12 financial planning tips for 2025

When the clock strikes midnight and Auld Lang Syne rings out, it marks a fresh start in more ways than one. A new year provides an opportunity to reflect on decisions made over the previous twelve months, and a clean slate to make new ones for the upcoming year. And with a number of changes outlined in the Autumn Budget there are many key financial decisions to be made.

There are a range of strategies worth considering depending on your personal circumstances. Emma Sterland, chief financial planning director at Evelyn Partners, says, “There have obviously been changes announced in October’s Budget that will alter plans for some. Irrespective of evolving tax and other financial rules, our circumstances and needs also change constantly so it’s important to pause and take stock.” 
 
With that in mind, here are our 12 financial planning tips and ideas for 2025.

There are attractive tax benefits for pension saving in the UK, with tax relief for money that you pay in plus tax-free growth for as long as the money remains inside a pension. Many people are not saving enough for retirement, so if you can find room in your budget, increasing pension contributions can be something of a financial ‘no-brainer’.   
  
Minimum pension contributions for most workers are currently 5% from the employee and 3% from the employer. However, some employers offer pension contribution matching above these minimum levels. If your employer offers matching, it’s something you could consider taking advantage of.  
  
Sterland says, “You can also add to your pension with one-off lump sums – an inheritance for instance – as long as you are careful to abide by the annual allowance rules, which limit how much you can contribute to a pension in a tax year while receiving the tax relief. “ 
   
“It is also around this time of year that many employees are asked how they would like their bonuses paid to them. Many firms offer the option of having a bonus sacrificed into the company pension, which means the full amount is paid into the workplace scheme, rather than losing a good chunk in income tax and National Insurance.”  
  
Bonus sacrifice can be especially beneficial for those around the £100,000 annual salary mark. Every £2 you earn above this amount reduces your personal allowance by £1, which can mean an effective tax rate of 60% for earnings between £100,000 and £125,140. Contributing a bonus into your pension could avoid this trap.

Of course, investing into a pension also carries risk and you may get back less than invested. Tax treatment depends on individual circumstances and is subject to change.

It’s never too early to start creating wealth for the future generations. Small amounts saved regularly over time have the potential to accumulate into quite substantial sums over many years thanks to the power of compounding. 
 
By opening an account such as a Junior ISA for a young relative, you could be giving them a real financial head start in life. Junior ISAs come with their own £9,000 annual allowance and contributions don’t eat into the adult’s annual ISA limit.

Of course, investment growth isn’t guaranteed, and values can go down as well as up.     
   
If you invested £100 a month in a Junior ISA from birth, assuming a net average annual 5% growth rate, the account would have just over £35,000 in it by the time the child turned 18. With the maximum £9,000 a year contribution, the pot would be worth more than £263,000.  This is an example for illustrative purposes only. The growth rate could be more or less than this amount and you may get back less than invested.
  
It is also possible to open and save into a pension for a child, where the potential growth is even greater as the contributions will benefit from basic rate tax relief. While only a parent or guardian can open a pension for their child, anyone can then contribute to it. With a gross annual pension allowance of £3,600 for the non-earner, a relative can invest up to £2,880 a year into a child’s Self-Invested Personal Pension (SIPP) from age zero, which is topped up by the government with £720 in tax relief. Tax treatment is subject to change.

The Budget changes to inheritance tax (IHT) rules mean that from April 2027 unspent pension pots could be included in the value of your estate for IHT purposes, if the proposed legislation goes through as planned. 
 
This major potential change is a reminder to check who receives your pension savings should you die, in what’s known as a nomination of beneficiaries. This applies to personal pensions and SIPPs as well as occupational schemes. Nominating your pension beneficiary is a quick and straightforward process, so it’s definitely something worth doing in 2025.
  
Sterland says, “Some people might currently have nominated one or more children as well as or instead of their spouse or civil partner. They might want to keep it this way but should be aware that from April 2027 leaving this asset to a spouse or civil partner will probably be more tax-efficient” This is due to the fact that IHT is not payable on assets transferred to a surviving husband, wife or civil partner.

