ISAs still play an important role
Individual Savings Accounts (ISAs) remain one of the most tax-efficient ways to hold savings and investments.
In the 2026/27 tax year you can invest up to £20,000 into ISAs, with any income or growth free from tax.
Even in retirement, ISAs can be useful for managing income in a tax-efficient way.
Supporting the next generation
Many people in later life are also thinking about how they can help children and grandchildren financially.
Junior ISAs (JISAs), with a £9,000 annual allowance, can be a valuable way to build long-term savings for younger family members.
Thinking about Inheritance Tax planning now!
You may also want to start thinking more carefully about Inheritance Tax (IHT) planning. With proposed changes to the IHT treatment of pensions from April 2027, this could be a good time to review how pensions, investments and gifting strategies fit together.
For those with larger pension pots, particularly individuals who do not rely heavily on their pension savings during retirement, it could prompt a rethink of how pensions fit within a wider estate planning strategy.
One commonly used approach has been the so-called ‘pension as the last pot’ strategy, where individuals spend other assets such as ISAs or savings first and leave their pension untouched for as long as possible. With pensions potentially becoming subject to IHT, this strategy may not always remain the most efficient option.
Instead, some individuals may wish to consider alternative approaches, such as gradually drawing on pension funds during retirement, making use of gifting allowances during their lifetime, or reviewing how their estate and beneficiaries are structured, consider trusts for example. Using annual gifting allowances can help gradually reduce the value of your estate while supporting children or grandchildren during your lifetime.
Couples may also benefit from coordinating withdrawals and planning together to make the best use of available tax allowances.
Importantly, these changes will not come into force until April 2027, meaning pensions will continue to benefit from their current IHT treatment until then. In many cases, pensions will remain a highly tax-efficient way to save for retirement.
Nevertheless, this reform represents a significant shift in the way pensions interact with estate planning. Reviewing your arrangements well in advance can help ensure your retirement and legacy plans remain aligned with your goals.
A yearly financial review
Your finances don’t stand still – and neither should your financial plan.
The start of a new tax year offers a helpful opportunity to review your investments, income strategy and estate planning to ensure everything remains aligned with your goals.
A review with your Finli planner could help protect your financial security while also supporting the people who matter most to you.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. The Financial Conduct Authority does not regulate Will writing, tax and trust advice and certain forms of estate planning. Tax legislation and rates can change, and their application depends on individual circumstances.