Brits could face a potential funding gap if they need care later in life. A report from the Just Group (8 December 2025) suggests that 6 in 10 over-45s are underestimating the cost of a care home by thousands of pounds. 

Industry figures suggest average residential care home fees are almost £66,500 a year. However, 60% of over-45s believe the annual cost would be less than £60,000, with 28% underestimating the true cost by more than half. The cost of care figure relate to self-funders and may vary across the UK and will depend on the needs of the individual. 

Of those surveyed who had previously helped find care for a loved one, 85% said they were shocked by the cost. 

With the report estimating that 4 in 5 people aged over 65 will require some level of care before they die, thousands of families could be surprised by the care bill they receive. 

Read on to find out whether you’re likely to need to self-fund care, and how to make it part of your financial plan. 

Taxpayer support is means-tested, and many care home residents need to pay care costs

According to the report, 67% of people surveyed said they were surprised by how little financial support the state provides, and how much they’d have to contribute.

Indeed, taxpayer support is means-tested, and as a result, many people are required to cover all or a portion of their care costs.

In England and Northern Ireland, anyone with assets valued at more than £23,250 is expected to pay their own residential care costs in full. You will have to contribute some of your income to cover fees if the value of your assets is between £14,250 and £23,250. Whether your home is included when calculating the value of your assets will depend on your circumstances.  

In Scotland, personal and nursing care is free, but you might still need to pay for other costs, such as accommodation. If your assets total more than £35,000, your local council will not cover the additional fees associated with a care home.

In Wales, you might need to cover all your care home fees if you have assets that exceed £50,000. If your capital is below this threshold, your local council will contribute towards your fees. 

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 care plan could provide certainty and peace of mind

While you may hope that you don’t need to move into a care home in the future, making the potential costs part of your financial plan now could offer peace of mind.

The report from Just Group found that 73% of people said the process of finding care was very stressful. Being unsure whether you can afford the costs and how it might affect your goals could further add to this stress for both you and your loved ones.

Yet, the survey shows only 7% of over-75s have made a specific provision to cover the cost of care themselves. 

There are several ways you might fund care yourself. According to the report, among those paying for their own costs, the top three ways were:

• Savings or investments (59%)

• Pension income (48%)

• Proceeds from selling property (36%).

A care plan might involve reviewing your assets and setting a portion of them aside to cover care if it’s required. 

Being proactive about planning for care could mean you have greater choice in the future.

For example, 71% of people said a care home close to family would be important to them. If you have a care fund to draw on, you might be able to select a care home that would otherwise be out of reach.

Similarly, you might prefer a care home that has certain amenities, which would make the next chapter of your life more enjoyable. Again, making care part of your financial plan could mean you have the option to choose a care home that suits your needs.

Contact us to talk about your care plan

A care plan can help you set money aside in case you need support later in life and offer you peace of mind. Please get in touch to talk about making care part of your wider financial plan.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

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

Tax and social care funding rules can 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 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.

Think carefully before securing other debts against your home. Equity release will reduce the value of your estate and can affect your eligibility for means-tested benefits.

If you’re saving for retirement, you will want to get the most out of what you’re putting into your workplace or private pension. 

Fortunately, there are plenty of tax efficiencies when you save your wealth into a pension.

Indeed, any investment returns generated within your fund are typically free from Income Tax and Capital Gains Tax. 

Better yet, you can also receive tax relief on your contributions, significantly bolstering the value of your pot over time. 

Despite these advantages, many people overlook one of the most valuable benefits pensions offer.

Research from PensionsAge (8 December 2025) found that 44% of UK adults don’t know what pension tax relief is, while just 31% could identify its purpose.

Over time, missing out on pension tax relief could be costly. So, continue reading to find out how pension tax relief works and how it could significantly improve your retirement income. 

Pension tax relief is when the government tops up your contributions

When you pay into a pension, the government essentially “tops up” these contributions based on your marginal rate of Income Tax. Tax relief at the basic rate (20%) is usually added to your pension automatically, known as “relief at source”. However, if you’re a higher- or additional-rate taxpayer, you will normally have to claim your full entitlement via HMRC.

Looking at it another way, tax relief acts as a “refund” of the Income Tax you have already paid on the money you put in your pot.

As a result, in England, Wales, and Northern Ireland, a £100 payment into your pension would typically cost:

• £80 if you pay basic-rate Income Tax

• £60 if you pay higher-rate Income Tax

• £55 if you pay additional-rate Income Tax. 

Please note, Income Tax bands and rates are different in Scotland, which affects pension tax relief.

