Should you – do you – fully trust your platform to look after your investments?

Might they hire a budding Bernie Madoff who siphons off your assets to his own account?

Or maybe a Mr Bean, who loses track of them altogether?

Surely our world-leading regulatory oversight would prevent anything so catastrophic from happening?

And anyway, there’s always the FSCS to bail you out if anything does go wrong, right?

Well…maybe.

In the second of (what I’ve just decided will be) my investment survival series, let’s look at how platforms aim to keep your assets safe.

(In case you’ve already forgotten, part one wasSurviving system meltdowns and cyber attacks.)

Where are my assets?

Platforms typically hold client assets in omnibus nominee accounts.

That is to say, your fund, equity, and cash holdings are pooled together with everyone else’s.

The legal owner of your assets is normally a nominee company or custodian appointed by the platform.

You are the beneficial owner, entitled to enjoy the dividend payments and sales proceeds.

The number of shares you see displayed on your account is from your platform’s own records. In many cases, the fund managers, company registrars, or banks don’t know who you are and what you own.

Thus, your financial well-being is heavily dependent on the successful functioning of the platform and its custodian.

What are the safeguards?

The Client Asset (CASS) rules are quite rightly one of the most important parts of the FCA Handbook.

Investment firms must:

• Keep your assets separate from their own
• Maintain a good record of what you have
• Regularly check that it’s all still there

Every day, platforms get up-to-date statements from banks, fund managers, and security depositories. The platform then adds up all the client holdings of each asset and checks that they hold that many units (or shares or pounds) in their nominee account.

This is known as reconciliation.

If there’s any discrepancy, the platform must immediately put some of its own cash aside to cover any shortfall until the problem is resolved.

The nominee company is usually a separate legal entity from the platform. If the platform goes under, the legal owner of your assets should still be standing, and your assets should be out of reach of creditors of the platform.

The details of the appointed nominee will usually be given on the platform website, if you want to check.

The platform must appoint a senior person to be responsible for CASS compliance. This way the FCA knows who takes the rap if anything goes wrong.

Bulletproof, right?

In my experience, the platforms take CASS very seriously and have good people overseeing all this. I’ve never witnessed any behaviour that gives me any concerns.

And yet, and yet…

…the history of finance offers plenty of examples of astonishing levels of fraud and incompetence going undetected for extraordinarily long periods of time.

Ultimately, all the safeguards depend on key people being competent and honest. Whilst most of us try to think the best of people, there is a limit.

What could go wrong?

In 2020, the FCA fined Charles Schwab UK Ltd (CSUK) £9 million for failing to adequately protect client assets.

These failings included:

• Incorrect records of client assets
• Failure to reconcile client assets
• Poor organisational structure
• No resolution plan in case of insolvency

There were no client losses, but to a nervous investor, this still sounds quite damning.

I’m not sure whether to be comforted that the FCA is breathing down the neck of investment companies or worried that these problems arise in the first place.

The FCA’s summary stated:

Charles Schwab UK failed to put in place the necessary safeguards to ensure, if required, there could be an orderly return of client assets.

If a platform simply fails as a business, then you would expect segregated assets to be returned to clients in full without too much fuss.

If custody records are poor however, then the process of returning assets to clients will be harder and take longer.

But the real problems occur if that poor record keeping is covering up a genuine hole in client assets through incompetence or fraud.

What’s the worst that could happen?

In 2023, the FCA demanded that WealthTek, a wealth manager, cease operations after identifying an £80 million-plus shortfall in client assets and money.

The head of the company John Dance was later charged with allegedly diverting £64 million from client assets into his own accounts. The trial is now set for 2027.

It took over 18 months after the company went into administration for the first clients to see any of their money returned. Some had to wait more than a year longer than that.

According to the FCA, around 84% of clients got all their money back from the administrators.

Of the remaining 16%, some were covered by government compensation and some were not.

This is scary stuff.

On the plus side, Mr Dance did win the King George VI at Kempton in 2022 with one of the horses he bought with the allegedly stolen money.

Will the government bail me out?

The Financial Services Compensation Scheme (FSCS) can compensate you for up to £120,000 for the loss of cash held with a failed bank or building society, and up to £85,000 for the loss of assets held with a failed investment company.

In practice though, working out what you’ll be covered for is not always easy. If you want to know the details, there’s no better place to look than The Accumulator’s article referenced above.

But for now, his pithy summary is enough:

The FSCS investment protection scheme may come to your aid. But eligible claims have more strings attached than a puppet show.

In the case of WealthTek, the FSCS was clear that it would not cover all client losses:

The maximum amount payable to eligible WealthTek customers is £85,000 per client, inclusive of the cost contribution. We recognise that many clients may have lost more than £85,000 and will not have been fully compensated following the completion of this process.

Note the mention of costs. The costs of the administrator responsible for overseeing the wind up of the company were passed on to the clients.

For the 84% of WealthTek clients that got all their money back from the administrator, the FSCS covered their share of the administration costs.

But for the 16% who didn’t, the administration costs compounded their losses.

Should we worry?

WeakthTek was a relatively small wealth manager. It’s highly unlikely that any mainstream platform will fail. It’s even less likely that there would be any shortfall in client assets.

But it is not impossible.

If you’re still in the early stages of accumulating wealth, you probably shouldn’t worry too much. You have less at stake, and you should get everything back well before you need it.

But if you’re at the end of that journey and relying on your assets for income then the risks, however small, become more pertinent.

You won’t be able to make up any losses from earnings if you’ve stopped working. And even where there are no client losses, you can hardly get by without income for two years.

What can we do?

Most obviously, if you spread your assets across multiple investment platforms, then your losses will be lower if one fails and you will still be able to take income from elsewhere.

It would also be sensible to make sure that your chosen platforms are not owned by the same parent company. This would have implications for FSCS limits. Having all your eggs in one basket leaves you exposed to the risk of a failed company infecting others in the group.

For instance:

• Interactive Investors is owned by Aberdeen, which also owns a couple of adviser platforms.
• Lloyds Banking Group owns both the Scottish Widows platform (formerly iWeb) and Halifax/Lloyds Bank Share Dealing.

It might also be wise to stick with platforms owned by large banks or investment companies with deep pockets, risk averse operations, and a hard-earned reputation to protect. Size is no guarantee against failures, but large, well-capitalised firms might be better able to absorb losses and have stronger incentives to protect their reputation.

If a company is listed, so much the better as its accounts should be well scrutinised.

