Understanding your pension and how to maximise it.

The State Pension remains a foundation of retirement income for millions across the UK. Although private pensions and other investments often play a significant part in retirement plans, the State Pension provides a consistent baseline of support. Many people seek clear guidance on what to expect from the State Pension, especially when government policies evolve. Changes set for the 2025/26 tax year have prompted questions about how much pensioners will receive, how the system affects those who are planning to retire soon, and what individuals can do to stay informed. This guide addresses these questions and offers an overview of the updated State Pension system.

Overview of the new State Pension

The UK introduced the “new State Pension” for people who reach State Pension age on or after 6 April 2016. This new system replaced the old basic State Pension and additional State Pension (sometimes called SERPs or S2P). Its goal was to simplify retirement benefits and make them more transparent, but several changes have occurred over the years.

Under the new State Pension, you need at least ten “qualifying years” of National Insurance (NI) contributions to receive anything. You typically need 35 qualifying years to receive the full new State Pension. These are broad guidelines; some people who paid or received NI credits under the old system may have special situations, so it’s worth checking your own NI record to confirm your status.

From April 2025, the UK government will continue to determine State Pension amounts according to policies in place at that time. Although the official weekly figure for 2025/26 will depend on economic factors like inflation, average wage growth, and policy decisions, the triple lock (discussed in the next section) means that the new State Pension is expected to rise in line with either average earnings, inflation, or a minimum rate (2.5%), whichever is highest.

From April 2025, the full rate of the new State Pension will be £230.25 per week, while the old basic State Pension will be £176.45 per week.

Key takeaways:

• If you reach State Pension age on or after 6 April 2016, you fall under the new State Pension rules.
• You need at least ten qualifying years of NI contributions to receive any State Pension.
• You typically need 35 qualifying years to receive the full new State Pension.

Recent increases and the triple lock

The triple lock has been a cornerstone of the government’s approach to State Pension increases. It ensures that each year, the new State Pension rises by the highest of three measures:

1. Average earnings growth
2. Inflation (usually measured by the Consumer Prices Index, or CPI)
3. A flat 2.5%

Because of this policy, the new State Pension has risen significantly in some years, especially when inflation or wage growth has been higher. According to the UK Parliament’s data in recent years, pensioners often rely on the State Pension for more than half of their income. This underscores why each annual increase remains so important for retirees, especially during times of rising living costs.

State Pension age changes

The government has gradually increased the State Pension age over the past decade. This process affects both men and women. It is already 66 for most individuals, and it is set to become 67 between 2026 and 2028. The government has also explored raising the State Pension age to 68 earlier than planned, but those proposals usually require further parliamentary debate and public consultation.

For 2025, the State Pension age remains 66 for most people, though those who were born in specific years may face a shift to 67 if their birthday falls within the transition period. It’s wise to check the government website or use the official “Check your State Pension age” tool to see your personal pension age.

National Insurance contribution requirements

Your NI record is the foundation of your State Pension entitlement. Each tax year in which you pay or are credited with sufficient National Insurance contributions counts as one “qualifying year.” You need at least ten qualifying years to receive any portion of the State Pension, and around 35 qualifying years to receive the full new State Pension.

Ways to build your NI record:

• Pay NI contributions through employment: If you are employed and earn above a certain threshold, you automatically pay NI contributions.
• Pay NI contributions if self-employed: If you are self-employed, you pay Class 2 and/or Class 4 contributions depending on your profits.
• NI credits: If you receive certain state benefits (for example, Child Benefit for a child under 12), you may receive NI credits. These credits can fill in gaps for years when you are not working.
• Voluntary contributions (Class 3): If you have gaps in your record, you can pay voluntary contributions to top up certain years. You usually have up to six years to fill past gaps, but from time to time, the government extends these deadlines.

Special note for 2025/26

If you discover missing years in your NI record when you check in 2025, you may still be able to buy back some prior years – if the deadlines allow. Keep in mind that voluntary contributions might not always boost your State Pension if you already qualify for the full amount, so you should confirm before making payments.

Deferring the State Pension

You do not have to start claiming your State Pension as soon as you reach State Pension age. If you choose to defer, the amount you eventually receive will increase. The government calculates deferral increases daily, and you usually need to defer for a minimum period before seeing a rise in your weekly pension.

For the new State Pension, the deferral rate for each year you delay is roughly just under 5.8% extra per year (the precise rate can vary). This means that if you have other sources of income and do not need the State Pension right away, you might consider deferring. However, it can take several years of receiving a higher pension to offset the time you spent without payments. So you should review your personal circumstances and consider factors such as health, life expectancy, and current financial needs.

Possible impact on your personal finances

The changes in 2025/26 may influence your financial planning, especially if you are close to retiring or already in retirement. Here are some points to consider:

• Inflation and cost of living: If inflation remains high, an increase in the State Pension could help you keep pace with rising prices. At the same time, costs for essentials such as energy bills or groceries could offset some of the benefit of a pension increase.
• Other benefits and allowances: People who receive the State Pension may also qualify for other benefits, such as Pension Credit or Housing Benefit, depending on their income and circumstances. If the State Pension rises, it could affect how much help you get from these benefits.
• Interaction with private pensions: If you have a defined benefit or defined contribution pension, you may want to look at how your total retirement income will stack up. The State Pension can serve as a safety net, but it might not be enough on its own for your financial goals.
• Tax considerations: The State Pension counts towards your taxable income. If a rise in the State Pension pushes you into a higher tax bracket, you could end up paying more in income tax.

Stay aware of how the annual changes in State Pension rates could influence your tax situation. Many people in retirement find themselves with multiple sources of income – part-time work, private pensions, savings, or investments – so it can be helpful to forecast how an increase in the State Pension might affect your taxable income.

