With the 30 October Budget fast approaching, it’s an opportune time for individuals to evaluate their financial situation. Rachel Wyatt, a wealth planning expert, offers practical advice on maintaining long-term financial goals, regardless of the outcomes from Chancellor Rachel Reeves’ upcoming decisions.
Experts from Arbuthnot Latham have also examined possible changes the government may introduce. They have prepared a guide on what to expect from the Autumn Budget, encouraging clients to reach out to their bankers with any questions, either before or after the announcements.
A critical part of financial planning involves balancing savings and investments. While savings accounts provide stability and liquidity, making them ideal for short-term financial needs, long-term growth is often better supported by investments. Individuals aiming for longer-term financial objectives, such as five years or more, might consider investing to capitalise on potential market gains. There are also options for investing in future generations, such as through a Junior ISA, which allows for tax-free savings until the child reaches adulthood. However, Wyatt reminds potential investors that investments come with inherent risks, including the possibility of losing initial capital, and understanding these risks is essential.
Another key aspect of financial planning is maximising available tax allowances. UK residents can invest up to £20,000 annually in an individual savings account (ISA), with any returns being exempt from both income tax and capital gains tax. Pensions also offer significant tax advantages, making them one of the most effective tools for retirement savings, with contributions often qualifying for tax relief and fund growth being tax-free. Couples, whether married or in civil partnerships, may also find opportunities to optimise their finances through allowances or asset transfers, potentially lowering their overall tax liabilities. As tax reliefs and allowances can be subject to legislative changes, staying informed on relevant tax laws and personal circumstances is crucial.
As wealth grows, protecting it from unforeseen risks becomes increasingly important. Insurance plays a vital role in safeguarding financial futures. Mortgage protection can relieve families of outstanding mortgage burdens, life insurance can ensure financial support in the event of terminal illness or death, and income protection or critical illness cover can provide financial security during unexpected health issues. Arbuthnot Latham offers further guidance on protecting wealth in its Guide to personal protection.
Planning for the future also includes making provisions for transferring wealth to the next generation. Writing or updating a will is essential to ensure assets are distributed according to individual wishes. Inheritance tax planning is another important factor, as it helps reduce the tax burden on heirs through strategies such as annual gift allowances or setting up trusts. Additionally, life insurance can help cover estate taxes and ensure that the value of an estate is preserved for beneficiaries. Properly structured, life insurance payouts can bypass the probate process, providing swift access to funds.
Rachel Wyatt emphasises that a well-rounded financial plan should include strategies for growing wealth, protecting assets, and preparing for the future. By balancing savings and investments, planning for wealth transfer, and making use of tax-efficient opportunities, individuals can achieve their financial goals while preserving their legacy for future generations.
Arbuthnot Banking Group PLC (LON:ARBB), trading as Arbuthnot Latham, provides private and commercial banking products and services in the United Kingdom. Founded in 1833, Arbuthnot Banking is based in London, United Kingdom.