Lastly, you could keep a recent statement tucked away somewhere. The chances of all client records being permanently deleted are vanishingly small, but there might come a time when you’ll be thankful you have some evidence to show that the administrator has made a mistake.

And finally…

If you read my previous article, you may have spotted that the measures to protect yourself against cyber-attack are pretty much the same as those to protect against fraud.

But it’s good to think through all the risks to help decide how far you want to go to protect yourself.

Look out for part three of this survival series, which will address the breakdown of society. Spoiler: a PDF of your latest statement won’t help in that scenario.

Peaceful dreams!

The post Surviving platform fraud or fiasco appeared first on Monevator.

Anyone planning for FIRE ¹ knows it’s hard to think about retirement living standards while you’re still having a blast in your 20s and 30s – or even when you’re neck-deep in your responsible 40s and 50s.

Like a precog from Minority Report, you can only glimpse fragments of your future.

Happily, intrepid retirees have sent us back reports from the frontier. And they’ve supplied just enough detail to fill in the ‘Here Be Dragons’ gaps in your FI map.

The resultant research – Retirement Living Standards in the UK: 2025 update – plots three tiers of retirement spending: from Minimal to Moderate to Comfortable.

This annually-updated paper also reveals what kind of retirement living standards such spending really gets you – from people who are already doing it.

Much ado about much more than nothing

Retirement research gives us a shortcut to answering that perennial awkward cocktail party question: How much do I need to retire?

Okay, maybe it’s only personal finance bloggers who get asked such questions at parties…

Anyway, instead of doing laborious calculations on a spreadsheet, you could just pick one of the consensus retirement income answers published by the Pensions and Lifetime Savings Association (PLSA). ²

We’ll get to those in a minute. But a bonus of this research is it also includes testimonies from retirees and near-retirees drawn from various socio-economic backgrounds and regions across the UK.

If our retirement future is an unknown country, then their words act like an audio tour guide. We learn something about what really matters – and as ever, the experience of others might help us find our own path.

Plus it’s interesting to read. There’s nowt so queer as folk!

Okay, let’s start with the hard data. We’ll then move on to the fluffy anecdotal evidence.

Retirement living standards 2025: income targets

Source: PLSA

This table is a bronze, silver, and gold rostrum of annual retirement incomes – as determined by sampling members of the UK public aged 55 or older.

There’s also more granular detail on what you get for your money at each level. We’ll get to that shortly but – spoiler alert – the Minimum lifestyle isn’t factoring in many trips to Florida.

What’s not clear from the table is the income numbers are after-tax.

This makes it an interesting contrast with the UK median household disposable income ³ of £36,700 as of the end of 2024, according to the most recent ONS data.

The poorest 20% of households are on £16,800 (including benefits) and the richest 20% have £71,100 to spend. Remember this is disposable income. 

As for the median retired household income, that’s £29,728 – about 9% shy of the Moderate spending level for couples in the table.

Note that the PLSA expects the State Pension to do much of the heavy lifting in retirement. Especially at the Minimum standard.

This is why we think there’s no need to fear the State Pension being done away with. Scrapping it would be catastrophic for any government.

Solo sorrows

Another thing that leaps out from the table? Life is expensive for singletons.

The most effective cost-saving measure any retiree can make is to couple-up. No wonder there are so many senior Casanovas out there!

Be sweet to your significant other and keep them healthy. Give flowers, not chocolate. 

What you get for your money

To understand the life of Riley promised by the numbers in the table, we need to dive deeper to see what our pounds are purchasing.

Here’s the singles version:

And for couples:

There is much social division written into these lines – especially in the contrast between the top and bottom. Please draw your own conclusions. I’d love to hear them in the comments.

While the table forces a statement of spending priorities, the reality is that many of us will drift back and forth across the tiers, depending on where we prefer to direct our financial firepower. 

For example, The Accumulators are in the Minimum zone for clothing. But we’re in the Comfortable bucket for transport.

Retiree vox pops

What I most like about such research isn’t the numbers, however. It’s the voices.

The 2023 edition featured study participants discussing their lived experience for each major spending category. From this, a portrait emerges of retirement reality, painted in the primary colours of what money can buy.

The anonymous quotes below are excerpts from the study’s 2023 group sessions. (Sadly the 2025 report doesn’t feature these breakdowns, though they received a light update in 2024.)

Food spending

The snapshot above shows the foodie living standard each income band afforded in 2023.

The Comfortables are clearly loading their plates with much more spice of life than the Minimums. At least on the surface.

I say that because one of the things that the FIRE community has been great at is uncovering ways to enjoy life without throwing money at it. 

For instance, you can take turns hosting dinners with your friends, which keeps you all socially engaged – and hopefully well-fed – without the overheads of eating out.

Still, rampant inflation in recent years hasn’t helped on this score, either. As one woman told the study:

I don’t think it’s just so much taking people out, but it is having people to the house to cook for them… which you are spending quite a lot of money to then invite people round to, you know, feed five or six people which I would probably do once a month.

In my 20s I spent like The Comfortables on eating out. That was just how I lived the life.

Now I’m under-spending The Minimums and I’m happy with that. 

Housing spending

There’s been a sea change in how the study treats housing costs. Prior to 2025, it was assumed Minimums pay social housing rent while Moderates and Comfortables would have paid off their mortgages by retirement.

However, participants no longer believe it’s reasonable to assume that Brits can access social housing if they need it – especially in London. And costs escalate dramatically if you add in rent (figures from the 2025 report):

Earlier on, we saw a retired couple required about £24,100 to scrape a Minimum standard of living in London in 2025 (Green lozenge). 

But the minimum cost soars over 81% (red lozenge) if retirees are fully exposed to the private rental market, according to this research. 

Much of that hike can apparently be covered by housing benefit. However I’m none too sanguine about that. Wouldn’t it be better to build more social housing than line landlord’s pockets with taxpayers’ money?

2023’s study participants forecast trouble ahead for the researchers’ mortgage-free retirement assumptions, too: 

I think that it is probably reasonable now that they would own it but in ten years’ time perhaps they would be more likely to rent?

Personally, I think we’ve fallen short as a country on home ownership. It’s hypocritical to hoover up housing stock and lock future generations out of the market by failing to build. We’re creating a generational divide that puts social cohesion at risk – even as younger generations are still meant to bankroll the NHS, long-term care, State Pensions, and fixing the climate crisis. 

