Author: Helen Whitehouse

HMRC collected £938.8 billion in tax and National Insurance receipts during 2025/26, an increase of 9.3% on the previous year.

Income Tax, Capital Gains Tax and National Insurance remained the largest sources of revenue, together accounting for 59% of total receipts. The figures underline the continued importance of employment and personal taxation to Government finances.

The annual report also details HMRC’s work to reduce the tax gap through compliance investigations, debt collection and targeted enforcement. The department continued to invest in data, automation and technology to identify unpaid tax and improve the efficiency of its compliance activity.

Modernisation remained a major focus. HMRC progressed preparations for Making Tax Digital for Income Tax and continued developing digital services for taxpayers, businesses and agents. It also aimed to move more routine enquiries online and reduce reliance on telephone support.

Customer service performance remained under pressure, although HMRC reported further improvements to its digital channels. The department continued to use automation and artificial intelligence in some operational and compliance processes.

HMRC’s main priorities during the year were reducing the tax gap, improving customer experience and modernising the tax and customs system. These objectives shaped its spending plans and operational work.

Alongside tax collection, HMRC administered tax reliefs, repayments and financial support for individuals and businesses. It also managed customs processes and supported international trade.

The report covers HMRC’s financial and operational performance for the year ending 31 March 2026, including tax receipts, compliance activity, departmental spending, governance and progress against its strategic objectives.

Talk to us about your taxes.

According to the Department for Work and Pensions’ (DWP) latest annual report and accounts, fraudulent benefit overpayments reached £9.9bn in 2025/26.

The overall overpayment rate fell slightly from 3.3% to 3.2% of benefit spending measured for fraud and error. However, the total value increased from £9.4bn to £9.9bn because overall benefit expenditure rose during the year.

Universal Credit continued to account for the largest share of overpayments. The overpayment rate fell from 9.5% to 8.5%, but the cash value increased from £6.2bn to £6.7bn.

Housing Benefit overpayments also declined, falling from 7.2% (£1.1bn) to 6.2% (£800 million). In contrast, Personal Independence Payment (PIP) overpayments almost doubled, rising from £330m to £660m as the overpayment rate increased from 1.3% to 2.3%.

Pension Credit recorded the highest overpayment rate of any benefit at 10%, equivalent to £620m, compared with 10.3% (£610m) a year earlier. State Pension overpayments also increased, rising from £180m to £230m.

The figures were published alongside the Government’s review of the PIP system, which concluded the current approach is no longer fit for purpose.

The DWP said its counter-fraud work prevented around £27bn of incorrect payments during the year. It also reviewed 1.2 million Universal Credit claims, identifying and correcting around 250,000 awards, generating estimated savings of £1.1bn.

The department said it remains on course to reduce the overall fraud and error rate across the welfare system to 2.8% by 2028/29.

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More than 5 million homeowners are expected to see their monthly mortgage repayments rise by the end of 2028, according to new Bank of England forecasts.

That is 1m more than the Bank predicted in December, with the change linked to the economic impact of the Iran war and higher energy prices.

The Bank’s latest Financial Stability Report said the increase should be less severe than the payment shocks seen in recent years. A typical owner-occupier coming off a fixed-rate deal in the next two years is expected to pay around £45 more a month. By comparison, those refinancing between late 2022 and the end of 2024 faced an average rise of £120 a month.

However, some households face a much sharper increase. Around 750,000 homeowners currently paying less than 3% interest are due to come off those deals this year. The Bank expects their repayments to rise by an average of £170 a month.

More than 8 in 10 mortgage customers are on fixed-rate deals, usually lasting two or five years. Their payments stay the same until the deal ends and they choose a new one.

Before the Iran conflict, more than 2m borrowers with two-year fixed deals expiring by the end of 2028 had been expected to remortgage at similar rates, with some seeing repayments fall. The Bank now says falling repayments are less likely.

The war pushed up oil and gas prices after the Strait of Hormuz was closed, increasing inflation fears and raising expectations of higher interest rates. Lenders have passed those higher costs on through mortgage rates.

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Key planning points for businesses ahead of the 2029 mandate.

 

E-invoicing is moving from a software choice to a compliance and finance planning issue.

 

The government has confirmed that e-invoicing will become mandatory for all VAT invoices from April 2029. HMRC and the Department for Business and Trade are due to publish an implementation roadmap at Budget 2026, setting out the milestones businesses should expect before the mandate takes effect.

 

This gives businesses time to prepare, but it also means 2026/27 is a useful year to review invoicing processes, customer and supplier data, software, payment terms and VAT controls. Waiting until the final year may create avoidable cost, disruption and pressure.

 

This guide explains what e-invoicing is, why the UK is moving in this direction and what businesses should plan before the Budget roadmap is published.

What e-invoicing means

An e-invoice is not simply a PDF invoice sent by email.

 

HMRC describes e-invoicing as the digital exchange of invoice data directly between a supplier’s and buyer’s finance systems, even where those systems differ. The data can then automatically feed into the buyer’s system, reducing manual processing and improving efficiency.

 

In practical terms, an e-invoice uses structured data. That means the invoice information – such as supplier details, VAT number, invoice date, tax point, purchase order reference, VAT rate and payment terms – sits in a format that software can read and process.

 

A PDF invoice may look digital, but it often still needs manual checking, coding, approval and entry. E-invoicing aims to remove much of that manual handling.

What has the government announced?

The key points are:

• The UK will mandate e-invoicing for all VAT invoices from April 2029. This will apply to VAT invoices, which are generally used for business-to-business and business-to-government transactions where VAT is due. It will not usually apply to normal business-to-consumer retail transactions.
• The government will publish an implementation roadmap at Budget 2026. That roadmap should give businesses and advisers more detail on timing, staging, standards and practical requirements.
• The government has also announced that Peppol will be the UK’s core interoperability network for e-invoicing. This gives software providers and businesses a clearer steer on the technical direction of travel.
• The mandate is not immediate. April 2029 gives businesses a planning window. However, e-invoicing affects more than the invoice template. It touches sales processes, credit control, purchase ledger, VAT records, customer onboarding, supplier management and software integration.

Why this is linked to VAT and digital reporting

E-invoicing forms part of a wider shift towards digital tax administration and better-quality business data.

 

For the 2026/27 tax year, the VAT registration threshold remains £90,000 and the VAT deregistration threshold remains £88,000. The standard VAT rate remains 20%, with the reduced rate at 5% and the zero rate at 0%.

 

Many VAT-registered businesses already keep digital VAT records and submit VAT returns through Making Tax Digital software. The e-invoicing mandate will take this further by focusing on the invoice data that sits behind those records.