How to check and boost your State Pension

A few straightforward steps can help you understand your entitlements and increase your State Pension if you have gaps:

1. Check your State Pension forecast: The government’s website (gov.uk) offers a service where you can see your forecast based on your NI record. It will show you how many years you have, how many you need for the full amount, and any shortfalls.
2. Review your NI record: You can check your NI record online to see if there are any gaps. This information is crucial when deciding if voluntary contributions make sense for you.
3. Consider voluntary NI contributions: If you have empty or partially empty years in your record, think about paying voluntary Class 3 contributions to help you qualify for a higher State Pension. Ensure you seek guidance – sometimes from a professional adviser – before paying, because it might not always boost your pension.
4. Understand credits for carers: People who take time off work to raise children or look after someone with a disability may receive NI credits that count towards the State Pension. It’s important to confirm that you have received all the credits you are entitled to.
5. Stay up to date on government announcements: The government may extend deadlines or offer temporary concessions, such as the chance to buy back older missing years, which can help you fill longer-standing gaps.

The importance of staying informed

With each financial year, the State Pension rules can shift through legislative changes or new government initiatives. You might see proposals to adjust the triple lock, alter the State Pension age schedule, or change the contributions system. While not all proposals become law, it helps to stay aware of discussions in Parliament.

Reliable sources for up-to-date information include:

• uk (official government site with detailed explanations, calculators, and eligibility checkers).
• UK Parliament website (for legislative updates).
• Advisory services such as Citizens Advice or Pension Wise (for free guidance on retirement options).

Statistics from the Office for National Statistics (ONS) often offer insights into trends such as pensioner incomes, average lifespans, and employment patterns among older workers. These data points can give you a sense of where retirement planning stands on a national level.

Final thoughts

The State Pension remains an important building block of retirement security. Although private pensions, savings, and investments can be significant, many retirees rely on the State Pension for a sizeable part of their income. The updates expected in 2025/26 will likely continue the pattern of annual increases, but you should monitor official sources for the precise figures.

Paying attention to your National Insurance record and considering whether voluntary contributions could help you top up your future pension are good steps if you suspect shortfalls in your NI history. If you plan to retire around 2025 or slightly later, you should look at your anticipated State Pension age to see if you might be affected by any forthcoming age changes.

It can also help to reflect on how the new State Pension interlocks with your other sources of income. If the State Pension pushes your total earnings in retirement above certain tax thresholds, you should plan for that possibility. Meanwhile, if you have a smaller income, you should see whether you qualify for benefits such as Pension Credit. These decisions can benefit from professional advice, and many accountants, financial advisers, and charity services can guide you based on your individual circumstances.

The steps you take to check your forecast and NI record can make a difference. Accessing government services online and reading official guidance can confirm that you are on track to get the maximum amount for which you qualify. If you have a gap in your record, paying voluntary contributions might mean the difference between missing out on a higher payment or receiving a boost that could last the rest of your life.

Staying aware of potential changes is worthwhile, especially if you intend to retire in the near future. Even though the State Pension is only one part of your income in retirement, it can provide a dependable foundation. If you keep up with announcements and take a proactive approach to your NI record, you’ll be in a better position to ensure your State Pension meets your expectations.

Have any questions about your State Pension? Get in touch – we’re here to help.

According to a new survey from the Institute of Chartered Accountants in England and Wales (ICAEW), business confidence in the UK has dropped to its lowest level in two years.

The industry body found that rising tax concerns, persistent cost pressures, and weakening sales expectations weigh heavily on companies. Its business confidence index fell to -3 in the first quarter of 2025, down from 0.2 in the final months of 2024. This marks the weakest reading since late 2022.

ICAEW surveyed 1,000 chartered accountants, over half of whom (56%) cited tax increases as a growing challenge – the highest proportion since the survey began in 2004. The pressure comes after Chancellor Rachel Reeves raised employer National Insurance contributions as part of a £40 billion tax package introduced on 6 April.

Meanwhile, international headwinds are also adding to the strain. US President Donald Trump’s renewed trade war is expected to dent UK economic growth, with the National Institute of Economic and Social Research warning that high US tariffs could push GDP growth close to zero in 2026.

Despite stronger-than-expected growth in February, official figures show a 0.5% economic uptick and business sentiment remains fragile. Surveys suggest job shedding at levels not seen since the 2008 financial crisis, though official labour market data has painted a more resilient picture.

Talk to us about your business.

The Bank of England (BoE) is now widely expected to cut interest rates in May, as escalating trade tensions sparked by Donald Trump’s tariff hikes weigh heavily on the global economic outlook.

President Trump has imposed a 10% tariff on all UK exports to the US (although a 90-day pause on proposed tariff hikes has been called), claiming it’s a response to British duties on American goods. The move follows US levies of 25% on UK steel, aluminium and cars. The UK Government has so far refused to retaliate, warning that it won’t be rushed into trade decisions.

With financial markets jittery and the risk of a global recession rising, investors expect at least three rate cuts from the BoE this year – up from two earlier. The Bank Rate currently stands at 4.5%, but three 25 basis-point cuts would bring it down to 3.75% by December. A former BoE policymaker has called for even faster action.

The Monetary Policy Committee (MPC) will next meet on 8 May. While the BoE has remained cautious about inflation, the threat to growth is becoming harder to ignore. After briefly hitting the 2% inflation target in May last year, inflation has since risen to 2.8%.

Meanwhile, BoE Governor Andrew Bailey has been nominated to chair the Financial Stability Board, a global organisation monitoring financial system risks. His appointment comes at a time of heightened concern about market volatility and the broader economic impact of US trade policy.

Talk to us about what this means for you.

The UK Government has taken control of British Steel’s Scunthorpe plant after passing emergency legislation in a rare Saturday sitting of Parliament.

The new law gives Business Secretary Jonathan Reynolds sweeping powers to intervene in the operations of the Chinese-owned site, including the ability to enter the plant by force to secure assets and ensure continued production.

The action came after Reynolds said he had no choice but to act swiftly to prevent Jingye, the plant’s owners, from shutting down the plant’s two blast furnaces, an outcome that would have ended primary steel production in the UK.