Also, the study appears to radically underestimate other housing cost. These are set at £1,300 per year for the Comfortables in 2025. That amount seemingly covers energy costs, maintenance and decoration, plus buildings and contents insurance.

There’s not a cat in hell’s chance you can keep a £1,300 lid on that lot. 

I’d suggest the researchers need to redo their sums. Bear in mind the rule-of-thumb: 1% to 4% of your property’s value annually for upkeep and repairs.

Til divorce do us part

Finally on keeping a roof over your head, divorce looms large as a catastrophic roll of the dice in the game of housing snakes and ladders:

Lifestyles nowadays, people like myself got divorced a couple of times, I ended up on my own and … I live in rented. I have had houses and owned them in the past, but because of circumstances and stuff I don’t.

Divorce is often mentioned by readers in the Monevator comments as a third-party calamity. (Excuse me while I google ‘thoughtful gifts’.)

Speaking of unhappy endings I’d rather not think about…

Body disposal etiquette

Being at an age where they’ve seen plenty of family and friends pass away, the study’s focus-grouped retirees are very pragmatic:

You could die with a million pounds but have your family got access to that million pounds to bury you?

Probably not because it has got to go through probate and solicitors so they might not have the £3K, £4K, £5K to bury you next week or in a fortnight’s time.

Pre-paid cremation plans are included in the Moderate and Comfortable budgets. The interviewees confirmed they didn’t want their loved ones to foot the bill.

Mrs Accumulator is under instruction to pop me out with the bins. But she says she will put me in the freezer so she can still chat to me.

We’re gonna need a bigger freezer.

Health issues

We all have teeth that get holes in them and eyes that go wonky, whatever our financial means.

So for dentistry, for example, each of the retirement living standards bands includes the cost of a check-up every six months and one treatment per year, such as a filling, as well as including the cost of replacing dentures every five years.

In an ominous sign of the times, contributors voiced fears about being able to rely on the State for medical treatment:

You need to be able to have money available in case you need [it] because you can’t rely on the NHS well unless you want to wait in pain for ten years or something.

Private healthcare is always a talking point for the study’s focus groups, but it apparently loomed extra large back in 2023. It was not included in the retirement budgets this time – but for how much longer?

Funding the NHS feels like another slow-moving car crash that we’re not grappling with as a society.

Are we prepared to pay more in taxes? Can we reduce the burden on the NHS by looking after ourselves more? (I mean by living healthier lifestyles that increase our chances of staving off chronic conditions, not DIY brain surgery!)

No amount of private health insurance will save us if we need urgent assistance but must wait two days for an ambulance.

Moolah for manscaping 

At least if you’re hit by the proverbial bus, you might be more likely to have your best face on for it these days.

The various spending budgets have always included beauty treatments for women.

But now there’s a budget for men too at the Moderate and Comfortable levels.

The researchers note:

“a shift in social norms and expectations and that, as one participant put it, ‘they like it all these men nowadays, they are all grooming themselves aren’t they?’.

The budget included for women covered the cost of beauty treatments, such as manicures and eyebrow threading.

However the focus groups suggested the budget for men could cover the cost of ‘grooming’ such as a shave at the barber or a facial massage, as well as, for example, occasional physiotherapy appointments or sports massages.

While some may despair of ever escaping from society’s expectations about personal appearance, at least it seems positive that:

…in general, groups talked about retirement now being a far more active period and as a consequence there should be a budget to cover these sorts of treatments.

Social and cultural participation

Comfortables are spending 150% more per person per week on leisure activities than The Minimums.

The potential impact of that spending power on a life well-lived is captured in this quote:

It is really important for mental health and everything as well isn’t it? So you know even day classes or evening classes are everything. You don’t get much… I don’t think you get much less if you’re retired.

Interestingly, this budget area hasn’t increased much over time. Perhaps that reflects more flexibility within this category? Gym memberships can give way to running shoes and walking boots, for example.

Early Mr Money Mustache was a trailblazer in rethinking life’s riches so they don’t cost a packet.

I’m not sure anyone has replaced him in this respect? Let me know who I’m missing in the comments.

Tech tock

The social participation category also includes spending on technology – an ever-changing hit to our (increasingly digital) wallets.

DVD players are long gone, obviously. But streaming services are now considered an essential at every income level:

I was going to say it is for your mental health well-being as well, socially included because if you’re not able to watch Netflix you know a small series like that, I just feel that is you socially excluded as well.

Interestingly, ‘cleverer’ home technology such as passive cameras and smart speakers crept into the budgets and anecdotes as more of a necessity.

One participant explained in 2023 why she’d sorted out a smart speaker for her father:

A couple of months ago he did fall and had we set up in time he would have been able to call one of us because he couldn’t reach his mobile phone.

You can ask Alexa to phone so they are a good feature on that so they’re well worth the money to be honest.

But smart speakers were already considered surplus to requirements in 2024 as phones have colonised the space. 

The spread of smartphones among retirees is notable in itself. All the Boomers in my life have upgraded, after years of resistance. Though they do still sometimes stare at the thing like a caveman facing a mortgage application. 

Will an AI subscription be de rigueur the next time the research is overhauled?

“Hello Future Me”

Retirement is difficult to imagine until you get there. We plan it out on bland spreadsheets and struggle to relate our parents’ experiences to our own.

Making it even harder is that friendship groups tend to be intra-generational. I know more about the trials of my elders via Monevator readers than I do from real-life.

That’s why I found the retirement thumbnails in this research so fascinating. I heard things people don’t normally talk about.

What have you got to say for yourselves? Please do flesh out the picture for all of us in the comments below.

Take it steady,

The Accumulator

P.S. It’s interesting to contrast the 2025 numbers above with the 2023 figures:

Weirdly, the Minimum lifestyle is cheaper in 2025: 

• £13,900 for a singleton outside London
• £14,600 for London singles despite all those Tinder dates
• £24,100 for couples in the capital
• £22,500 for provincial double-acts. Not down but well below an inflationary rise from 2023

The drop occurred in 2024, when the researchers re-analysed the assumptions underpinning the Minimum lifestyle’s budgetary requirements. 

It helped that utility bills fell after the energy crisis. But sadly people also allocated less money for the fun stuff like celebratory food and drinks. 

The historical detail for 2023:

1. Financial Independence Retire Early.
2. The PLSA is a financial industry group. It includes asset managers, consultants, law firms, and fintechs. They’re so keen to get Britain saving for retirement that they commission this research from Loughborough University’s Centre for Research in Social Policy.
3. Disposable income is what’s left after direct taxes, such as Income Tax, National Insurance, and Council Tax.