 

Making Tax Digital for Income Tax has also started for sole traders and landlords with qualifying income over £50,000 from 6 April 2026. It will extend to those with qualifying income over £30,000 from 6 April 2027 and over £20,000 from 6 April 2028.

 

These changes show the same general direction: more structured records, more regular digital reporting and less reliance on manual data entry.

Why businesses should not wait until 2029

The legal requirement may be three years away, but the operational work starts earlier.

 

Many businesses still use a mixture of PDFs, spreadsheets, email trails, manual approvals and supplier portals. That may work day to day, but it can create pressure when customers, suppliers, government bodies or software systems start demanding structured invoice data.

 

HMRC-commissioned research found that 59% of VAT-registered SMEs surveyed were familiar with the definition of e-invoicing, but only 29% reported using it. The same research found that PDF or email remained the most common invoicing method for sending and receiving invoices, followed by paper or physical mail.

 

That gap between awareness and actual use matters for planning. Businesses may think they are already digital because they send invoices by email. In many cases, they are not yet e-invoicing in the way the future regime is likely to require.

Start with your current invoice process

The first step is to map how invoices move through the business today.

 

For sales invoices, look at how the business creates the invoice, checks the customer details, applies VAT, sends the invoice, records payment and chases overdue amounts.

 

For purchase invoices, look at how supplier invoices arrive, who approves them, how they are matched to purchase orders, how VAT is checked and how the payment run is prepared.

 

The aim is to identify where people rekey data, correct errors, chase missing information or rely on informal workarounds.

 

Common issues include:

• Different invoice layouts for different customers
• Missing purchase order references
• Incorrect or outdated customer addresses
• Supplier VAT numbers not checked
• VAT codes selected manually without review
• Invoice approvals sitting in email inboxes
• Credit notes handled outside the main process
• Payment terms varying between systems and contracts

 

These are process problems, not just software problems. E-invoicing works best when the underlying data is clean and the process is consistent.

Check customer and supplier data

E-invoicing depends on accurate master data. Businesses should review customer and supplier records before they move towards e-invoicing. Poor data can cause invoice rejections, payment delays and VAT errors.

 

Useful checks include:

• Legal entity name
• Trading name, where different
• Registered office or billing address
• VAT registration number
• Company registration number, where relevant
• Email and finance contact details
• Purchase order requirements
• Payment terms
• Bank account details
• Customer or supplier portal requirements

 

VAT numbers deserve particular attention. If a business regularly invoices other VAT-registered businesses, it should have a process for checking and maintaining VAT details. E-invoicing is likely to make weak data more visible because systems will reject or flag records that do not meet the required format.

Review your software before the Budget roadmap

The Budget 2026 roadmap should give more details on the path to April 2029. Before then, businesses can still ask useful questions about their current systems.

 

For example:

• Can the software create and receive structured e-invoices?
• Does it support Peppol, or does the provider plan to support it?
• Can it handle VAT invoice requirements properly?
• Does it integrate with the bank, payment provider, stock system, CRM or project management system?
• Can it process purchase orders, approvals and credit notes?
• Can it export clean audit trails?
• Does it support digital record keeping for VAT and, where relevant, Making Tax Digital for Income Tax?

 

Businesses do not necessarily need to change software immediately. However, they should open the conversation with providers early. Software roadmaps, implementation slots, training and data migration can take time.

 

A rushed software switch close to a compliance deadline can increase cost and risk. A planned review gives the business more control.

Think about cashflow and late payments

E-invoicing is not only a compliance project. It can also support better cashflow.

 

Late payment remains a serious issue for UK businesses. The government’s late payment response stated that late payments cost the UK economy almost £11bn per year. It also reported that 14,000 businesses close each year as a result of late payments, and that businesses are owed an estimated £26bn in late payments at any given time.

 

E-invoicing will not solve every payment problem. A customer can still delay payment even when the invoice data is perfect. But e-invoicing can reduce disputes caused by missing information, wrong purchase order numbers, slow invoice entry or unclear approval routes.

 

Businesses should use the move towards e-invoicing to tighten payment processes. That means checking whether invoices go out promptly, whether payment terms are clear, whether customer purchase order requirements are met and whether the credit control process starts early enough.

Identify customers who may move first

Some larger businesses and public sector bodies may adopt e-invoicing requirements before smaller suppliers are legally required to use them.

 

This means a small or medium-sized business may face practical pressure before April 2029. A major customer could request Peppol-ready invoices, structured invoice files or portal-based invoice submission as part of its own readiness plan.

 

Businesses should review their customer base and identify which customers are most likely to set requirements early. This may include:

• Public sector customers
• Large corporate customers
• Overseas customers in countries that already use e-invoicing widely
• Customers with strict purchase order controls
• Customers who already use supplier portals

 

If a small number of customers account for a large share of revenue, their invoice requirements should sit high on the planning list.

Do not ignore purchase invoices

Many businesses focus first on sales invoices because that is where cash comes in. Purchase invoices also need attention.

 

A business that receives supplier invoices in structured form can reduce manual input, improve VAT coding, speed up approvals and gain better visibility over committed costs.

 

This is especially useful where a business has several approval layers, multiple sites, project-based costs or regular supplier disputes.

 

Purchase invoice planning should cover:

• How supplier invoices arrive
• Whether purchase orders are required
• Who approves spend
• How goods or services are matched to invoices
• How VAT is reviewed
• How credit notes are processed
• How duplicate invoices are detected
• How payment runs are authorised

 

A strong purchase invoice process helps control costs and reduces the risk of paying the wrong amount or paying the same invoice twice.

Prepare staff and responsibilities

E-invoicing changes the work people do. Finance teams may spend less time keying in invoices and more time reviewing exceptions, checking data quality and managing approvals. Sales teams may need to collect better customer billing information at the start of a relationship. Operations teams may need to raise purchase orders more consistently.

 

Businesses should decide who owns the e-invoicing project. In smaller businesses, this may sit with the owner-manager or finance lead. In larger businesses, it may involve finance, IT, operations and sales.

 

Key responsibilities include:

• Reviewing current processes
• Speaking to software providers
• Cleaning customer and supplier data
• Updating invoice templates and VAT coding
• Training staff
• Testing new workflows
• Communicating with customers and suppliers

 

E-invoicing will work better where the business treats it as a finance process change, not a last-minute technical update.

What to watch for in Budget 2026

The Budget roadmap should help answer some of the remaining questions. Businesses should look out for:

• The detailed implementation timetable
• Any phased approach by business size or transaction type
• Technical standards and Peppol requirements
• Rules for receiving as well as issuing invoices
• Transitional arrangements
• Treatment of legacy systems
• Support for small businesses
• Links with VAT compliance and digital record keeping

 

The government has said it will continue to engage with stakeholders on legacy systems that cannot interoperate in the future system.