The legislation, which was passed by both the Commons and Lords, and which has now received Royal Assent, was not opposed by any major party. Conservative MPs, however, criticised the Government for acting too late. Several Conservatives also supported nationalisation, which Reynolds said may be necessary if no private buyer can be found.

For now, Jingye retains ownership, but the Government is effectively running the plant. Reynolds said ministers remain hopeful of attracting private investment to secure the site’s future despite no interested buyers.

Liberal Democrat MP Daisy Cooper backed the emergency recall of Parliament but urged the Government to exercise caution in using the powers granted.

Independent MP Jeremy Corbyn called for all UK steelmaking to be brought into public ownership. The Scunthorpe plant employs around 2,700 people.

Talk to us about this decision.

Plan your next business move with confidence.

A merger or acquisition can open new doors for growth, streamline operations, and enhance market presence. Businesses across the UK often consider combining forces to improve economies of scale, benefit from complementary expertise, or secure new technology. Although this form of restructuring can bring advantages, it also involves risks if it is not managed correctly. This guide outlines essential factors that business owners should consider when they plan or undertake a merger or acquisition in the current UK environment.

Below, you will find guidance on the process, from preliminary research and financial evaluations through to post-deal integration. The goal is to give you a reliable foundation for decision-making. Please note that every organisation’s requirements are different, so it is wise to consult professional advisers and the relevant legislation to ensure compliance.

Introduction to mergers and acquisitions

In general terms, a merger refers to an arrangement in which two companies combine to form a single, new entity. This often occurs when businesses of similar size, or with complementary strengths, join to expand their reach or create efficiencies. An acquisition, by contrast, takes place when one company buys a majority or complete stake in another. The acquired business then either continues to function as a subsidiary or is integrated more closely, depending on strategic objectives.

The Office for National Statistics (ONS) tracks merger and acquisition activity in the UK. While figures fluctuate from year to year, overall M&A activity remains a notable part of the economic framework. For example, ONS data indicated that domestic M&A (where both parties are based in the UK) reached £8.6 billion in Quarter 4 of 2024. Although specific figures will vary in each subsequent year, it is evident that M&A deals form a significant proportion of corporate restructuring activity. The upward trend in certain sectors, such as technology and healthcare, suggests that more businesses may consider this path in the years ahead.

Preparing your strategy

Before you approach a deal, begin with a clear strategy. Have a realistic, data-driven rationale for what you aim to achieve. Some organisations seek scale to access bigger markets. Others acquire specialist knowledge or intellectual property in order to enhance their product or service range. By outlining your objectives from the outset, you can shape every step of the process.

Key considerations when defining your objectives:

1. Operational alignment: Determine how the combined entity will manage production or service delivery. It helps to compare supply chains, distribution networks, and management structures.
2. Financial gains: Aim to establish whether the transaction could bring cost savings or boost revenue streams. Sometimes this happens through shared resources, cross-selling opportunities, or improved procurement terms.
3. Market analysis: Investigate how well the target company complements your reach. Investigate the size of the potential audience, any overlapping market segments, and any new regions you might be able to access.
4. Cultural compatibility: Examine whether work cultures, values, and approaches are comparable. This is sometimes overlooked, but it can make a difference to staff retention and day-to-day operations.

By knowing your end goals early, you establish a roadmap for the rest of the process. During negotiations, these objectives also help you evaluate whether a proposed deal will truly benefit your company.

Evaluating the financial position

A detailed financial assessment is fundamental. This work usually involves both in-house teams (such as finance or accounts) and external professionals, including accountants and solicitors, who can carry out due diligence checks.

Vital checks include:

• Balance sheets: Examine the assets, liabilities, and equity structure of the target company. Look for any outstanding debts or pending litigation that could affect future profitability.
• Cashflow statements: Review past and projected cashflow to see how the business funds day-to-day activities. If there are shortfalls or negative trends, be realistic about the time, investment, or restructuring required to correct them.
• Profit and loss statements: Look at revenue sources, direct costs, and overheads for a minimum of three to five years (or longer, if available). Consistent growth is often more attractive than sporadic spikes in revenue.
• Customer and supplier contracts: Determine whether these agreements will remain in force after a merger or acquisition. Contracts that are set to expire or have clauses triggered by ownership changes can lead to unexpected issues.
• Contingent liabilities: Identify any possible liabilities that might appear in the future, such as pending lawsuits, tax investigations, or product warranty claims.

Consider hiring independent auditors or accountants to offer an unbiased opinion, especially for larger deals. They will typically supply an in-depth review of the target’s financial health, so you can gauge how these figures align with your objectives. A report of this nature will often highlight elements that could pose potential risks or confirm that the target is stable and aligned with your strategic plan.

Tax considerations for the current UK tax year

Tax liabilities can have a meaningful impact on the success of a merger or acquisition. As of the current tax year (starting 6 April 2025 through 5 April 2026), corporation tax rates can vary depending on a business’s level of taxable profits. After changes introduced in recent budgets, the main rate of corporation tax is set at 25% for businesses with profits above £250,000. Companies with profits up to £50,000 may qualify for a 19% small profits rate, while those in between typically pay a tapered rate.

When assessing a target company’s position, confirm that any existing corporation tax, VAT, and payroll taxes have been submitted correctly and on time. A thorough check of VAT records, in particular, is recommended if the acquired or merged company operates in industries where goods or services have different VAT treatments.

Additional points:

• Stamp Duty: If you acquire shares in a UK company, you may pay Stamp Duty at 0.5% on the total purchase price of the shares. For asset purchases, Stamp Duty Land Tax (SDLT) may apply if property is involved.
• Capital allowances: Large capital investments, such as machinery or commercial vehicles, might offer potential tax reliefs.
• Research and Development (R&D) relief: If the newly combined entity invests in R&D, you might be eligible for additional tax relief. However, specific eligibility requirements apply, so check the current HMRC guidelines.

Tax rules can be complex, so it is worthwhile to confirm your situation with professional advisers. Failing to manage tax obligations correctly can result in penalties or unexpected bills later on.