The post What your retirement could look like: retirement living standards in the UK appeared first on Monevator.

I was interested to see that Novo Nordisk’s Wegovy pill was approved last week by the UK’s Medicines and Healthcare products Regulatory Agency.

The post Weekend reading: If the drugs do work appeared first on Monevator.

Another disappointing result for DIY corporate financiers this week. Having hosted the ‘Fair Sale’ over itself nearly two years ago, Residential Secure Income (LSE: RESI) has announced that most of its assets are set to be acquired by the Social Housing REIT (LSE: SOHO).

SOHO will get RESI’s retirement home portfolio, with the rump of RESI’s assets going to a currently unnamed bidder.

The mostly paper-based deal values RESI at about 57p per share, depending on movements in SOHO’s share price.

There are a few moving parts to the deal. But the point to note is that RESI was priced at about 60p a share in October 2024 when it first announced it was winding itself down. Hence this has hardly been a barnstorming return for anyone who bought into the REIT ¹ in hopes of unlocking value.

Moreover, RESI’s tangible NAV ² was nearer 80p in late 2024, compared to c.63p at the last count. RESI did sell a different chunk of its portfolio in early 2025, but that all went on debt repayment.

So its managers have presided over a shrinking asset base that’s ultimately been sold at a still-meaningful discount to NAV.

The total return situation isn’t quite as dispiriting. RESI yields over 7%, so when you take dividends into account investors were at least paid to wait for their mediocre outcome.

RESI’s managers would no doubt stress too that shareholders who keep their SOHO shares after the sale completes will retain ongoing exposure to RESI’s attractive (and discounted) assets, via the newly enlarged parent.

But still, this is hardly the sort of outcome that Joel Greenblatt touted in his classic book You Can Be A Stock Market Genius, when he explained how ordinary investors can profit from corporate activity in the public markets.

REIT petite

I wrote about the opportunity in RESI for Moguls in January 2025. In the same post I also highlighted that Abrdn European Logistics Income (LSE: ASLI) was on the block, too.

The ASLI outcome was a bit better. Shareholders should eventually get around a 20% return from memory, once the protracted endgame is over.

(Surely we can also all rejoice any time an instance of the dreaded moniker ‘Abrdn’ is put out of its misery!)

But again, the ASLI wind-down did not release vast swathes of value. And that has been the trend with this REIT consolidation that began after the yield-driven rout of 2022.

Cut-price deals: everything must go

A.J. Bell recently published a handy roundup of all this REIT sales and merger activity, and the premiums – or otherwise – achieved:

Source: Company accounts / A.J. Bell

Note: Negative moves/premiums in brackets.

While these actions spurred some worthwhile-ish share price pops, they have nearly all seen assets taken out at a big discount to NAV. Which I suppose isn’t surprising in hindsight, given the huge discounts that even the largest and most liquid UK REITs still trade on.

This suggests two things.

Firstly, there are not many buyers for these property assets – either from the public or private domains.

Secondly, neither the market nor the companies themselves consider these commercial property NAVs as anything like gilt-edged. They are more, as the pirate’s code puts it, guidelines.

Clearly, fears and uncertainties still abound – six years after Covid plunged the future of commercial property into doubt, three years after interest rate rises did a number on the economics, and a couple of years into A.I. making everyone nervous about what the future of humans at work really looks like anyway.

The REIT stuff

When a sector is this unloved, it’s hard to remember it wasn’t always so. But the real estate sector’s status as stock market booby prize isn’t a law of nature.

Throughout the 1990s and the early 2000s, property was lauded as a halfway house between bonds and equities.

The pitch? You got the attractive income of bonds and some of the capital gains of shares, with a dose of inflation-hedging thrown into the mix, too. Back then even passive investors saw the value of adding REIT exposure to their portfolios. They hoped for a bit of lower-risk additional diversification.

Property developers thrived as much as the steadier landlords. Money was cheap, and as global capital searched for more touchy-feely returns following the Dotcom crash, prestige skyscrapers began to sprout across the world’s major cities, minting millions.

It’s hard to believe nowadays, but many UK REITs and blue chip property developers actually used to trade at a premium to NAV!

Confident investors anticipated valuation gains and higher incomes, and they were happy to front run them.

Bargain buildings

That all ended with the financial crisis, however, and the asset class has never recovered. Big discounts to NAV for commercial property REITs abound.

Here’s how the UK bellwethers trade compared to their assets:

Source: Company reports / Prices as of 18 June 2026

Imagine walking around town and seeing giant 30%-off labels slapped across the frontages of office blocks and shopping centres. That’s effectively what you get with most REITs – large and small – today. £10 of assets on sale for £7 or less.

LondonMetric – which has driven much of the sector consolidation that we began with – is on a narrower discount, true. Partly that’s thanks to its stronger balance sheet and tighter terms with tenants.

But I’d also argue LondonMetric has won investors over by telling a better story. That’s what the rest of the REITs need to do. (And ideally for it to be true, of course!)

REIT-sizing exposure

Even my co-blogger, The Accumulator, gave me stick about REITs the other day.

Apparently I’d persuaded TA that he should keep them in our Slow & Steady portfolio when he soured on the asset class.

It was a few years ago, but he hadn’t forgotten!

TA’s disenchantment with REITs will be driven more by revisiting the historical record than by the sector’s recent travails. All the same, if REITs were multi-bagging like semiconductor stocks I wonder if there’d be quite so much soul-searching?

Equally, I think I suggested we retain them more due to my bias against fussing too much with a model portfolio than out of conviction that the asset class was cheap.

Still, maybe this is another signal?

Most things in investing are cyclical. When even diehard passive investors are ready to throw in the towel, perhaps the bottom is near.

Most of the major REITs have been doing a lot better of late. Rents are up, and even office valuations are stabilising, if not rising. Albeit more for the top-end stuff.

The surviving players have navigated a once-in-a-generation interest rate shock, too.

Real estate investment vehicles invariably carry a lot of debt. So when interest rates spiked it not only made their dividend payouts relatively less attractive and pressured their tenants – it also stressed their own balance sheets.

The past three years saw debts refinanced and restructured though, and to my mind the big REITs now look pretty solid. They’ve even begun to invest in new developments.

Improving cashflows underpin generous dividend yields of 4-7% for the REITs in my table. I’d say that’s attractive, given there’s an inherent ability to respond to inflation (compared to vanilla bonds) and the prospect – eventually – of more capital growth.