For most personal pensions, basic-rate tax relief is applied automatically using a system known as “relief at source”. Some schemes use net pay arrangements, where tax relief is applied differently (this article talks about relief at source only).

If you pay higher- or additional-rate tax, you’re usually entitled to relief at your marginal rate. However, this portion isn’t added automatically. Instead, you usually need to claim it through your self-assessment tax return or by directly contacting HMRC. 

Many people forget to do this. Standard Life (24 February 2025) estimates that up to £1.3 billion of extra relief went unclaimed between the 2016/17 and 2020/21 tax years. 

This can make a considerable difference:

• A £1,250 total pension contribution would cost a basic-rate taxpayer £1,000, as £250 is added by HMRC.

• For a higher-rate taxpayer, the same total contribution would only cost £750 once the extra relief is claimed. 

As such, ensuring you claim everything you are entitled to could substantially increase the amount of money you can put towards retirement. 

If you believe you have missed out in the past, it’s worth noting that it is possible to backdate your tax relief claims for up to four tax years.

There are limits to the amount you can tax-efficiently contribute to your pension

While the incentives of tax relief are generous, there are limits on how much you can pay into your pension each year tax-efficiently. 

You can receive tax relief on any pension contributions worth up to 100% of your taxable earnings for that tax year. But if you surpass the Annual Allowance, your contributions could face a tax charge. 

If you don’t earn an income or are a non-taxpayer, you can contribute £2,880 to your pension annually and benefit from 20% tax relief. 

The Annual Allowance sets the maximum amount that can be contributed across all your pensions in a single tax year without incurring a tax charge. 

As of 2025/26, this is £60,000. While the Annual Allowance does reset each year, you may be able to carry forward unused allowances from the previous three tax years, provided you were still a member of a pension at the time. You also need to use all of the current year’s allowance before you can carry forward. 

It’s vital to note that if you have a high income, you may face the Tapered Annual Allowance. 

In 2025/26, this means that when your income exceeds £200,000, and your adjusted income (which includes your pension contributions) is above £260,000, the Annual Allowance falls by £1 for every £2 earned above that level. Just remember that the minimum it can fall to is £10,000.

What’s more, if you’ve already started accessing your pension wealth, you may have triggered the Money Purchase Annual Allowance. 

This typically reduces the amount you can tax-efficiently contribute to your pension to £10,000 each year. 

Compounding returns over time can make pension tax relief even more attractive

One of the most practical aspects of tax relief is that it's added straight to your pension, where it is usually invested on your behalf by your provider.

Any growth is reinvested, allowing your savings to benefit from “compounding”. This is the “growth on growth” effect that further boosts your returns over a longer period of time. 

As such, making regular payments, starting early, and making full use of tax relief can all improve your financial security later in life.

Contact us

We can help you understand whether you might be eligible for additional pension tax relief, helping you secure peace of mind for your retirement. 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.

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 Pensions Regulator.

The Financial Conduct Authority does not regulate tax planning.

Spending money with purpose can improve your wellbeing. With International Day of Happiness taking place on 20 March 2026, now is the perfect time to think about how you want to use your wealth in a meaningful way, taking inspiration from renowned actor Michael Sheen.

Often, people think about financial planning as a way to increase their wealth. However, that’s not always the case. Financial planning is about using your money to live the life you want now and in the future.

In some cases, this might involve a strategy to increase the value of your assets. For example, if you’re planning for retirement, you might invest through a pension with the goal of being financially secure when you’re ready to give up work. However, in other circumstances, your financial plan might involve using your savings because doing so would support your wellbeing. 

Michael Sheen used his money to launch a new national theatre for Wales

You might recognise Michael Sheen for playing Tony Blair in The Queen, the angel Aziraphale in Good Omens, or other memorable roles portrayed on stage and screen.

Respected for his versatility, Sheen is a sought-after actor, and if his goal was to accumulate wealth, he’d have the opportunity to pursue this. Yet, in 2021, he announced he would be a “not-for-profit actor” who would use the money he earns to support passion projects.

One of these projects was launching a new national theatre for Wales. 

Sheen first became involved in 2025 after the old theatre closed following funding cuts. At the start of 2026, the theatre was preparing its first full production, with Sheen also starring in the play. 

While funding is undoubtedly important for the new Welsh National Theatre, when asked by the BBC (13 January 2026) what he wants to achieve, Sheen said his aims included “pathways to develop young talent”, “productions that are bold and ambitious”, and a “canon of Welsh work”.

While this project might not have been the best way to increase wealth for Sheen, it may have improved wellbeing and created a sense of purpose. 

The benefits of spending with purpose 

If you’re accustomed to spending impulsively or focusing on wealth creation, spending with purpose can take some getting used to, but there are benefits to shifting your mindset.