Legal frameworks

A successful merger or acquisition in the UK needs to comply with relevant laws and regulations, including:

1. Companies Act 2006: Governs issues such as shareholder approval, disclosure requirements, and any restructuring processes.
2. Competition and Markets Authority (CMA) rules: If the combined entity attains a significant share of the market, the CMA might investigate the deal to ensure it does not hamper fair competition.
3. Employment law: Any reorganisation of staff must follow fair procedures, including Transfer of Undertakings (Protection of Employment) regulations (TUPE) if employees are transferred from one entity to another.
4. Data protection laws: Under the Data Protection Act 2018 and the UK General Data Protection Regulation (UK GDPR), businesses must handle any transfer of data responsibly and lawfully.

Professional legal advice is helpful for making sure the deal structure and post-completion changes comply with these statutory frameworks. Depending on the scale of the deal, certain agreements may need to be filed with Companies House. In some cases, pre-completion approvals from relevant authorities (such as regulatory bodies) may be required.

Cultural and operational alignment

Although the financial and legal aspects are prominent, the human factor also needs attention. Cultural and operational differences can contribute to friction if management teams do not address them from the start. Each business often has its own work routines, reporting structures, and values, so you should establish from the outset how these elements will combine or coexist.

Practical approaches include:

• Employee engagement sessions: Encourage dialogue among teams that will work together. This might help identify areas of overlap or conflict.
• Management alignment: Align management styles to reduce the possibility of misunderstandings. Consider leadership training or strategy workshops to unify teams.
• Branding decisions: If you plan to bring the acquired company under your brand, develop a timeline for rebranding. Alternatively, if you intend for it to remain a separate brand, clarify guidelines on messaging and brand usage.

Open communication and transparent policies help to build trust. If employees and stakeholders understand the reason behind major changes, they may adapt more quickly and contribute to a more productive environment.

Integration planning

After a formal merger or acquisition, the integration phase is where the intended benefits should materialise. Poorly planned integration can undermine the deal’s value, so it is worth investing in a detailed plan that covers every aspect of the new organisation.

Common areas to cover:

1. Systems and technology: Decide which IT systems will be maintained or replaced. Integrating accounting software, customer relationship management (CRM) tools, and other platforms can prevent data silos.
2. Finance and reporting: Standardise processes for budgeting, payroll, and financial reporting. This ensures all teams follow consistent procedures.
3. Product or service range: If each company has a different product line, explore opportunities to cross-sell or bundle services. Decide whether any products or services will be discontinued to avoid overlap.
4. Supply chains: Coordinate procurement and logistics to benefit from economies of scale or to negotiate better supplier contracts. Keep track of any supply-chain dependencies to avoid disruptions.
5. Key performance indicators (KPIs): Define measurable goals for the combined entity. Examples include profit margins, operational costs, customer satisfaction levels, or employee retention rates.

Be realistic about timescales. Depending on the complexity of the deal, integration might take many months or even longer. To stay on track, some businesses appoint an integration manager or set up an integration committee with representation from different departments.

Staff retention and communication

Maintaining staff morale is one of the more challenging tasks during a merger or acquisition. Sudden changes and uncertainty about the future can cause stress or prompt valued employees to look elsewhere. Clear communication is often the best way to reassure employees and keep them aligned with the business.

Steps to consider:

• Regular updates: Hold meetings or send official bulletins to keep staff informed of changes in structure, leadership, or operational processes.
• Support systems: Provide resources like training or counselling if needed. When staff understand new workflows or roles, they adapt more quickly.
• Transparent messaging: Be direct about any redundancies, relocations, or changes in benefits. Staff are more likely to trust management if they feel that they are getting full and honest information.
• Recognition of achievements: If teams meet set goals during the transition, emphasise their accomplishments. This contributes to a positive work culture.

High staff turnover can damage the new entity’s ability to deliver on its objectives and might cause delays, so it is sensible to make retention a priority.

Risk management

Even the most thoroughly planned deal can involve unexpected hurdles. Managing these effectively can make the difference between a successful transaction and a problematic one. A comprehensive risk assessment may cover:

• Financial risks: Changes in interest rates, fluctuations in currency values (for international deals), or unforeseen tax liabilities.
• Operational risks: Disruptions in supply chains, IT integration failures, or data security breaches.
• Legal risks: Non-compliance with competition law, failure to secure approvals from regulatory authorities, or breach of contract claims.
• Reputational risks: Public or media criticism if the deal results in widespread job losses, or if key stakeholders do not support the move.

Each risk area should have an assigned ‘owner’ who is responsible for monitoring and taking corrective steps if necessary. In some cases, businesses purchase specific forms of insurance (such as warranty and indemnity cover) to limit exposure to certain liabilities.

Post-deal considerations and ongoing compliance

Once the deal closes, ongoing monitoring helps ensure that projected benefits are realised. This involves checking performance metrics, meeting legal obligations, and continuing to engage with employees and customers to foster a cohesive corporate identity.

Ongoing activities might include:

1. Periodic audits: Schedule regular financial and operational reviews. This makes it easier to detect any discrepancies early.
2. KPI tracking: Measure key indicators against pre-deal forecasts. Adjust strategies if results deviate from the expected performance.
3. Cultural alignment checks: Assess whether teams remain cooperative. Look out for signs of silos or divisions that may emerge over time.
4. Reinvestment strategies: Determine if any resources saved or gained from the transaction can be reinvested in product development, market expansion, or staff training.
5. Stakeholder feedback: Gather input from employees, customers, and suppliers. Their perspectives can indicate whether the new structure is functioning well or needs adjustments.

Best practices for a successful process

Below is a concise list of action points that can guide you toward a successful merger or acquisition:

1. Perform thorough due diligence: Confirm that all key financial, legal, and operational aspects are verified.
2. Seek expert advice: Consult accountants, solicitors, and tax specialists who are experienced in M&A deals.
3. Have a clear strategy: State your objectives early and use them to evaluate potential targets.
4. Plan for integration: Develop a structured plan to unite systems, processes, and people.
5. Communicate openly: Maintain regular dialogues with all stakeholders, especially employees.
6. Comply with regulations: Adhere to relevant laws, including employment rules and data protection requirements.
7. Monitor progress post-deal: Conduct periodic reviews to confirm that the intended benefits are realised.