 

That point will matter for businesses using older software, bespoke systems or sector-specific platforms. These systems may still perform core tasks well, but they may need upgrades, connectors or replacement if they cannot meet future e-invoicing requirements.

A practical pre-Budget action plan

Businesses do not need to complete a full e-invoicing rollout before Budget 2026. They should use the time to understand their starting point.

 

A sensible action plan would be:

1. List how sales and purchase invoices are created, sent, received, approved and paid.
2. Identify where the business still relies on PDFs, spreadsheets, paper, email approvals or manual rekeying.
3. Review customer and supplier data, including VAT numbers, payment terms and purchase order requirements.
4. Speak to the current software provider about e-invoicing, Peppol and planned UK compliance updates.
5. Identify customers or suppliers that may move to e-invoicing early.
6. Review cashflow and credit control processes, especially where payment delays arise from invoice disputes.
7. Check whether current software also supports wider digital tax requirements, including VAT records and Making Tax Digital for Income Tax where relevant.
8. Set an internal review date after the Budget roadmap is published.

 

This approach keeps the business informed without forcing premature decisions.

Final thoughts

E-invoicing is not an immediate filing deadline, but it is now a confirmed direction of travel for UK VAT invoices.

 

The April 2029 mandate gives businesses time to prepare. The Budget 2026 roadmap should provide more detail, but businesses can already make useful progress by reviewing invoice processes, cleaning data, speaking to software providers and tightening payment controls.

 

The businesses that benefit most will not be the ones that simply meet the deadline. They will be the ones that use the change to reduce admin, improve invoice accuracy, speed up approvals and strengthen cashflow.

 

The best next step is a practical review of current invoicing. Once the Budget roadmap is published, businesses will then be in a stronger position to decide what to change, when to change it and how much support they need.

 

We can help you assess your current invoicing process and identify what may need to change. Get in touch with us today.

How divorce can affect property, pensions, investments and future tax bills.

 

Divorce or the end of a civil partnership often involves difficult personal and financial decisions. Tax may not be the first point on the list, but it can change the real value of a settlement.

 

A proposed division of assets may look fair on paper. The after tax position may be different if one person receives an asset with a built in gain, moves out of the family home, takes over a property with a mortgage, receives a pension share or becomes responsible for Child Benefit.

 

This guide sets out the main UK tax points to consider. It does not replace legal advice, and each case depends on the facts, the timing and the wording of the financial agreement. The important point is to check the tax position before signing a settlement, rather than after the assets have moved.

 

The latest Office for National Statistics release reported 103,816 legal partnership dissolutions in England and Wales in 2023, made up of 102,678 divorces and 1,138 civil partnership dissolutions. Divorce rates in 2023 were 8.6 for men and 8.5 for women per 1,000 married individuals.

Start with the timing

Tax often depends on dates. The key dates may include:

• When you stopped living together
• Whether the separation was likely to be permanent
• When the conditional order or decree nisi was made
• When the final order or decree absolute was made
• When a financial agreement or consent order was approved
• When each asset was transferred
• When a property was sold
• When someone moved out of the family home

 

These dates can affect Capital Gains Tax, property tax, pension arrangements, Child Benefit, Marriage Allowance and Inheritance Tax planning.

 

For Capital Gains Tax, HMRC treats spouses and civil partners as living together unless they are separated under a court order, by a formal deed of separation, or in circumstances where the separation is likely to be permanent. If the marriage or civil partnership has not broken down, living in different houses does not automatically mean you are treated as separated for these rules.

Capital Gains Tax on transfers between spouses and civil partners

Capital Gains Tax is one of the main tax issues in divorce.

 

While spouses or civil partners are living together, transfers of most assets between them usually take place on a “no gain/no loss” basis. This means the person transferring the asset does not trigger an immediate Capital Gains Tax charge. The person receiving the asset takes over the original base cost for future tax purposes.

 

The current separation rules first applied to disposals made on or after 6 April 2023. Since then, separating spouses and civil partners have had a longer window for no gain/no loss transfers.

 

If you and your spouse or civil partner were living together at some point in a tax year, you can transfer assets between you on a no gain/no loss basis up to the earlier of:

• The end of the third tax year after the tax year in which you stopped living together
• The date the court grants a divorce, annulment or dissolution

 

Transfers made under a formal divorce or separation agreement or court order can qualify for no gain/no loss treatment without any time limit.

 

This makes the legal documentation very important. A transfer that falls outside the automatic window may still be protected if it takes place under the right formal agreement or court order.

 

Assets that need a Capital Gains Tax review

The family home often receives most attention, but other assets may carry tax exposure. Examples include:

• Buy-to-let properties
• Second homes
• Shares and investment portfolios
• Cryptocurrency
• Business shares
• Commercial property
• Land
• Valuable personal possessions
• Overseas assets

 

The person receiving an asset may not pay tax at the point of transfer if no gain/no loss treatment applies. However, they may inherit the original tax base cost. If they sell the asset later, they may pay Capital Gains Tax on the full gain since the original purchase, not just the increase in value since the divorce settlement.

 

For 2026/27, the Capital Gains Tax annual exempt amount for individuals is £3,000. For gains made from 6 April 2026, basic rate taxpayers pay Capital Gains Tax at 18% on gains within the basic rate band and 24% on gains above it. Trustees and personal representatives pay Capital Gains Tax at 24% from 6 April 2026.

 

A settlement should therefore compare assets on an after tax basis. A £200,000 cash payment and a £200,000 investment portfolio may not be equivalent if the portfolio contains a large unrealised gain.

The family home and Private Residence Relief

The family home can be the largest asset in a divorce settlement. It can also be one of the most sensitive tax areas.

 

Private Residence Relief can reduce or remove Capital Gains Tax on the sale of a home that has been your only or main residence. For spouses and civil partners living together, there can only be one main residence between them for this relief. After separation, each person may have a different only or main residence.

 

If one person moves out of the family home and later sells or transfers their share, the tax treatment depends on the facts. HMRC guidance states that a person who stops living in the matrimonial or civil partnership home may be entitled to Private Residence Relief for the period before they moved out, plus the final nine months of ownership.

 

There are also special rules where one person keeps an interest in the former home and it is sold later under a formal divorce or separation agreement or court order. In some cases, the person who moved out can choose to treat the period after they left as if the property remained their only or main residence, provided conditions are met. This can help where the other spouse or civil partner continues to live in the home before a later sale.

 

This choice can affect relief on another home bought after moving out, so it should be reviewed before the property is sold.