Priced for imperfection

While I might keep my shares in SOHO when the RESI deal completes, I think I’m more inclined to look at the stronger REITs than to punt again on the little guys being taken over.

With hindsight, it was optimistic to expect the smaller prey to get acquired at close to NAV when the big predators themselves were still badly limping.

Sector consolidation was necessary – too many sub-scale REITs were launched in the near-zero interest rate era. But investors aren’t being rewarded for the extra risks.

In contrast, the big REITs will hopefully see continued strong dividends and eventually some more share price growth. And there’s the prospect of a double-whammy gain if property valuations increase even as discounts narrow to meet those rising NAVs.

Of course, there are risks – everything from the sorry state of the UK economy and politics to the need to upgrade old offices to comply with environmental standards to AI threatening to send white-collar workers to not-work-from-home forever.

But the discounts likely reflect a lot of these dangers, given the underlying metrics are now improving. And to the upside, with oil flows set to resume through Hormuz and inflation risks hopefully contained, we might eventually even see more interest rate cuts.

That’d really help refurbish the appeal of property. Just ask Donald Trump!

1. Real Estate Investment Trust
2. Net Asset Value Per Share.

The post Investors are still Out of Office (and other REITs…) appeared first on Monevator.

The last few years have seen dividend tax rates steadily rise.

At the same time investors have seen a massive reduction in the already miserly tax-free dividend allowance.

Let’s update ourselves on where dividend tax rates and allowances now stand. We’ll then briefly consider how we got here, and what you can do about it.

Dividend tax rates and allowances

The rate of tax you’ll pay on your dividends depends on your income tax band.

UK dividend tax rates are currently:

• Basic-rate taxpayers: 10.75%
• Higher-rate taxpayers: 35.75%
• Additional-rate taxpayers: 39.35%

The basic and higher rates were increased on 6 April 2026.

Note that depending on your total earnings – and where it comes from – you could pay tax at more than one rate on your income.

Importing note: we’re talking here about dividends paid outside of tax shelters. Dividends paid within ISAs and pensions are ignored with respect to tax. Are you adding up your dividends for your tax return? Don’t include dividends paid in ISAs or pensions – forget about them when it comes to tax! (Remember them when it comes to reinvestment to get rich.)

The tax-free dividend allowance 2026 to 2027 and beyond

Back in April 2024, the annual tax-free dividend allowance was halved to just £500.

It’s still stuck there today. Yet another frozen tax threshold!

The good news is that this £500 dividend allowance means you at least escape dividend tax on your first £500 of dividend income.

Dividends you receive within this tax-free dividend allowance are not taxed, irrespective of how much non-dividend income you earn and your tax bracket. But breach the allowance and the rest is taxed, as per your income tax band.

Like other tax allowances such as the personal allowance for income tax, the dividend allowance runs over the tax year. (From 6 April to 5 April the next year).

(Incidentally, if you recall the allowance being much more generous, you’re right. It has been slashed over the past few years. More on that below.)

What are dividends, anyway?

Dividends are cash payouts made by companies:

• You may be paid dividends by shares listed on the stock market or by funds that own them.

• You might also be paid dividends from your own limited company, as part of your remuneration.

As mentioned, dividend tax is only applied on dividends paid outside of a tax shelter.

Hence using ISAs and pensions is key to shielding your income-generating assets from tax for the long-term.

What tax rate will you pay on your UK dividends?

If your dividend income exceeds the tax-free dividend allowance, you’ll pay tax on the excess.

This liability must be declared and paid through your self-assessment tax return.

For example, if you received £6,000 in dividends in a year, then tax is potentially charged on £5,500 of it. (£6,000 minus the £500 tax-free dividend allowance).

The rate you’ll pay depends on which tax bracket your dividend income falls into.

Beware of being bounced into a higher tax band

If you own dividend-paying shares outside of an ISA or pension, then dividends may increase your taxable income. Perhaps by enough to push you into a higher tax bracket.

If you own funds outside of tax shelters, you could also owe tax on reinvested dividends. Choosing accumulation funds doesn’t spare you the tax rod – unless they’re safely bunkered in your tax shelters.

The lesson again is to avoid taxes reducing your returns by using ISAs and pensions.

Watch out for withholding tax on dividends

If you’re paid dividends from overseas companies, you may be charged tax on them twice. Once by the tax authorities where the company is based, and again by His Majesty’s finest in the UK.

You may even pay this withholding tax on foreign dividends held in an ISA or pension.

However there are reciprocal tax treaties between the UK and some other countries. These can reduce the total amount of dividend tax you pay.

Your broker should take care of this for you. (Check though!)

Some territories do not charge withholding tax on dividends received in a UK pension. The US most notably. (This kindly treatment doesn’t apply to ISAs. Choose where you shelter your US shares accordingly.)

Again, make sure your platform is paying you any US dividends in your pension without any tax having been charged.

It can all get a bit fiddly. See our article on withholding tax.

Why was the old dividend tax system changed?

Then-chancellor George Osborne revamped UK dividend taxation back in the summer budget of 2015.

Osborne apparently wanted to remove the incentive for people to set themselves up as limited companies and then use dividends as a more tax-efficient way to get paid, compared to salaries.

Osborne also said the changes enabled him to reduce the rate of corporation tax.

Whatever his intentions, today’s regime applies equally to all dividends – whether received from ordinary shares or from limited companies.

Even worse, an initially fairly-generous dividend allowance of £5,000 – designed to prevent small shareholders being taxed on legacy portfolios – is now just £500.

At the same time dividend tax rates have ratcheted higher. Notably in 2022, when the rates were increased by 1.25 percentage points, and then in 2026, when the basic and higher rates were lifted by another two percentage points.

I hope you’re keeping notes at the back.

Admittedly, small investors have generaly not been hit by these changes. That’s because most of us hold our shares within ISAs and pensions, so we’re not affected by dividend taxation.

However there are exceptions.

Business owners paid a dividend by their limited companies now pay more tax. Their salary-sized dividends quickly chew through the £500 dividend allowance.

There is also a dwindling cohort of older investors who built up big portfolios of income shares outside of ISAs and pensions. They’re paying far more tax on dividends, too.

Always use your tax shelters

For years I urged such dividend-focused investors to move as much money as possible into ISAs.

They could have done this by defusing gains to fund their ISAs every year, for example.