Key takeaways

Mergers and acquisitions can introduce new opportunities to expand market share, streamline operations, or enhance innovation. They can also involve challenges that range from strict legal requirements to employee concerns. Careful preparation and professional advice will help you handle the process in a way that preserves business stability and positions you for future growth.

As you set your strategy, remember the importance of thorough due diligence, efficient tax planning, and proactive communication. A well-managed transition sets the stage for a stronger and more competitive entity. Whether you aim to improve your product range, extend your customer reach, or strengthen your infrastructure, a merger or acquisition can be an effective path forward when planned and executed with diligence.

Before finalising any transaction, confirm the relevant guidelines issued by HMRC, the CMA, and other regulatory bodies. This ensures that your decisions align with the current UK tax year requirements and any updates in business or employment legislation. With well-grounded planning and ongoing monitoring, you have a strong chance of achieving a successful outcome that benefits stakeholders on all sides.

Every deal is different – speak to us to make sure your strategy, tax planning, and structure are fit for purpose.

Strategies for minimising IHT liabilities.

Inheritance tax (IHT) in the United Kingdom applies to the transfer of wealth after death. It can affect property, savings, investments, and other assets. Although it applies to a smaller portion of estates, those crossing certain value limits may face a 40% tax charge on amounts above available allowances. Thresholds have been frozen for several years, so rising asset prices can bring more families into scope.

This guide reviews the 2025/26 allowances, rates, and reliefs and outlines legal provisions under HMRC regulations. It offers factual, compliance-based guidance for individuals and families who wish to manage their affairs effectively.

Current thresholds and rates

• Nil-rate band (NRB): £325,000 per individual. This level has not changed for several years and remains frozen for 2025/26. Estates valued below £325,000 pay no IHT. Amounts above this threshold are generally taxed at 40%.
• Residence nil-rate band (RNRB): £175,000 per individual, available when a home is left to direct descendants (children, stepchildren, adopted children, or grandchildren). If the RNRB applies, it can raise a person’s overall tax-free allowance to £500,000 (i.e. £325,000 plus £175,000).
• Taper for RNRB: If the total estate exceeds £2 million, the RNRB is withdrawn by £1 for every £2 above £2m. High-value estates may lose some or all of the £175,000 allowance.
• Spouse and civil partner exemption: Transfers between spouses or civil partners are exempt from IHT, regardless of amount. The first spouse’s unused NRB can pass to the survivor. This can double allowances to £650,000 (2 × £325,000) or up to £1m (2 × £500,000) if the RNRB is fully used.
• Rate of tax: The standard rate is 40% on any value above the available allowances. This can drop to 36% if you leave at least 10% of your net estate to charity.

These thresholds are set to remain in place until at least April 2030. Since property and investment values continue to rise, individuals who might not previously have worried about IHT may now need planning advice.

Lifetime gifts and exemptions

A common way to lower IHT liability is to pass on assets while still alive. Some gifts are instantly exempt, while others become exempt over time:

Annual gift exemption

• Each individual can give away up to £3,000 per tax year free of IHT. This amount can go to one person or be split among several recipients.
• If the full £3,000 exemption goes unused in a particular tax year, it can carry forward one year (up to £6,000 maximum). After that, any unused portion expires.

Small gifts exemption

• You can give any number of gifts up to £250 per recipient each tax year, and these are immediately exempt as long as no other exemption is used for the same person that year.
• This applies well to small, customary presents for special occasions.

Wedding or civil partnership gifts

• Gifts made on the occasion of a marriage or civil partnership are exempt up to certain limits: £5,000 for a child, £2,500 for a grandchild, and £1,000 for anyone else.
• You can combine this exemption with the £3,000 annual exemption.

Regular gifts out of income

• If you have surplus income, you can set up a pattern of gifts from after-tax income without affecting your normal standard of living. These are free of IHT immediately.
• Proper documentation is important: your executors should be able to show that the gifts came from income and did not erode your capital.

Potentially exempt transfers (PETs) and the seven-year rule

• Gifts above the specific exemptions above are known as PETs. They incur no IHT if the donor survives for seven years.
• If the donor dies within seven years, the gift may be added back into the estate, potentially creating a tax liability. However, taper relief can reduce the IHT rate on that gift if death occurs more than three years after the donation.

Gift with reservation of benefit

• You cannot keep using or benefiting from an asset you have supposedly “gifted.” For instance, giving a house to children but continuing to live there without paying market rent would not remove the property from your estate for IHT.
• The gift must be genuine and unconditional for it to leave your estate.

By making gifts early and consistently, an individual can reduce the size of their taxable estate. The seven-year window for larger transfers (PETs) is important to keep in mind. Good record-keeping is essential for executors to show HMRC the timing and nature of any gifts.

Trusts

Trusts can provide a structured way to transfer or protect assets. Different trust types follow specific IHT and tax rules:

Bare trusts

• A bare trust gives the beneficiary an immediate, absolute right to the assets. It is often used for minors until they reach adulthood.
• For IHT, putting assets in a bare trust counts as a PET. If the donor survives seven years, the gift is fully exempt.

Discretionary trusts

• Discretionary trusts allow trustees to decide which beneficiaries receive income or capital. No beneficiary has an automatic right.
• When establishing or adding assets to a discretionary trust, any amount above your available nil-rate band can be taxed at 20% (the lifetime rate). If you die within seven years, that may rise to 40%, with credit for the 20% already paid.
• Discretionary trusts face a “periodic charge” (up to 6%) every ten years on the value above the nil-rate band, and there may be an “exit charge” of up to 6% when assets leave the trust between those anniversaries.