Tactical steps are important, but it’s important that the small actions fit into an overall strategy. Sterland says, “Research tells us that many people only turn to financial advice late in life by which time most crucial decisions around retirement saving, investments or pension access have already been made.”¹  
     
A comfortable retirement could be in closer reach with the help of a trusted financial planner. Not just through the access to knowledge and expertise around investments and financial rules, but also through having an unbiased third-party to help you make better decisions.

Entrusting your financial future to a new financial planner can be a daunting prospect for someone who is on the cusp of retirement, so the message is: don't leave advice too late. 
 
Sterland says, “For those who aren’t advised, time can overtake even the most savvy among us. Our circumstances and needs can change significantly and unexpectedly for all sorts of reasons – births, marriages, deaths, inheritances, career change, divorce, illness, the list goes on.”

If you’re in the higher or additional rate tax brackets, tax wrappers like ISAs and pensions become even more important. As the end of the tax year approaches, individuals and couples should make sure they are making their annual allowances work for them.  
 
Investments held outside a tax-protected wrapper, such as an ISA or pension, are now vulnerable to a higher rate of capital gains tax (CGT), particularly so as the annual exemption remains at just £3,000. Even so, investors can consider using their annual CGT exemption in the next three months to realise some gains before the end of the tax year.

It should only be considered if the investment case makes sense and it’s not going to have a significant impact in isolation, but using these allowances every year is a hygiene factor for a good financial plan.
 
For couples, it is time to look at whether both sets of allowances are being used efficiently and whether – in the case of married couples or people in a civil partnership – spousal exemptions can be used to allow the couple to take gains or manage income more tax efficiently.

Self-assessment isn’t just for the self-employed. Basic-rate tax relief is added at source, contributed directly into your pension scheme, but higher and additional-rate relief must be claimed back through a self-assessment.

So, for higher and additional-rate taxpayers, skipping your self-assessment might mean you’re missing out on valuable tax relief. In fact, research suggests that a third of higher-rate taxpayers every year could be missing out on an additional 20% tax relief on their pension contributions.²  
   
Sterland says, “A higher-rate taxpayer paying £50,000 into a private pension each year could potentially miss out on £12,500 due to the unclaimed pension tax relief, while that sum would be even higher for an additional-rate taxpayer.”   
 
“This can be claimed on a tax return, but if you are employed and have no other reason to register for self-assessment, it is possible to claim it by writing to HMRC with all the details of your contributions and the scheme you are paying into.”

Sterland says, “So many financial problems and worries arise and grow because of a lack of communication, whether that is between partners or between parents and their children. The so-called ‘sandwich generation’, who in middle age have both parents who are dependent in some way and children at school or university, can find life particularly difficult if they don’t talk with their family about important financial issues.” 
 
As we all know, this can be easier said than done. Many families find it hard to navigate these conversations, but they can be made easier with help from an outside expert to guide the discussion and ask the uncomfortable questions.

Those with both elderly parents and growing children have the most to gain from careful, generational financial planning, with the potential for significant gains over the long term from good advice around cashflow, investments, wealth transfer and tax-efficiency.

If you don’t have a Will then making one is often a huge step in establishing financial security and peace of mind for your family. It can prevent unnecessary stress and disputes for the administrators and beneficiaries of an estate and could save them having to pay unnecessary inheritance bills.  
   
Having Wills in place is especially crucial for unmarried couples in long-term relationships and blended families. The intestacy rules could lead to an unwelcome distribution of assets at death, and uncertainty and misunderstanding can arise where the estate beneficiaries aren’t straightforward.   
  
Even where Wills are in place, and especially if they were made some time ago, make sure that they still do what you want them to and that new tax rules don’t change the basis of your decisions.   
 
Sterland says, “To take one example, after the proposed changes to business relief and agricultural property relief in the Budget, the traditional mirror Wills for married couples (where the couple leaves everything to one another and then to their children) might no longer be the best option to maximise the use of available IHT reliefs, should the new rules become law.”  
  
While going through this process, it’s also a good time to reflect on articulating your wishes at a time of lost capacity. You can register a lasting power of attorney (LPA) at any time and nominate one or more trusted persons, but you do not have to grant it until the need arises.