Early action was important because the annual ISA allowance is a use-it-or-lose-it affair. Hence you must build up your total ISA capacity over many years.

Yet inexplicably to me, some of those unsheltered dividend investors argued – even in the Monevator comments – that there was no point.

Dividends were not taxed until you hit the higher-rate band, they said. So why bother?

Well, that was true under the old system. And maybe there was a hard choice to be made if you also had massive cash savings. In that case there was competition as to how to best to divvy up your annual ISA allowance.

But taxes on dividends were always vulnerable to change, like everything else in our convoluted tax code. And eventually they did.

At that point, the people who had declined to move some or all of their portfolios into ISAs – just to save a few quid – began to be hit with large tax bills.

I hate to say I told you so. (Truly – I run this blog to help people.)

ISA sheltering costs nothing. Even back then there was at most a trivial cost difference between an ISA and a trading account. Nowadays there’s usually none.

The moral of the story is to get any non-sheltered portfolios into an ISA (and/or a SIPP) as soon as possible.

Not only because of dividend tax, but also to shelter from capital gains taxes and future regulatory changes.

Note: Comments below may refer to old (or incorrect) dividend tax rates and allowances. Please check the dates if unsure.

The post UK dividend tax explained appeared first on Monevator.

The tax year runs from 6 April to 5 April the next year. This means that the most crucial UK tax deadline occurs every April.

That’s because there exist various annual allowances and tax reliefs that you need to make use of to legally mitigate your income tax bill and stop taxes devouring your investment returns.

Most of these are ‘use it or lose it’ allowances with a 5 April deadline.

It’s no good bemoaning in June that you should have filled your ISA allocation by 5 April, but you were too preoccupied by the Donald Trump Show or the Six Nations rugby!

No point cursing if you create a £500 capital gains tax liability in July that you might have defused in March!

Ch-ch-changes

Of course you read Monevator. You know this kind of stuff. But it’s still all too easy to overlook something.

Especially when the tax rules keep changing! (For example, the basic and higher rates of dividend tax were increased in April 2026. Remember?)

Let’s run through a checklist of what to think about as the UK tax deadline draws near.

Follow the links in each section to go deeper.

ISA allowance

The annual ISA allowance is the maximum amount of new money you can put each year into the range of tax-free savings and investment accounts that comprise the ISA family.

The ISA allowance for the current tax year to 5 April is £20,000.

You cannot carry forward or rollback this ISA allowance. What you don’t use in the tax year is lost forever.

ISAs are a superb vehicle for growing your wealth tax-free. But the fiddly rules – seemingly made up by a bureaucrat with a grudge against mankind – are subject to change over time.

Watch out for rule tweaks

For example, as of the 2024-25 tax year you can open multiple ISAs of the same type in the same tax year.

Previously you could only open one new ISA of each type in a tax year.

Note though that you can only contribute £20,000 in total to your ISAs a year – old or new. And it’s down to you to keep track of your running total.

Also, you can still only pay into one Lifetime ISA per year. The maximum contribution here is £4,000. This counts towards your £20,000 annual ISA allowance.

Another recent-ish change is that you can now make partial ISA transfers – although not all platforms will accept them. (Under the old rules, if you contributed to an ISA and then wanted to transfer the funds to a different provider in the same tax year, you had to transfer all of that year’s ISA contributions).

And another: fractional shares can now be held in a stocks and shares ISAs. They’re listed as ‘fractional interests’ on this page of qualifying investments.

My co-blogger wrote the definitive guide to the ISA allowance.

• The ISA allowance: how it works and how to use it

Pension contributions annual allowance

There is a limit to how much money you can contribute to your pension in a given tax year while still receiving tax relief on those contributions.

It is sometimes referred to as the pension annual allowance.

Despite massive speculation with every Budget, the allowance is still £60,000. ¹

Also note that unused pension annual allowance can generally be carried forward for up to three tax years, subject to the usual pernickety conditions you always see with pensions and taxes. (Hargreaves Lansdown has a decent guide).

Note that the rules about inheritance tax and pensions were thrown into the Magimix blender in late 2024:

• Pensions and inheritance tax: rugged by Reeves

Pensions put off taxes

Saving into a pension is mostly a tax-deferral strategy. That’s because you’re eventually taxed on pension withdrawals, unlike money you take out of an ISA tax-free.

In theory this makes ISAs and pensions equivalent from the perspective of tax.

In practice though, the fact that you can also draw a special tax-free lump sum from your pension gives pensions an edge in tax-terms – albeit at the cost of locking away your money for years.

Weigh up the pros and cons of each tax wrapper. We think most people should do both.

You can reduce your marginal tax rate by making pension contributions, if you can afford to go without the money today. Those on higher-rate tax bands should definitely do the maths:

• The rich person’s guide to pension contributions

Personal savings allowance

Under the personal savings allowance:

• Basic-rate taxpayers can earn £1,000 per year in savings interest without having to pay tax.
• Higher-rate taxpayers can earn £500 per year.
• Additional rate taxpayers don’t get any personal savings allowance.

Back when interest rates were very low, these savings allowances seemed quite generous.

But rising rates have changed everything. Even interest on unsheltered emergency funds can now take you over the personal savings allowance and see some of your interest being taxed.

Redo your sums. Higher-rate taxpayers should look into holding low-coupon short duration gilts instead. Recently these have offered a lower-taxed alternative to savings interest.

• Why the personal savings allowance is important again

Dividend allowance

The annual tax-free dividend allowance was reduced to £500 in April 2024.

Dividends you receive within the tax-free dividend allowance are not taxed. But breach the allowance and you’ll pay a specific dividend tax rate on the rest, according to your income tax band.

You can avoid the whole palaver by investing inside an ISA or pension.

• UK dividend tax explained

Capital gains tax allowance

Everyone has an annual capital gains tax allowance, or ‘annual exempt amount’ in the lingo of HMRC.

This allowance was halved to £3,000 from 6 April 2024.

It is still (for now) frozen at this level.

Capital gains tax is levied on the profits you make when you sell or transfer most assets. These assets include everything from shares and buy-to-let properties to antiques and gold bars.

You can shield your stock market gains from capital gains tax by investing within ISAs and pensions. Go re-read the relevant bits above if you skimmed them!

• Capital gains tax in the UK

EIS and VCT investments

You can also reduce your taxes by investing in Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS).

These vehicles are mostly marketed at wealthy high-earners for whom the large income tax breaks are attractive.

But be aware that these tax reliefs come with all kinds of risks, rules, and regulations.