Stamp Duty Land Tax and property transfers

Property transfers can also raise stamp tax issues. For properties in England and Northern Ireland, Stamp Duty Land Tax does not apply where an interest in land or property is transferred to a spouse or civil partner as part of an agreement or court order because the couple are divorcing, dissolving a civil partnership, annulling a marriage or legally separating. In those cases, there is no need to tell HMRC about the transfer, even if the value exceeds the SDLT threshold.

 

This is different from some other property transfers. For example, unmarried joint owners who transfer a larger share of a property between them may have an SDLT position if cash is paid or mortgage debt is taken over.

 

Wales and Scotland have separate property tax regimes. Wales uses Land Transaction Tax and Scotland uses Land and Buildings Transaction Tax. The tax treatment should be checked based on where the property is located.

Mortgages and the family home

A transfer of property is not only about legal ownership. The mortgage position also matters.

 

Where one person takes over a mortgage, the lender will usually need to agree. The tax position can also change where someone takes on debt as part of a transfer.

 

In a divorce or civil partnership dissolution, the special SDLT rule may prevent an SDLT charge where the transfer is made under the relevant agreement or court order. Outside those rules, taking over mortgage debt can count as chargeable consideration. HMRC gives examples where taking responsibility for part of an outstanding mortgage forms part of the SDLT calculation.

 

Before agreeing that one person will keep the home, it is sensible to check:

• Whether the lender will release the other person from the mortgage
• Whether the transfer qualifies for the divorce or separation SDLT rule
• Whether either person will keep an interest in the property
• Whether a later sale could trigger Capital Gains Tax
• Whether the person moving out plans to buy another property

Pensions in a divorce settlement

Pensions can be one of the most valuable assets in a marriage or civil partnership. They can also be easy to undervalue because they are not always visible in day-to-day finances.

 

A pension sharing order can give one party a percentage of the value of the other party’s pension rights. The amount awarded must be used to provide the recipient with their own pension benefits. HMRC refers to the reduction in the original member’s pension rights as a pension debit, and the amount given to the former spouse or civil partner as a pension credit.

 

The recipient does not simply receive the pension as cash. The tax position depends on the type of pension and how benefits are later taken. HMRC guidance states that the former spouse or civil partner will be entitled to pension benefits in their own right, and those benefits will be taxable in their hands when taken, depending on the scheme and how the pension is accessed.

 

Pension settlements should be considered alongside tax, retirement plans, age, health, income needs and the type of scheme. Defined benefit pensions, public sector pensions and pensions already in payment may need specialist advice.

Maintenance payments

Maintenance payments need careful treatment in budgets.

 

Child maintenance payments are not taxable for the recipient. GOV.UK also states that child maintenance payments do not affect benefits, including Universal Credit.

 

Spousal maintenance is different from child maintenance, but most modern divorce maintenance arrangements do not create a straightforward tax deduction for the payer. A limited Maintenance Payments Relief still exists, but it applies only where specific conditions are met, including that either person was born before 6 April 1935.

 

For 2026/27, the relief is worth 10% of qualifying maintenance payments, up to a maximum tax reduction of £453.

 

Where maintenance forms part of a settlement, both the payer and the recipient should check how it fits within their wider tax and cash flow position.

 

Child Benefit and the High Income Child Benefit Charge

If children are involved, Child Benefit should be reviewed as part of the separation.

 

For 2026/27, Child Benefit is £27.05 per week for the eldest or only child and £17.90 per week for each additional child.

 

The High Income Child Benefit Charge applies where the higher earner in a couple has adjusted net income above £60,000. It is based on the higher earner’s individual income, rather than the couple’s combined income. The charge gradually claws back Child Benefit between £60,000 and £80,000 and equals the full Child Benefit amount once adjusted net income exceeds £80,000. Following a permanent separation, the former partner’s income is no longer taken into account, so the threshold applies to the parent receiving Child Benefit or their new partner, if applicable.
Separation can change who should claim and who may be liable for the charge. It can also affect National Insurance credits where the claimant is not working or has low earnings. The parent with day-to-day responsibility should review the claim, the payment position and any High Income Child Benefit Charge exposure.

Marriage Allowance and personal tax codes

Marriage Allowance allows eligible married couples and civil partners to transfer £1,260 of one person’s Personal Allowance to the other. For 2026/27, the standard Personal Allowance is £12,570, and the transfer can reduce the receiving partner’s tax bill by up to £252.

 

Marriage Allowance must be cancelled if the relationship ends because of divorce, dissolution of a civil partnership or legal separation. It should also be reviewed if income changes mean the couple no longer qualifies.

 

Tax codes may also need updating where someone changes name, address, employment benefits or taxable income. This is often missed during separation because practical issues take priority.

Inheritance Tax and wills

Divorce can affect estate planning. Transfers between spouses and civil partners are generally exempt from Inheritance Tax while the marriage or civil partnership continues. That position changes after divorce or dissolution. A will should also be reviewed because divorce can affect how existing will provisions operate.

 

For 2026/27, the Inheritance Tax nil rate band is £325,000 and the residence nil rate band is £175,000. The residence nil rate band is available where a qualifying residence passes to direct descendants, subject to conditions. The taper starts where the net estate exceeds £2 million. HMRC states that qualifying estates can continue to pass on up to £500,000, and up to £1 million for a surviving spouse or civil partner where the relevant unused allowances are available.

 

After separation, it is sensible to review:

• The will
• Pension death benefit nominations
• Life insurance policies
• Jointly owned property
• Trust arrangements
• Guardianship wishes for children
• Powers of attorney

 

Tax planning and legal planning should work together here.

Business owners and family companies

Where one or both spouses own a business, divorce can affect the company as well as the individuals.

 

Points to review include:

• Whether shares are being transferred
• Whether the transfer qualifies for no gain/no loss Capital Gains Tax treatment
• Whether the company has distributable reserves
• Whether dividends will change
• Whether both parties are directors or employees
• Whether one person will exit the business
• Whether a valuation is needed
• Whether any shareholder agreement applies

 

Dividend tax rates changed for 2026/27. The dividend allowance remains £500. The dividend tax rate is 10.75% for basic rate taxpayers, 35.75% for higher rate taxpayers and 39.35% for additional rate taxpayers.

 

A settlement involving company shares should be reviewed before anything is signed. The legal value of the shares, the tax base cost, future dividend rights and control of the company may all point in different directions.

Unmarried couples

This guide focuses mainly on divorce and civil partnership dissolution, but unmarried couples should take extra care.

 

Many of the special tax rules for spouses and civil partners do not apply to unmarried partners. This can affect Capital Gains Tax, SDLT, Inheritance Tax and pension arrangements.