Will trusts

• Assets can pass into a trust when someone dies, based on the terms in their will.
• In the past, couples sometimes used nil-rate band discretionary trusts in their wills so the allowance of the first spouse was not wasted. However, since the nil-rate band can now be transferred between spouses, that is less common for the sole purpose of using the band. Trusts in wills remain helpful for more complex family arrangements or controlled distribution.

Reasons to use trusts

• They allow control over how and when beneficiaries receive assets.
• Once assets have been correctly placed in trust for long enough (and any relevant IHT on entry paid or avoided through exemptions), future growth often sits outside the settlor’s estate, which may reduce IHT in the long run.

Trusts require careful drafting and administration. Specialist advice is often advisable to ensure the trust is set up in line with current tax laws.

Business and agricultural reliefs

Certain businesses and farms benefit from substantial IHT relief, preventing a situation where heirs must sell assets to cover the tax.

Business relief (BR)

• Some or all of a trading business can be passed on free of IHT, depending on qualifying criteria.
• Ownership of an unlisted trading company or partnership interest may attract 100% relief if held for two years.
• Assets such as land or machinery personally owned but used by the business can attract 50% relief.
• Businesses that focus on investment rather than trading (e.g. property letting) usually do not qualify.
• From April 2026, BR will be capped so that only the first £1 million of qualifying business assets (or interests) benefits from the relief.

Agricultural property relief (APR)

• Aims to protect working farms. Farm property, farmhouses, and buildings used for agriculture may receive up to 100% relief, depending on ownership duration and use.
• The agricultural value of the property is exempt, but extra development value might not be covered.
• From April 2026, a cap will apply so that only the first £1 million of qualifying agricultural property benefits from full APR, with reduced relief available above that threshold.

These reliefs can significantly reduce the taxable part of a deceased’s estate by ensuring conditions are met (such as maintaining a genuine trading status or continuing active farming). Ownership time frames are key – most often, two years of ownership is required for 100% relief.

Pensions

Defined contribution pensions usually lie outside the estate for IHT purposes, making them a significant opportunity for wealth transfer:

• General treatment: Because most pension schemes are set up with discretion for trustees over death benefits, the funds are not considered part of the estate for IHT.
• Before vs. after age 75: If death occurs before 75, a nominated beneficiary may inherit pension funds tax-free (no income tax and no IHT). If death occurs after 75, the beneficiary pays income tax at their marginal rate when drawing from the inherited pot, but there is still no IHT on the fund.
• Practical approach: Many retirees choose to spend non-pension assets first, leaving the pension to grow or remain invested, as it can transfer to heirs with minimal tax consequences.
• Potential future changes: The government has indicated it may review these rules, especially from 2027 onwards, but for 2025/26, defined contribution pensions generally remain outside IHT.

By clearly nominating beneficiaries, individuals can ensure their pension passes smoothly, often free of inheritance tax. Given the freeze on other allowances, this is a popular planning tool.

Charitable donations

Leaving part of an estate to charity can reduce or remove inheritance tax on the donated sum and, in some cases, lower the rate on the rest of the estate:

Charity exemption

• Any assets left to a registered UK charity are fully exempt from IHT. This portion does not affect the nil-rate band.
• For example, leaving £50,000 to charity reduces the taxable estate by that amount.

Reduced 36% rate

• If 10% or more of the net estate (after allowances and deductions) goes to charity, the IHT rate on the remaining taxable estate is cut from 40% to 36%.
• Therefore, the effective cost of donating that 10% is partly offset by the lower tax on the rest.

Some people choose to combine these two benefits, both supporting philanthropic causes and reducing the overall tax their heirs might face.

Other strategies

Life insurance in trust

• A life insurance policy (often a whole-of-life plan) can be used to cover any IHT bill. Writing the policy in trust means the payout falls outside the estate and is paid promptly to the beneficiaries or trustees, who can then settle the tax.
• This approach does not reduce the IHT itself, but it removes the need for beneficiaries to raise cash – often a problem if most wealth is in property.

Equity release

• A homeowner can take out a lifetime mortgage to unlock cash from their property. This debt reduces the estate’s net value, and the homeowner might gift the released funds (which could be exempt if they survive seven years).
• The accumulating interest on the loan will further lower the estate’s final value. This can help reduce or avoid IHT, although it also means less equity remains for beneficiaries.

Family investment companies (FICs)

• A private company structure can allow parents to transfer shares to their children without giving them immediate control over the assets.
• Shares given to children count as potentially exempt transfers. If the parents survive seven years, the shares do not return to their estate.
• Parents typically retain voting (but low-value) shares, so future growth accrues to the children’s shares, helping to limit the parents’ taxable estate.

Wills and regular reviews

• A valid will is essential to use allowances and reliefs effectively.
• As personal or legislative circumstances change, reviewing IHT plans periodically helps to keep strategies up to date.

The value of professional guidance

While some estates remain below the IHT thresholds, many property owners now find themselves close to or over these limits. Families can mitigate or eliminate the 40% tax on amounts above the nil-rate bands by focusing on legitimate allowances, reliefs, and planning structures.

Early, informed action is the foundation of effective IHT planning. By reviewing current rules, seeking professional guidance, and monitoring any legislative changes, individuals can ensure their estate plans remain aligned with their wishes. Regular updates can help owners respond to shifts in property values, personal circumstances, and policies, allowing them to preserve more of their assets for future generations.

Regularly reviewing your inheritance tax plan can help you adapt to legislative changes and protect your assets. We’re here to help.

Unlock funding to grow your business.