First, it’s an approach that can make your life more meaningful.

Making financial decisions based on your interests and passions, rather than simply increasing wealth, can lead to a more fulfilling life that provides a strong purpose.

The outcome of choosing to make financial decisions based on purpose will be different for everyone. Some may want to dedicate a portion of their income to supporting charitable causes that are important to them. Others might want to explore the option of reducing working hours, so they have the time to focus on a passion project. 

What’s important is that the decisions you make reflect the life you want to lead. 

Second, placing meaning at the centre of your financial decisions can provide extra motivation to stick to the plan you set out. It’s an approach that could keep you on track.

Finally, spending with purpose could help you balance short- and long-term goals.

When you’re focused on simply increasing your wealth, you’re often doing so for the future, and you might miss out on opportunities that you’d enjoy and can afford now. Shifting your focus to wellbeing could help you strike a balance between living your life now and long-term security that suits you. 

A financial plan could give you the confidence to pursue your passions

Creating a financial plan that’s tailored to you could give you the confidence to pursue your passion projects.

While you might not be funding a new national theatre, you may still worry about how supporting causes that are important to you or pursuing different opportunities could affect your long-term financial security. 

A financial plan could give you the confidence that your other goals will remain on track if you want to focus on areas that would improve your wellbeing, happiness, or sense of purpose. As your financial planner, we can help you assess the impact of your decisions, so you can understand what’s right for you. 

Contact us to talk about your financial plan

If you’d like to talk about your passions and how you may incorporate them into your financial plan, please get in touch.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

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

Despite ups and downs throughout the year, 2025 proved to be a great year for the FTSE 100 – an index of the 100 largest companies listed on the London Stock Exchange. 

According to the Guardian (31 December 2025), the FTSE 100 increased in value by a fifth in 2025, marking the strongest annual gain since 2009. When markets closed on New Year’s Eve 2025, the index was up 21.5% compared to where it was at the start of 2025. 

The index got off to a positive start in 2026 as well. The BBC reported (2 January 2026) that the FTSE 100 climbed above 10,000 for the first time when markets reopened in the new year. 

So, what investment lessons can you learn from the performance of the FTSE 100?

1. Look beyond the headlines 

If you only looked at the headlines of 2025 and tried to predict how markets had performed, you might expect a very different outcome.

The headlines were often sensational and may have led investors to fear that the value of their investments would fall significantly. For instance, when the US introduced trade tariffs and threatened to impose others, this created attention-grabbing headlines that often suggested a negative impact. 

Understandably, these headlines may have triggered an emotional response in some investors. However, those who acted on this fear by selling assets may have missed out on potential gains. 

While it’s impossible to avoid the news completely, looking beyond the headlines and taking a long-term view may be useful. It could help you focus on your long-term strategy rather than current events that might cause short-term market volatility. 

2. Markets have historically recovered from downturns 

It’s important to note that all investments carry some risk, and performance cannot be guaranteed. However, historically, markets have recovered from downturns over the long term.

When you look at the dips the FTSE 100 experienced in 2025 there has been some recovery.

For example, the Guardian reported that the FTSE 100 was down on 7 April 2025 after the US announced it would not consider pausing trade tariffs. While this may have been a cause of concern for some investors, the FTSE 100 made gains in the following weeks as the outlook changed.

If you’re tempted to react to market volatility, remembering that markets have historically recovered from downturns could help you hold your nerve and stick to your long-term investment strategy. 

3. Diversification could help manage investment volatility 

The performance of the FTSE 100 highlights the value of diversifying your portfolio.

Rather than investing in a few companies, choosing to invest in a wide range of assets, regions, and sectors can help spread investment risk. While one area of your portfolio might fall, other areas may help offset these losses. 

Diversification doesn’t remove investment risk, but it could help you manage investment volatility. 

The FTSE 100 includes companies working across a broad range of sectors, from mining to advertising. Some of these sectors have experienced significant gains in 2025, which helped balance out losses in others. 

While the FTSE 100 is made up of the largest companies listed on the London Stock Exchange, many of them are multinationals.

According to data from LSEG (5 March 2024), more than four-fifths of the sales of the FTSE 100 come from outside the UK. So, even when investing in an index tied to the London Stock Exchange, investments may be more global than you expect. 

Investing in companies around the world can help balance your portfolio. For example, if external factors led to the retail sector dipping in the UK, this might be offset by rising sales in other countries. 

Get in touch

If you’d like to review the performance of your investments or have questions about your investment strategy, please get in touch. We’re here to help you understand how your investments could support your long-term goals. 

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

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

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.