expected. 

With retirements often spanning several decades, even a seemingly low rate of inflation could add up. 

As a result, making inflation part of your retirement plan is often an important part of ensuring you’re depleting assets at a sustainable rate. Again, a cashflow model could be useful for understanding the effect of inflation on your income. 

A retirement plan could help you manage decumulation effectively 

There isn’t a one-size-fits-all solution when managing your retirement finances. Instead, a long-term tailored financial plan could help you manage decumulation and other retirement challenges in a way that reflects your priorities and situation. 

Please get in touch if you’d like to arrange a meeting to talk about your retirement. 

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

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.  

The Financial Conduct Authority does not regulate cashflow modelling.