The lump sum allowance provides all pension savers with the potential to draw a tax free lump sum from their pensions, up to a total of £268,275 (assuming they had no lifetime allowance protection in place).
  
There is a calculation that is used for lump sums that were taken prior to 5 April 2024 and, if the tax-free cash previously withdrawn was less than 25% of the value crystallised, then this could mean that you might be entitled to more tax-free cash than you thought.   
  
This situation is more common for those who have already taken final salary pensions or purchased annuities. An error here could reduce the amount of lump sum allowance available to you, so please seek advice before doing anything. Remember, tax treatment depends on individual circumstances and is subject to change.

Once you’ve recovered from Christmas generosity, the new year can be a good time to give some thought to a longer-term gifting plan. Can you afford to start the ‘seven-year clock’ ticking on larger gifts? Do you want to gift your pension tax-free lump sum now that pension pots could potentially come under the ambit of IHT by April 2027?  
  
You could also consider starting to make regular gifts using the ‘normal expenditure out of surplus income’ exemption or use your own pension savings to start or boost the pension of a loved one. To ensure these strategies are affordable for your personal situation, seeking advice from a financial planner who can provide you with cashflow modelling can be hugely beneficial.
 
The Autumn Budget proposed changes to IHT rules and reliefs mean that if you currently benefit from business and agricultural property reliefs, it’s time to consider whether your current plans are fit for purpose. However, you should bear in mind there is a risk to taking action before legislation is finalised as there may be further changes.

While the IHT reforms announced in the Autumn Budget are still under consultation it does look like certain pension death benefits will be subject to IHT.  
  
Many employers offer life assurance benefits as part of a workplace pension, in the form of a tax-free lump sum of often three to four times your annual salary. 
  
At the moment such payments paid out by occupational pension schemes are not counted as part of an estate for IHT purposes, but under the new rules they could be, depending on who you’ve nominated as your pension beneficiary.

Sterland says, “It’s a wake-up call for everyone to check they have the correct person nominated for this benefit, and those concerned about the IHT implication of such a payout should check with their employer as to the type of death-in-service scheme they have in place.”

Almost all employees are now enrolled in workplace pensions and many are accumulating multiple pots. Research shows that the value of lost pension pots in the UK has risen by 60% since 2018, and that 3.3 million pension pots are now considered dormant or lost, at an average size of £9,470.³  
 
According to Sterland, “The new year is a good time to sit down and make sure you have all the details of your pension savings. If you don’t, you can call previous employers or providers, or try the government pension tracing service, to get them together.   
  
“This is the first step towards taking control of your retirement fund, and not just because it’s daft to let hard-earned money go missing. You also need to keep track of how much you have saved and where it is invested to have any idea whether you are saving enough for retirement.”

You may also want to consider whether your retirement investments would be easier to manage if you consolidated some or all of the pots. It’s possible to do this yourself, but where you’re looking at larger sums this is really an area where the right advice can pay dividends. Not only to make sure you consolidate into the best scheme for you, but also to ensure the investment selection is aligned with your long term objectives and attitude to risk.

Before consolidating pensions, you should check whether you will lose any valuable benefits or features or incur any penalties. You should also compare the charges as a new arrangement may be more expensive. If the pension is an employer-related plan, check if the employer will cease to pay in benefits if it is transferred elsewhere. If you have an occupational final salary pension scheme it is very unlikely to be advisable to transfer and advice should be sought.

If you want to set your finances up for success in 2025, speaking to a financial planner can be a great place to start. At Evelyn Partners, our financial planners can help you navigate the changing rules around areas like pensions and IHT, help you identify your retirement goals, and create a strategy to help you reach them.

At the same time you can work directly with a professional investment manager, who partners with your financial planner to offer what we call combined wealth management. It’s financial planning and investment expertise which centres around you.

To get 2025 started right, you can book a complimentary initial consultation online or call 020 7189 2400.

¹ Invesco, UK Retirement Study, November 2024.  

² Interactive Investor, Third of higher-rate taxpayers could be missing out on thousands in pension tax relief, January 2024  

³ Pensions Policy Institute, Over £31 billion of pension assets are in lost pots, October 2024