 

For example, HMRC guidance notes that unmarried joint owners who transfer an interest in property from one owner to another may have an SDLT position if consideration is given, such as taking over mortgage debt.

 

Unmarried couples should not assume that living together creates the same tax treatment as marriage or civil partnership.

Practical checklist before agreeing a settlement

Before agreeing a divorce or dissolution settlement, it is worth checking the following:

• What assets each person owns legally and beneficially
• Whether any assets have built in gains
• Whether transfers qualify for no gain/no loss Capital Gains Tax treatment
• Whether the family home qualifies for full or partial Private Residence Relief
• Whether the person moving out will buy another home
• Whether a property transfer is covered by the divorce or separation SDLT rules
• Whether any mortgage debt is being taken over
• Whether pension sharing, offsetting or attachment is proposed
• Whether child maintenance and spousal maintenance have been modelled properly
• Who should claim Child Benefit
• Whether the High Income Child Benefit Charge applies
• Whether Marriage Allowance should stop
• Whether tax codes and HMRC details need updating
• Whether wills, pension nominations and life policies need changing
• Whether business shares or company income are part of the settlement

Summing up

Divorce tax planning is not about reducing fairness. It is about understanding the real financial outcome before an agreement becomes binding.

 

The same settlement can produce different results depending on timing, asset type, ownership, residence history and future plans. Property, pensions, investments, businesses and Child Benefit all need attention.

 

The best time to review the tax position is before the financial order is finalised and before assets are transferred. That gives both parties a clearer view of the after tax position and reduces the risk of unexpected tax bills later.

 

Contact us to understand how property, pensions, investments or Child Benefit could affect your settlement.

The UK crypto industry has reached a “significant milestone” after the Financial Conduct Authority (FCA) confirmed new rules for firms operating in the sector.

From October 2027, crypto firms will need to meet tougher standards on financial resilience, market integrity and consumer protection. The regime will apply to trading platforms, intermediaries, custodians, stablecoin issuers and firms arranging staking.

Under the new framework, these firms will need FCA authorisation to operate in the UK. Applications will open from 30 September 2026 and close on 28 February 2027, giving firms time to prepare before the rules become mandatory.

The FCA said the measures follow a series of consultations and are designed to make the regime workable in practice. Changes include simpler capital requirements for stablecoin firms and trading rules that better reflect how crypto markets operate.

Stablecoins, which are crypto assets designed to hold a stable value, usually by being linked to a currency such as sterling or the US dollar, will be subject to clearer standards. The FCA said this should help build trust in how they are used over time.

The new regime will also introduce market abuse rules covering areas such as insider dealing and market manipulation. Further guidance has been issued on inside information, legitimate market practice, best execution and how firms should monitor trading activity.

Firms safeguarding qualifying crypto assets will face dedicated client asset rules, reflecting the specific risks in the sector.

Until October 2027, the FCA’s oversight remains limited to financial promotions and anti-money laundering controls.

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The benefits worth knowing and the limits to plan for.

 

Salary sacrifice can be a useful way to reduce tax and National Insurance, increase pension savings and access certain employee benefits at a lower net cost.

 

Used well, it can reduce the tax and National Insurance paid on some benefits, preserve allowances that would otherwise be lost, and help build pension savings more efficiently. Used without care, it can reduce statutory pay, affect mortgage affordability or leave you tied into an arrangement that no longer suits your plans.

 

This guide explains how salary sacrifice works in the 2026/27 tax year, where the savings sit, the pension changes due from April 2029, and the practical points to check before agreeing to an arrangement.

 

How salary sacrifice works

Salary sacrifice is a contractual arrangement between you and your employer. You agree to reduce your gross pay in return for a non-cash benefit.

 

Common examples include:

 

• employer pension contributions
• electric cars
• cycle-to-work schemes
• workplace nursery places
• employer-funded pensions advice
• additional annual leave, depending on how the scheme is structured.

 

Your contract must change, and your cash pay will be reduced. Your employer then provides the benefit.

 

The tax treatment depends on the benefit. Pension salary sacrifice currently saves income tax and employee National Insurance on the sacrificed amount. Some other benefits remain tax-efficient, but many are caught by the Optional Remuneration Arrangement (OpRA) rules. Where OpRA applies, the tax charge is usually based on the higher of the salary given up or the taxable value of the benefit.

 

For 2026/27, the main rates that affect salary sacrifice savings are:

 

• Basic rate income tax, 20% on income from £12,571 to £50,270
• Higher rate income tax, 40% on income from £50,271 to £125,140
• additional rate income tax, 45% on income above £125,140
• employee National Insurance, 8% between the Primary Threshold (£12,570 per year) and Upper Earnings Limit (£50,270 per year), then 2% above that
• employer National Insurance, 15% above the Secondary Threshold.

 

There is also an effective 60% tax rate on earnings between £100,000 and £125,140, because the personal allowance is gradually withdrawn in this band. This can make salary sacrifice particularly valuable for some higher earners.

 

These income tax bands apply to England, Wales and Northern Ireland. Scottish income tax bands are different, so Scottish taxpayers need to check the Scottish rates.

 

The combined savings depend on where your sacrificed salary falls. As a guide:

 

• A basic-rate taxpayer sacrificing salary that sits within the main NI band can save around 28%
• A higher-rate taxpayer sacrificing salary above the Upper Earnings Limit can save around 42%
• An additional-rate taxpayer can save around 47%, while someone sacrificing income between £100,000 and £125,140 may save more because salary sacrifice can help reduce the impact of the personal allowance taper.

 

Because the employer also saves on NI, as well as the employee, some employers choose to pass on part or all of that saving by putting it towards the benefit. This can make the overall value even greater.

 

What can still be sacrificed efficiently?

Many salary sacrifice arrangements lost their income tax advantage when the OpRA rules were introduced in April 2017, although employees can still retain the National Insurance savings.  For benefits caught by OpRA, the tax charge is usually based on the higher of the salary given up or the taxable benefit value, which often removes the intended tax saving.

 

The main benefits that can still work efficiently include:

Employer pension contributions: Pension salary sacrifice remains the most common arrangement. The sacrificed salary becomes an employer pension contribution. For now, this usually saves income tax and employee NI for the employee, and employer NI for the employer.

 

Cycle-to-work schemes: Bicycles and cyclist safety equipment remain protected under the excluded exemptions. Scheme rules and ownership terms still need to be followed.

 

Electric and ultra-low emission cars: Cars with CO2 emissions of 75g/km or less are excluded from the OpRA rules. Fully electric cars remain attractive because the benefit-in-kind percentage is still relatively low. For a zero-emission car, the appropriate percentage is 4% in 2026/27, rising to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30.