Small and medium-sized enterprises (SMEs) are the backbone of the economy, comprising 99.9% of all businesses and employing a significant portion of the workforce. To support the growth and sustainability of these enterprises, the government offers a variety of grants tailored to diverse business needs. Understanding and accessing these grants can provide vital financial support, enabling SMEs to innovate, expand, and thrive.​

The importance of government grants for SMEs

Government grants are non-repayable funds allocated to businesses to achieve specific objectives, such as fostering innovation, enhancing sustainability, or stimulating regional development. For SMEs, these grants can alleviate financial constraints, reduce operational risks, and accelerate growth. Unlike loans, grants do not require repayment, making them an attractive funding source for businesses aiming to undertake new projects or expand existing operations.​

Types of government grants available

The government provides grants that cater to various business activities and sectors. Key categories include:

1. Innovation and research grants: Aimed at businesses developing new products, services, or processes. For instance, Innovate UK offers funding to support research and development (R&D) initiatives across multiple industries.​
2. Regional development grants: Designed to stimulate economic growth in specific areas. These grants often target businesses that contribute to local employment and infrastructure development.​
3. Sector-specific grants: Focused on particular industries, such as renewable energy, manufacturing, or creative arts, to encourage growth and competitiveness within those sectors.​
4. Employment and training grants: Intended to support businesses in creating jobs and providing training, thereby enhancing workforce skills and employability.​

Notable government grants for SMEs

Several prominent grants are available to SMEs in 2025:

• Innovate UK smart grants: These grants support disruptive innovations in any technology area, including science, engineering, and the arts. Eligible projects can receive funding to cover a portion of their costs, depending on their size and scope.​
• Gigabit broadband voucher scheme: This scheme aims to help SMEs upgrade their broadband connections by providing vouchers worth up to £4,500 to cover installation costs.

Eligibility criteria and application process

Each grant has specific eligibility criteria, often based on factors such as business size, sector, location, and the nature of the project. Common requirements include:

• Business size: Many grants are targeted at SMEs, typically defined as businesses with fewer than 50 employees and an annual turnover not exceeding €10 million (small), and fewer than 250 employees and an annual turnover not exceeding €50 million (medium).​
• Project type: Grants may be available for activities such as R&D, capital investment, training, or sustainability initiatives.​
• Geographical location: Some grants are region-specific, aiming to boost economic activity in particular areas.​

The application process generally involves:

1. Researching available grants: Identify grants that align with your business objectives and assess their eligibility criteria.​
2. Preparing a detailed proposal: Outline your project, objectives, expected outcomes, and how the grant will be utilised.​
3. Submitting the application: Follow the guidelines the grant-awarding body provides, ensuring all required documentation is included.​
4. Awaiting assessment: The grant provider will evaluate your application against set criteria and inform you of the outcome.​

Challenges in securing grants

While government grants offer valuable support, securing them can be challenging due to:

• High competition: Many businesses vie for limited funding, making the selection process highly competitive.​
• Complex application processes: The detailed information required can be time-consuming to compile and may necessitate professional assistance.​
• Specific eligibility requirements: Strict criteria can limit the number of businesses that qualify for specific grants.​

Despite these challenges, the potential benefits make pursuing grants worthwhile for many SMEs.​

Strengthening your grant application

With many businesses competing for limited funding, a well-prepared grant application can make all the difference. The key to success lies in demonstrating not just eligibility but also the value and impact of the project. SMEs should ensure their applications are clear, well-structured, and backed by evidence. This means detailing how the grant will be used, providing realistic financial forecasts, and outlining measurable outcomes. Funders seek projects which align with their objectives, whether fostering innovation, job creation, or sustainability improvements. Tailoring an application to highlight these factors will increase its chances of approval.

Timing is another important factor. Many grants operate on specific funding rounds with set deadlines, so planning ahead is crucial. Businesses that prepare early can avoid last-minute issues, such as missing key documents or underdeveloped proposals. If a business is unsuccessful in securing funding on the first attempt, it’s worth seeking feedback from the awarding body. Understanding why an application was rejected can help refine future submissions, improving the likelihood of success.

Many SMEs overlook the importance of partnerships when applying for grants. Collaborating with other businesses, research institutions, or local authorities can strengthen an application by demonstrating broader benefits and shared expertise. Some grants explicitly encourage joint applications, particularly those aimed at innovation and regional development. Partnering with an organisation with a strong track record in securing funding can also provide additional credibility.

Avoiding common mistakes in grant applications

Many SMEs miss out on valuable funding opportunities due to common mistakes in their grant applications. One of the biggest pitfalls is failing to fully understand the eligibility criteria. While a grant may seem like a perfect fit, businesses must carefully review all requirements before applying. Some grants require a minimum number of employees, a specific turnover threshold, or a clear demonstration of financial need. Misinterpreting these conditions can lead to wasted time and effort on applications that are unlikely to succeed.

Another frequent mistake is submitting a weak business case. Grant providers want to see a well-defined project and evidence that it will deliver meaningful results. This means outlining clear, measurable objectives and explaining how the grant funding will be used to achieve them. A vague or overly ambitious proposal can raise red flags, making it harder for assessors to justify awarding funds. Including strong financial projections and, where possible, examples of past successes can help demonstrate credibility.

Incomplete applications are another major issue. Many grants require supporting documentation, such as financial statements, project plans, or letters of recommendation. Businesses that submit applications without the necessary documents risk being disqualified outright. Paying close attention to the requirements and double-checking everything before submission is crucial.

Timing is also an issue. Some businesses delay applying for grants until they are in financial difficulty, only to find that the process takes longer than expected. Grants are designed to support growth and innovation, not as emergency funding. SMEs should be proactive in identifying funding opportunities early and planning their applications well in advance.

Many businesses underestimate the importance of aligning their applications with the grant provider’s goals. For example, if a grant is designed to boost sustainability, the application should clearly highlight how the project contributes to environmental improvements. Tailoring each application to the specific objectives of the grant increases the chances of success.

Maximising the benefits of government grants

To fully leverage government grants, SMEs should:

• Align grants with business strategy: Ensure the grant objectives complement your long-term business goals.​
• Maintain accurate records: Keep detailed financial and project records to meet reporting requirements and demonstrate accountability.​
• Seek professional advice: Consult financial advisers or business support organisations to enhance your application and compliance processes.​
• Stay informed: Regularly monitor government announcements and industry news to identify new funding opportunities.​

Leveraging grants for long-term business growth

Securing a government grant can provide an immediate financial boost, but its real value lies in how it is used over the long term. A well-planned project funded by a grant can position an SME for sustained growth, allowing it to expand operations, invest in new technology, or improve efficiency.