VCTs

VCTs are venture capital funds run by professional managers who make investments into startup companies.

But somewhat quixotically, VCTs don’t even pretend to try to deliver high venture-style returns for investors.

Instead they aim to return cash via steady tax-free dividends.

You can invest up to £200,000 a year into VCTs. You must then hold them for at least five years to keep your 20% income tax relief.

(The tax relief rate was lowered from the longstanding 30% in April 2026).

VCT fund charges are invariably expensive, and the returns mostly mediocre – especially if you back out the tax reliefs.

EIS

EIS investing is even riskier than VCTs. Qualifying companies are usually very young, and many investors buy into them via crowdfunding platforms, rather than through professional fund managers.

The quality of these EIS opportunities is extremely variable, and information is usually scanty.

And while there have been a few big crowdfunded winners, the majority do poorly and often go to zero.

If you’re a baller who buys Lamborghinis before breakfast, you may already know you can put up to £1m a year into EIS investments. (Up to £2m if you’re investing in ‘knowledge intensive companies’).

You can also still knock 30% of your EIS investment amount as tax relief from your income tax bill – presumably because EIS investments are deemed riskier than VCTs – and there are other reliefs should things go wrong.

But you must hold EIS investments for three years to qualify for the tax relief – again a slightly better deal than with VCTs, presumably to compensate you for higher risk.

Most people shouldn’t put more than fun money into EIS or even VCT schemes, in our opinion. Certainly not unless they’re very sophisticated investors or getting excellent financial advice.

• The risks of Venture Capital Trusts
• What are Enterprise Investment Schemes?
• Running a 31-fold gain in pursuit of a 100-bagger

Check in on your tax band and personal allowances

The rate of income tax you pay depends on your total income from all sources. This includes salary, interest, dividends, pensions, property letting, and so on.

You add up all this income to get your total income figure.

You then subtract your personal allowance from the total to see which tax bracket you fit into.

Everyone starts with the same personal allowance, regardless of age:

• The personal allowance is currently £12,570

Your personal allowance may be bigger if you qualify for Married Couple’s Allowance or Blind Person’s Allowance.

However the Personal Allowance goes down by £1 for every £2 of income above a £100,000 limit. It can go down to zero.

For England, Wales, and Northern Ireland, the income bands after deducting allowances are:

Source: HMRC

Note: If your non-savings taxable income is above the starting rate limit, then the starting savings rate does not apply to your savings income.

Scotland has its own income tax rates.

As we’ve seen above, there are further allowances and reliefs for income from certain sources – such as dividends and savings – that can reduce how much of that particular income is taxable.

You can take steps such as making additional pension contributions or having a spouse hold certain assets to further reduce your taxable income or the highest rate of tax you pay.

• UK tax brackets and personal allowances

Don’t make the UK tax deadline into a crisis

Scrambling to exploit these allowances before the tax year ends is not only stressful – it’s financially suboptimal.

If you had cash lying around that you might have put into an ISA earlier in the year, for example, then it could have been earning a tax-free return for months beforehand.

But don’t blush too hard if you find yourself in this position.

Most of us are similar, which is why we wrote this article – and why the financial services industry bombards us with ISA promotions every March.

Try to automate your finances to invest smoothly and intentionally over the year.

And remember that April also brings warmer weather and longer days. Life is about much more than money and taxes!

Save and invest hard, take sensible steps to mitigate your tax bill, and enjoy life like a billionaire with whatever you’ve got leftover.

1. Very high-earners are subject to a much-fiddled with taper that reduces their allowance. It is reduced by £1 for every £2 someone earns over £260,000, including pension contributions.

The post UK tax deadline: how to make use of all your tax allowances appeared first on Monevator.

Squeeze the most heavily taxed investments into your tax shelters first.

Happily, the pecking order for maximum tax efficiency is clear cut for most people.

Tax-efficient investing priority list

Shelter your assets in this order:

• Non-reporting offshore funds
• Bond funds, money market funds, UK REITs ¹, and PIAFs ²
• Individual bonds
• Income-producing equities
• Foreign equities (arguable, from a dividend perspective)

To see why this sequence is the most tax efficient, let’s just tee up the relevant tax rates:

From 6 April 2027, tax on savings income – as paid by money market, treasury bills, and bond funds – rises to 22%, 42%, and 47% for basic, higher, and additional rate tax-payers respectively. The same rate will also apply to property income from 6 April 2027. This is payable by UK REITs and PIAFs but not ordinary REIT tracker funds.

At a glance we can see that income tax is the nastiest while capital gains tax (CGT) is generally the most benign. Your CGT burden can also be reduced by offsetting gains against losses.

So the plan is to shelter investments that are liable to income tax first, dividend tax second, and CGT third.

A few tax efficiency caveats to consider

Before we get into the guts of it, I’ve got to dish up some caveat pie:

• Interest is taxed at your usual income tax rate until 6 April 2027. Basic-rate payers have a £1,000 personal savings allowance, reduced to £500 for higher-rate payers and nil pounds beyond that.

• A few very low earners qualify for an additional band of tax relief on savings. Up to £5,000 of interest can be sheltered under the ‘Starting Rate for Savings’.

• If your interest, dividend income, or capital gains pushes you into a higher tax band then you will pay a higher rate of tax on the protruding part.

• In that situation, it matters what order you’re taxed in, so you can make the most of your tax-free allowances. The UK order of taxation is: non-savings income, savings income, dividend income, and finally capital gains.

• Never neglect the tax-deflecting powers of ISAs and SIPPs.

• If you’re unsure which wrapper is best for saving, then read our take on the ISA vs SIPP debate. Most people should probably diversify across both tax-efficient investing shelters. But there are a some important wrinkles to think about.

Let’s now look in more detail at – all things being equal – the best order of sheltering assets for tax-efficient investing, starting at the top.

Non-reporting offshore funds

Offshore funds that do not have reporting fund status are taxed on capital gains at income tax rates. And as you can see from the table above, that’s a hefty tax smackdown.

Worse still, your capital gains allowance and offsetting losses are knocked out of your hands by HMRC like the school bully taking your lollipop.

If your offshore fund or exchange-traded product (ETP) doesn’t trumpet its reporting status on its factsheet then it probably falls foul.

It’s worth double-checking HMRC’s list of reporting funds. Many offshore funds / ETPs available to UK investors don’t qualify. Also, it’s possible for a reporting fund to lose its special status.