 

Workplace nursery places: Workplace nurseries can remain tax-efficient where the employer is properly involved in the provision and the conditions are met.

 

Employer-provided pensions advice

The exemption for employer-provided pensions advice can apply up to £500 per tax year, subject to the rules.

 

For many other benefits, such as gym memberships, white goods or gadgets, OpRA can remove most or all of the tax advantage. Additional annual leave is slightly different, because it may be treated as a reduction in working time rather than a taxable benefit, but it is not usually a tax-saving arrangement in the same way as pension salary sacrifice.

 

Pension salary sacrifice

Pension contributions remain the main use case for salary sacrifice.

 

For example, a higher-rate taxpayer earning £60,000 who sacrifices £5,000 into their pension would usually save £2,100 in income tax and employee NI on that slice of pay, made up of 40% income tax and 2% employee NI. The full £5,000 goes into the pension, while take-home pay falls by around £2,900 before any extra employer contribution. If the employer shares some of its 15% employer NI savings, the pension contribution may be higher.

 

The exact saving depends on earnings, tax code, pension scheme rules and whether the sacrificed salary falls above or below the Upper Earnings Limit.

 

The April 2029 pension change

A change is due from April 2029. From 6 April 2029, only the first £2,000 of each year will be exempt from National Insurance. Salary sacrificed above that limit will be subject to employee and employer NI. Income tax relief on pension contributions will continue, subject to the usual pension limits.

 

A few points are worth noting:

 

• Salary sacrifice pension arrangements can continue after April 2029
• The first £2,000 per employee will still be free from NI
• Salary sacrificed above £2,000 will attract employee and employer NI
• All non-salary sacrifice employer pension contributions will be free from NI
• The change does not stop people from contributing more than £2,000 to a pension
• Employers will need to make payroll changes before the rules start.

 

HMRC estimates that 7.7 million employees currently use salary sacrifice for pension contributions. Of these, 3.3 million sacrifice more than £2,000, meaning around 44% would be affected by the measure and around 56% would be fully protected by the £2,000 threshold.

 

For 2026/27, 2027/28 and 2028/29, the current NI treatment remains in place. Anyone planning larger pension contributions may want to review the next three tax years carefully.

 

Salary sacrifice and income thresholds

Salary sacrifice can also help manage adjusted net income. That can be useful where income sits near a tax threshold or benefit withdrawal point.

 

The £100,000 personal allowance taper

The personal allowance is reduced by £1 for every £2 of adjusted net income above £100,000. It is lost completely once adjusted net income reaches £125,140.

 

For someone in that band, reducing adjusted net income through pension salary sacrifice can restore some or all of the personal allowance. The effective tax saving can be high because it includes the normal higher-rate tax saving (60)% and the value of the restored allowance.

 

The £60,000 to £80,000 High Income Child Benefit Charge band

From 2024/25 onwards, the High Income Child Benefit Charge starts where adjusted net income exceeds £60,000. The charge is 1% of Child Benefit for every £200 of income above £60,000. Once income reaches £80,000, the charge equals 100% of the Child Benefit received.

 

Salary sacrifice that reduces adjusted net income below £60,000 can reduce or remove the charge.

 

The £50,270 higher rate threshold

For an employee just above the higher-rate threshold, pension salary sacrifice can reduce the amount of income taxed at 40%. If the sacrificed salary is above the Upper Earnings Limit, the saving is usually 40% income tax plus 2% employee NI.

 

The £125,140 additional rate threshold

Salary sacrifice can also help someone stay below the additional-rate threshold. It may also restore some personal allowance where income falls back into the £100,000 to £125,140 taper band.

 

The limits and trade-offs

Salary sacrifice is not always the right answer. Before increasing or entering into an arrangement, check the wider effects.

Statutory pay

Statutory maternity pay, statutory paternity pay, statutory adoption pay and statutory sick pay are usually based on earnings after salary sacrifice. Heavy sacrifice in the relevant calculation period can reduce statutory entitlements.

 

Some employers offer enhanced parental or sick pay, and their own policies may be more generous than the statutory minimum. The statutory calculation itself is based on the relevant earnings rules, so check the scheme before entering or adjusting a sacrifice arrangement ahead of planned leave.

 

Mortgage applications

Salary sacrifice may affect mortgage affordability checks. Some lenders look at post-sacrifice pay, while others may consider the arrangement if it is clearly shown on payslips or can be changed. Anyone planning to buy, move or remortgage should check before entering or adjusting a sacrifice arrangement.

 

Minimum wage rules

Salary sacrifice must not reduce cash pay below the National Minimum Wage or National Living Wage. Employers must check this before processing the reduction.

 

State Pension entitlement

To build a qualifying year for the State Pension through earnings, post-sacrifice pay still needs to be at or above the National Insurance Lower Earnings Limit. For 2026/27, this is £129 per week, or £6,708 per year.

 

Most full-time employees will remain above this level, but heavy sacrifice on a part-time salary needs care.

 

Changing the arrangement

Salary sacrifice changes your employment contract. Schemes usually restrict when you can opt in, opt out or change the amount. HMRC guidance also warns that if employees can swap between cash and benefits at will, the expected tax and NI advantages may not apply. Pick a level you can afford to maintain.

 

Pension annual allowance

The standard pension annual allowance for 2026/27 is £ 60,000. It can taper down for people with a threshold income above £200,000 and adjusted income above £260,000, with a minimum tapered annual allowance of £10,000.

 

Salary sacrifice pension contributions count towards the annual allowance. Exceeding the annual allowance can result in an annual allowance charge.

 

Electric car salary sacrifice

Electric car salary sacrifice remains attractive for many employees who want a new car.

 

The arrangement can reduce costs compared with funding a car personally because the lease cost is taken from gross pay, the car is excluded from OpRA if its emissions are within the 75g/km limit, and the benefit-in-kind rate for zero-emission cars remains low.

 

The saving depends on the car, lease terms, insurance, maintenance package, salary level, tax rate and how much of the employer’s NI saving is passed on. It is worth comparing the net salary sacrifice cost with a personal lease before signing.

 

The zero-emission car benefit-in-kind percentage is 4% in 2026/27. It rises to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30. The tax advantage will reduce as rates rise, but EV salary sacrifice should remain worth checking for employees who are already considering an electric car.

 

Practical steps

These questions can help you decide whether salary sacrifice is worth using.