Businesses that receive grants for research and development often reap benefits beyond the initial funding. Many R&D grants are designed to help businesses develop innovative products or services that give them a competitive edge. A successful innovation can lead to further investment opportunities, strategic partnerships, and increased market share.

Businesses that receive funding for digital transformation often find that the improvements have a lasting impact. For example, an SME that uses a grant to implement new accounting or customer management software may see long-term cost savings and improved productivity. The efficiencies gained can free up resources to reinvest in other business areas.

Grants that support hiring and training can also have lasting benefits. Expanding the workforce and improving employee skills contribute to long-term business stability and growth. A business that invests in upskilling its employees through grant-funded training may become more adaptable and resilient in the face of industry changes.

Once a business has successfully secured one grant, it may be in a stronger position to apply for future funding. Many grant providers look favourably at businesses with a track record of successfully managing grant funding. Keeping thorough records and meeting all compliance requirements makes applying for additional support in the future easier.

Beyond direct financial benefits, securing a grant can enhance a business’s credibility. Investors, lenders, and potential partners often view grant-funded businesses as lower-risk and more innovative. This can open doors to further investment and collaboration opportunities.

Government grants are more than just a short-term financial boost. When used strategically, they can help SMEs strengthen their position in the market, improve operational efficiency, and drive long-term success. Taking the time to apply carefully, manage funds effectively, and integrate grants into a broader business strategy ensures the best possible return on investment.

The role of accountants and advisers in grant management

Many SMEs struggle with the administrative burden that comes with applying for and managing grants. Accountants and business advisers play a crucial role in simplifying this process. From identifying suitable grants to ensuring compliance with reporting requirements, professional guidance can save time and reduce stress.

One of the most valuable services an accountant can provide is financial forecasting. Many grant applications require detailed financial projections, including cashflow forecasts and return on investment estimates. A well-prepared financial plan can demonstrate a project’s viability, increasing the likelihood of approval.

Once a grant is secured, conditions are often attached, such as reporting how funds are used or meeting specific project milestones. Failure to comply with these requirements can result in funding being withdrawn. Having a professional on hand to manage financial tracking and reporting ensures that businesses remain compliant and maximise the benefits of their funding.

Businesses that take a strategic approach to grant funding, with the support of experienced advisers, are more likely to use it effectively. The right financial guidance can turn a one-time grant into long-term business growth, helping SMEs maximise available opportunities.

Wrapping up

Government grants present significant opportunities for SMEs to access funding that can drive innovation, expansion, and sustainability. By understanding the available grants, meeting eligibility criteria, and effectively managing the application process, businesses can secure essential support to achieve their objectives.

We are committed to supporting SMEs and are here to assist you with grant applications and financial planning.

Get in touch to ensure you make the most of the opportunities available.

Tax changes could cost drivers up to £600. Many electric vehicle (EV) owners are unaware that road tax charges will rise from April 2025.

A survey of 2,000 UK car owners by used car retailer Motorpoint found that 83% of EV drivers did not know they would soon need to pay vehicle excise duty (VED).

Currently, EVs are exempt from road tax, but starting in April 2025, all electric cars will be taxed. New EVs will be charged £10 for the first year, while those priced under £40,000 will pay £195 annually from the second year.

More expensive models – originally costing over £40,000 and registered after 1 April 2025 – will face a £600 annual charge, including a £410 ‘expensive car supplement’. Taxing an EV before April 2025 could save drivers nearly £200 over the next year.

Despite Government plans to phase out new petrol and diesel car sales by 2030 and transition fully to zero-emission vehicles by 2035, many industry experts believe these targets are unrealistic. The Motorpoint survey found that 80% of respondents think the Government should do more to support EV adoption.

The Department for Transport reviews feedback on measures to encourage zero-emission vehicle uptake as part of its ongoing consultation on the transition.

Talk to us about your EV concerns.

Landlords and sole traders to receive letters from April. HMRC is set to inform taxpayers affected by Making Tax Digital (MTD) for Income Tax.

Initially, these will go to landlords, sole traders, and self-employed individuals earning over £50,000.

From 6 April 2026, those earning above this threshold must report income quarterly. While this is the first time HMRC has directly notified individuals, accountants are also urged to prepare their clients.

Letters will be sent from April 2025 to taxpayers whose 2023/24 self assessment returns indicate income at or above £50,000. Early sign-up is available with two options:
1. Join for the 2025/26 tax year: This allows firms and clients to familiarise themselves with the system before the deadline. Early adopters will receive support from a dedicated HMRC team.
2. Join for the 2026/27 tax year: Mandatory participation begins.

Some taxpayers, however, including those on HMRC payment plans, receiving income from trusts, or using profit averaging, are ineligible for early enrolment. Exemptions exist for age, disability, location, or religious beliefs.

Those already exempt from MTD for VAT do not need to reapply. As these changes approach, accountants must ensure they understand their clients’ impacts.

Talk to us about MTD.

Business activity across the UK private sector has fallen again, with weak consumer spending weighing on companies.

The latest growth indicator from the Confederation of British Industry (CBI) shows that private sector activity declined faster in the three months to February than in the previous quarter.

All sectors reported falling business volumes, pushing the CBI’s growth index down to -27% in February from -23% in January. Looking ahead, firms expect further declines as economic struggles persist. The overall outlook remains tough, particularly for consumer-facing sectors.

The CBI is urging the Government to boost business confidence through policy changes, such as reforming the apprenticeship levy, improving business rates, and offering incentives for occupational health.

Meanwhile, a survey by accountancy network BDO highlights concerns among mid-sized firms, with nearly half seeking better Government support for exports. Suggested measures include expanding access to UK Export Finance, new trade agreements, and simpler customs rules.

Rising workforce costs, including national insurance and the living wage, are also a major concern. A quarter of business leaders cited these as significant pressures, with the Government resisting calls to reverse the planned NICs increase set for April.

Talk to us about your business.