Article last updated 22 July 2025.
This is a great time to make sure you’re on track to meet your goals and ensure your money is working as hard for you as possible. Whether it’s reviewing your savings and investments, your pensions and retirement plans, your tax allowances or your estate planning, there are numerous reasons why reviewing annually where you stand financially is important if you want your money to be working as hard for you as possible both in 2025 and longer-term.
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This information is based on our current understanding of HMRC tax regulations in the UK. Tax treatment depends on your individual circumstances and may be subject to change in future. |
One of the financial matters that affect us all and therefore should be given the most consideration, is how we stay on top of and mitigate any unfavourable changes to tax allowances and reliefs.
Secondly, while inflation is coming down, it is still high and if your cash or investments aren’t providing a return higher than inflation then your wealth will inevitably be losing its purchasing power and therefore reducing over time.
These changes mean capitalising on the tax reliefs and benefits available to reduce your tax obligations and ensuring your money is invested wisely are crucial.
Seeking professional advice can pay dividends
There are many issues to consider and when it comes to navigating taxation, things can get complicated, which is why seeking professional advice can pay dividends.
At Rathbones our financial planning experts can work with you to undertake a thorough financial review to help you identify your goals and keep them on track. Below we explore some of the areas we believe can present opportunities for clients in 2025.
Tax Allowances & Reliefs
The Pension Lifetime Allowance
Pensions are still a tax efficient way of saving for retirement, and those with larger pension pots will especially benefit as the Lifetime Allowance (the maximum amount you could accumulate in your pension pots without incurring additional tax charges) was removed from April 2025.
Pensions are still a tax efficient way of saving for retirement
An efficient way of making pension contributions is to opt for salary sacrifice, where you agree to reduce your salary and your employer then pays the difference into your pension. This reduces the overall amount of Income Tax and National Insurance you pay, as well as reducing the National Insurance paid by your employer, which they may also pass on to you.
Company Pension Contributions
If you own your own business your company can make pension contributions directly into your pension. This can have several major tax-saving benefits:
1. HMRC treats company pension contributions as an allowable business expense, reducing your company’s corporation tax bill
2. You pay no income tax on the contribution, unlike additional salary or dividends, provided it does not exceed the annual allowance, which is currently set at £60,000
3. You also save on both employer and employee National Insurance contributions
4. If you have unused allowances from previous years, these can be carried forward for up to three years
5. Your pension can grow tax-free.
Higher-Rate Relief on Pension Contributions
Claiming all available tax reliefs is an important way of ensuring you are getting the most value out of your pension contributions. One tax relief overlooked by a significant number of higher-rate taxpayers is the additional 20% tax on your pension contributions, for a total of 40% tax relief. Many higher- rate taxpayers don’t realise that this relief won’t happen automatically – you must actively claim it via your self- assessment tax return.
Claiming all available tax reliefs is an important way of ensuring you are getting the most value out of your pension contributions
Money Management
An income and expenditure MOT
No matter what level of wealth you have, striking the right balance between spending and saving is important. At Rathbones we can conduct a comprehensive cashflow analysis that will consider factors like your current needs, your plans for retirement, the impact of being the Bank of Mum and Dad when your children need financial support, whether that be helping them to get on the property ladder or paying for school fees, as well as the potential costs of long-term care and inheritance tax planning.
Savings and Investments
Savings and Borrowing
Providing inflation continues to trend downward, interest rates are likely to fall further too. More cautious investors may need to rethink where they invest to achieve growth to beat inflation. Conversely, lower interest rates may also ease the burden on any new borrowing, and it may make sense to favour variable interest rates over fixed rates.
More cautious investors or those who have remained overweight in cash will likely need to rethink where they invest to achieve growth to beat inflation
Investment
The approach to how and where we invest our money can change year-on-year depending on our values, our life-stage, or a change in personal circumstances. Whether you want your investments to be more sustainability focused or now feel a more cautious or more aggressive investment approach is appropriate, it’s worth considering what you want to achieve and how best to get there. Our financial planners and investment managers will work with you to look at all aspects of your investment portfolio and make recommendations to achieve those objectives, as well as potentially introducing you to fresh thinking and alternative investment opportunities.
Whatever your personal goals, your Rathbones contact is on hand to navigate you through all the options
Estate Planning Review
Inheritance tax thresholds have remained frozen now for some time. Any plans already in place should be reviewed annually, to make sure they are still effective in reducing any tax liability, however the first point of call is to make sure your will is up to date and reflects any changes in family circumstance.
Many of the topics raised in this article are complex and require expert advice and guidance. Whatever your personal goals, your Rathbones contact is on hand to navigate you through all the options, helping to ensure that your finances in 2025 will be on track.