 

• What tax band are you in? The savings depend on where the sacrificed salary sits. Basic-rate, higher-rate and additional-rate taxpayers can see different results.
• Are you near a key threshold? Salary sacrifice can be especially useful around £60,000, £100,000 and £125,140, because those thresholds affect the High Income Child Benefit Charge, the personal allowance taper and the additional rate of income tax.
• Are you claiming Child Benefit? If your adjusted net income is between £60,000 and £80,000, pension salary sacrifice may reduce the High Income Child Benefit Charge.
• What does your employer offer? Schemes differ. Check what benefits are available, whether the employer shares its NI savings, how often you can change the arrangement and what happens if you leave employment.
• Are you planning parental leave, a mortgage application or a career break? Are you on sick leave? These are reasons to take extra care before entering or adjusting a sacrifice arrangement.
• Are you already sacrificing more than £2,000 into a pension? The April 2029 change means higher contributors should plan ahead. The current rules remain in place for 2026/27, 2027/28 and 2028/29, but the NI saving above £2,000 will reduce from April 2029.

 

Wrapping up

Salary sacrifice remains a useful planning option in 2026/27, especially for pension contributions, electric cars and employees close to the £60,000 or £100,000 income thresholds.

 

The April 2029 pension change will reduce the National Insurance benefit for higher pension sacrifice contributions, but it does not remove salary sacrifice altogether. The next three tax years still offer a planning window under the current rules.

 

If you would like to review whether salary sacrifice would work for your circumstances, please get in touch.

What every owner-managed group needs to know.

 

Running more than one limited company is common for many owner-managers. You might have a trading company alongside a property company, a separate company for a different service line, a holding company above the group, or an old company kept for a brand name.

 

Each company may have made sense when it was set up. The issue is what happens when the corporation tax rules look at those companies together.

 

Since 1 April 2023, the UK has used a tiered corporation tax system. The thresholds that decide whether a company pays the 19% small profits rate, the 25% main rate, or a rate (due to marginal relief) between the two can be divided between associated companies. The more associated companies there are, the lower each company’s thresholds become.

 

This guide explains how the rules apply to accounting periods falling within the corporation tax financial year starting 1 April 2026, who counts as an associated company, and the practical steps that can help protect your position.

 

The corporation tax rate structure

For the financial year starting 1 April 2026, the main corporation tax rates remain:

 

• 19% small profits rate for companies with profits up to £50,000
• 25% main rate for companies with profits over £250,000
• marginal relief for companies with profits between £50,000 and £250,000

 

The government’s Corporate Tax Roadmap also confirmed its intention to cap the headline corporation tax rate at 25% for this parliament and to keep the small profits rate and marginal relief at current rates and thresholds.

 

The marginal relief band is not always as simple as it looks. Companies in the band are first taxed at 25%, then marginal relief is deducted using the standard 3/200 fraction. In practice, this means profits within the marginal band can suffer an effective marginal rate of 26.5%.

 

That is why profit levels inside the marginal band need careful monitoring. The rate on the next pound of profit can be higher than many owners expect. The associated company rules can move a company into that band earlier than expected.

What is an associated company?

The starting point is control. A company is associated with another company if:

 

• One company controls the other, or
• Both companies are under the control of the same person or persons.

 

For accounting periods beginning on or after 1 April 2023, the main corporation tax thresholds are divided by the total number of associated companies, including the company itself.

 

An associated company can count even if it is associated for only part of the accounting period. That point is easy to miss when companies are set up, sold, struck off or reorganised partway through a year.

 

For a 12-month accounting period, the standard limits are divided like this:

 

• One company only: £50,000 lower limit and £250,000 upper limit
• Two associated companies in total: £25,000 lower limit and £125,000 upper limit each
• Three associated companies in total: £16,667 lower limit and £83,333 upper limit each
• Four associated companies in total: £12,500 lower limit and £62,500 upper limit each
• Five associated companies in total: £10,000 lower limit and £50,000 upper limit each

 

A standalone company with £40,000 of taxable profits may expect to pay corporation tax at 19%. If it has three other associated companies, its lower limit could fall to £12,500 and its upper limit to £62,500. That same £40,000 profit could then sit inside the marginal relief band.

Control and associates

Control is wider than direct share ownership. It can include rights to voting power, income, assets on a winding up, and rights held indirectly.

 

The rules can also look at the rights of a person’s associates. For an individual, associates include:

 

• A spouse or civil partner
• Parents, grandparents and other lineal ancestors
• Children, grandchildren and other lineal descendants
• Siblings
• Partners in a partnership
• Certain trustees and personal representatives.

 

The rules do not automatically treat every family company as associated. Where companies are controlled by associates, HMRC assesses whether there is substantial commercial interdependence between them.

 

This distinction is important. A husband’s trading company and a wife’s separate trading company in an unrelated sector will not usually be associated just because they are married. The position changes if the companies share customers, premises, staff, funding, equipment or management.

Substantial commercial interdependence

The substantial commercial interdependence test looks at three types of connection.

Financial interdependence

This can apply when one company provides financial support to another, directly or indirectly, or when both have a financial interest in the same business. Examples could include inter-company loans, guarantees, shared funding arrangements or informal financial support.

Economic interdependence

This can apply when companies work towards the same economic objective, when one company’s activities benefit the other, or when they have common customers. Shared sales channels, regular referrals, or a linked customer base can all point towards economic interdependence.

Organisational interdependence

This can apply where companies share management, employees, premises or equipment. It may also include shared admin support, shared systems or shared operational resources.

 

None of the three connection types needs to exist. A strong link in one area may be enough, but the answer depends on the facts. The test is whether the interdependence is substantial, not whether the businesses are identical.

 

In practice, the situations most likely to create a problem include:

 

• Shared premises, especially where one company provides space free of charge or below market rent
• Inter-company loans without clear commercial terms
• Common employees, directors or management
• Shared customer bases or regular referrals between companies
• One company supplying goods or services to another on non-arm’s-length terms
• Shared vehicles, equipment, systems or admin support.

 

Good records help. If companies are genuinely separate, keep evidence of separate premises, separate customers, separate employees, separate management and properly priced transactions.

Dormant and passive companies

Not every related company reduces the thresholds. A company can be disregarded if it has not carried on any trade or business at any time during the relevant accounting period. For corporation tax purposes, trading includes activities such as buying, selling, renting property, advertising, employing someone or receiving interest.

 

That means a company may fail the exclusion even if it looks inactive. A small bank interest receipt, a one-off invoice, rental income or investment activity can be enough to show that it is carrying on a business.

 

It is also important to separate Companies House dormancy from corporation tax dormancy. Filing dormant accounts does not automatically mean a company is ignored for associated company purposes.

There is also a separate exclusion for certain passive holding companies, but it is narrow. Broadly, the company must carry on no trade, hold only shares in 51% subsidiaries, receive only dividend income, meet redistribution conditions and avoid other activities such as chargeable gains or management expenses. A holding company should not be assumed to qualify without checking the details.

Quarterly instalment payments

Associated companies can also affect when corporation tax is paid.

 

A company is usually treated as large for corporation tax payment purposes if its annual taxable profits exceed £1.5m but do not exceed £20m. For accounting periods beginning on or after 1 April 2023, that £1.5m threshold is divided by the number of associated companies, including the company itself.

 

For example, if a company has two associated companies, there are three companies in total. The £1.5m threshold is divided by three, giving an adjusted threshold of £500,000.

 

That can create a real cashflow issue. A company with annual taxable profits of £600,000 might not expect to pay corporation tax by quarterly instalments as a standalone company. If it has two associated companies, it could be brought into the large company payment regime.

 

Large companies with a 12-month accounting period normally pay corporation tax in four instalments:

 

• Six months and 13 days after the first day of the accounting period
• Three months after the first instalment
• Three months after the second instalment
• three months and 14 days after the end of the accounting period.

 

For a company with a 1 January to 31 December accounting period, those dates would usually be 14 July, 14 October, 14 January and 14 April.

 

The rules are different for very large companies. A company is usually very large if its annual profits exceed £20m, again with the threshold reduced for associated companies. Very large companies with a 12-month accounting period pay earlier, on the 14th day of months 3, 6, 9 and 12 of the accounting period.

 

There are exceptions. For example, a company may not need to pay by instalments where its total corporation tax liability is less than £10,000. There can also be a first-year exception for companies becoming large, provided profits do not exceed the relevant £10m threshold, adjusted for associated companies where necessary. These rules need checking before payment dates are assumed.

Common situations that catch owners out

The forgotten company

An old company may have been kept for a brand name, project or trading style. If it has any activity, it may not qualify for ignoring.

The property company

A separate company may hold premises and rent them to the trading company. Common ownership, a rental relationship and shared premises can create financial, economic or organisational links.

The family group

A parent may help an adult child start a company by providing premises, a loan, equipment or referrals. That support can create substantial commercial interdependence even where day-to-day management is separate.

The spouse companies

Two spouses may run separate companies. The companies may look independent, but shared admin support, shared staff, shared vehicles, or shared customers can change the position.

The investment company

A personal investment company is not automatically dormant. If it holds investments, receives income or carries on business activity, it may need to be counted unless a specific exclusion applies.

 

Practical steps to protect your thresholds

• Review all connected companies each year: List every company you and your associates control or have an interest in. Note whether each company is active, dormant, passive, trading, investment-based or potentially linked to another company.
• Check whether each company is still needed: Companies set up years ago for a specific project, contract or brand may no longer serve a purpose. Closing a company can remove it from future counts, but timing matters because a company can count if it was associated for part of the accounting period.
• Keep arrangements on commercial terms: Where companies share premises, lend money, provide services or recharge costs, put proper agreements in place. Use commercial rates, issue invoices, and keep records.
• Separate operations where possible: Separate premises, staff, bank accounts, systems, equipment and customer bases can all help show that companies operate independently.
• Plan profits across the group: Where companies are unavoidably associated, review projected profits early. Timing expenditure, pension contributions, capital allowances and other reliefs may help manage exposure to the marginal relief band.
• Document genuine independence: If two companies under family control are not substantially commercially interdependent, keep a short note explaining why. Cover the different activities, customers, premises, resources, management and financial arrangements.

Final thoughts

The associated company rules can affect both the rate of corporation tax a company pays and the date the tax is due. A company with related entities should not assume that the full £50,000 and £250,000 thresholds are available without checking the position.

 

If you run more than one company, have family members or business partners with their own companies, or are considering setting up a new company for a project or property, it is worth reviewing the structure before next year-end.

 

A clear review can help identify which companies count, whether any exclusions apply, and whether the group has moved closer to the marginal relief band or quarterly instalment payment rules.

 

If you would like a review of your associated company position before your next year-end, please get in touch.

 

 

Higher borrowing costs are putting fresh pressure on homebuyers, with many now spending the largest share of their income on mortgage repayments since the 2008 financial crisis.

Analysis from UK Finance, the trade body for the banking and finance industry, shows buyers are spending an average of 21.3% of gross household income on initial mortgage repayments. That rising burden is weighing on affordability and reducing demand across parts of Britain’s housing market.

The pressure is not being felt evenly. East Anglia and parts of the London commuter belt are among the hardest hit, where property prices remain high, and mortgage costs are becoming harder for buyers to manage.

North Norfolk was named the least affordable local authority, with borrowers spending 25.7% of their gross income on mortgage repayments. It was followed by Hillingdon at 25.1%, Luton at 24.9%, Slough at 24.8% and Spelthorne at 24.8%.

The figures come amid wider concern about the effect of elevated interest rates and economic uncertainty on the housing market. With mortgage costs still high, many would-be buyers are delaying decisions, lowering budgets or stepping back from the market altogether.

According to reports in The Negotiator,  prices also fell again last month. Amanda Bryden, head of mortgages at Halifax, said: “Property price trends continue to reflect the uncertainty linked to developments in the Middle East.”

For buyers, the latest figures underline how stretched affordability has become. For sellers and agents, they point to a market where pricing, confidence and borrowing conditions remain tightly linked.

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Too many people face a significant drop in income when they retire, with the majority unlikely to save enough to maintain a moderate standard of living, according to a new report from Pensions UK.

The trade body estimates that a moderate retirement lifestyle now requires an annual income of £32,700 for a single person and £45,400 for a couple. However, just 23% of working-age people are currently on track to reach that level.

The findings highlight growing concerns about retirement adequacy as rising living costs push up the amounts people need to save. Pensions UK estimates that a minimum retirement income now stands at £13,900 a year for a single person and £22,500 for a couple. Around 82% of workers are expected to achieve this level.

For those seeking a more comfortable retirement, the income required rises to £45,400 for an individual and £62,700 for a couple. The report suggests only 9% of workers are on course to meet that target.

The figures are based on retirement living standards developed independently by the Centre for Research in Social Policy at Loughborough University. The calculations reflect expected spending on essentials and everyday activities, including food, transport, leisure and holidays, but exclude housing costs.

Pensions UK said higher spending on food and social activities had pushed retirement costs up over the past year, broadly in line with inflation.

The organisation is calling on workers, employers and the Government to take further action to strengthen retirement savings. Its warning follows renewed Government attention on pension adequacy, including the revival of the Pension Commission, which previously led to the introduction of automatic enrolment into workplace pensions.

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