Any fund that isn’t domiciled in the UK counts as an offshore fund. (Sometimes it’s worth saying the obvious!)

Bond and money market funds

Money market funds, bond funds, and even treasury bills are next into the tax bunker because interest payments are taxed at income tax rates rather than as dividends. (And on the higher ‘savings income tax’ rates from 6 April 2027.)

Any investment vehicle that has over 60% of its assets in fixed income or cash at any point in its accounting year falls into this category.

However, because these distributions count as savings income, interest payments are also protected by your Personal Savings Allowance (and even the Starting Rate for Savings).

Bond fund capital gains fall under capital gains tax, naturally.

Money market funds typically achieve at most miserly capital gains.

Treasury bills count as deeply discounted securities. Essentially they’re designed to make a capital gain rather than pay interest. But the capital gain counts as savings income.

Our Treasury bill article explains the weirdness.

Starting Rate for Savings – bonus protection

Some people – most likely retirees – can find themselves with low earnings income but reasonable savings income.

Such savings income can be sheltered by the Starting Rate for Savings.

Savings income that sits in a £5,000 band beyond your Personal Allowance may qualify for a 0% rate of income tax thanks to the Starting Rate for Savings rules.

That’s most likely to happen if your non-savings income plus savings income lands somewhere between £12,570 and £17,570.

(The upper limit can be increased if you’re eligible for additional tax-free allowances.)

Beware that every pound you earn (in non-savings income) over £12,570 shaves £1 from your £5,000 Starting Rate for Savings allowance.

So if you earn over £17,570 in non-savings income then you won’t get any Starting Rate for Savings privileges.

Whereas, £14,000 in non-savings income leaves you with another £3,570 in savings income that can be protected using your Starting Rate for Savings.

Any savings income that can’t huddle behind the Starting Rate for Savings barricade can still duck under the Personal Savings Allowance.

All this begs the question: what counts as earnings income?

The main categories are:

• Income from work, whether employed or self-employed
• Pension withdrawals including the State Pension
• Retirement annuities
• Rents
• Taxable benefits

It’s obviously less urgent to get all your bonds into your ISAs and SIPPs if you can earn interest tax-free via the Starting Rate for Savings and Personal Savings Allowance routes.

As mentioned though, bonds can make capital gains. Intermediate to long maturity bond funds have the most potential to land you with a significant CGT bill, whereas short bonds tend to be more cash-like.

UK Real Estate Investment Trusts (REITs) / PIAFs

UK REITs and PIAFs pay some of their distributions as Property Income Distributions (PIDs).

PIDs are taxed at income tax rates not as dividends. UK REITs and PIAFs will pay higher property income tax rates from 6 April 2027. Those rates will be 22%, 42%, and 47% for basic, higher, and additional rate tax-payers respectively.

Get them under cover for optimal tax-efficient investing. PIDs are paid net so make sure you claim back any tax due if you tax shelter ’em.

REIT tracker funds and ETFs distributions are liable to the standard dividend income tax rate, not the higher property income tax rate.

Individual bonds

Individual bonds are liable for income tax on interest – just like bond funds.

The only reason that bonds are slightly further down the list is because individual gilts and qualifying corporate bonds are not liable for capital gains tax.

We’ve previously delved into the differences between how bonds and bond funds are taxed.

There are also some particularly intriguing low coupon gilts on the market that pay very little interest. Instead, their future cashflows are heavily skewed towards capital gains – which are tax-free.

Check them out if you’re comfortable with buying individual gilts and would like to reduce your tax bill.

Income-producing equities

The dividend tax situation has got a lot worse for UK investors in recent years, so high-yielding shares and funds should duck under your tax testudo next.

By all means prioritise protection for your growth shares if you think CGT is the bigger problem.

But bear in mind you can still defuse some capital gains every year – although this mitigation measure has been hugely eroded by the shrinking capital gains allowance – and you can usually defer a sale.

Foreign equities

It isn’t necessarily a priority to get overseas funds and equities sheltered, but there’s a tax-saving wrinkle here that only works with SIPPs.

The issue is withholding tax, which is levied by foreign tax services on dividends and interest you repatriate from abroad.

Sometimes withholding tax will be refunded as long as you fill in the right forms. For example a 30% tax chomp on distributions from US equities becomes a mere 15% if your broker has the appropriate paperwork.

Foreign investments in SIPPs can often have all withholding tax refunded but only if your broker is on the ball (and the appropriate agreements are in place). You’d need to check. ISAs don’t share this feature.

Note that if you hold foreign equities outside of a tax shelter then you can use whatever withholding tax you have paid to reduce your UK dividend bill.

So in the case of US equities, a basic-rate taxpayer could use the 15% they’ve paid in the US to reduce their 7.5% HMRC liability to zero.

In other words, only higher-rate / additional-rate taxpayers should consider sheltering US equities in ISAs from a dividend perspective. (There’s still capital gains tax to think about in the long-term, remember.)

Everyone can benefit from the SIPP wrapper, though.

Bow-wowing out

It just remains to say that this is generalised guidance and tax is a byzantine affair. Please check your personal circumstances. (We cannot give individual advice – even if we knew you, which we don’t!)

Tax efficiency is important but whatever happens don’t let the tax tail wag your investment dog.

Take it steady,

The Accumulator

Note: This article on tax-efficient investing has been given a tidy up after a few years out in the pastures. Comments below might refer to previous tax rates and allowances. So do check the date they were posted!

1. Real Estate Investment Trusts
2. Property Authorised Investment Funds

The post Tax-efficient investing in the UK (or what order to put things into an ISA or SIPP) appeared first on Monevator.

Until the government starts taxing sex, capital gains tax (CGT) is probably the most annoying tax to pay. ¹

Capital gains tax is levied on the profits you make when you sell or transfer most assets. These assets include shares, investment properties – even a stake in your own company.

Like a maggot in your birthday cake, capital gains tax can really spoil the fun of making money.

Inheritance tax is a tax on your good fortune. Income tax is the cost of having a job.

But CGT is a tax on investing success.

Take cover from CGT where you can! Always try to use ISAs and pensions to shelter your investments from taxes. No tax is payable on gains realised within these wrappers.

Of course, you won’t always make a profit when you sell an investment.

Sometimes you’ll lose money. That’s called a capital gains loss.

Unfortunately you don’t get money back from the government when you lose money.

However you can offset your capital losses against your gains to reduce your total taxable gain. You can also defuse unsheltered gains using your annual CGT allowance.

How UK capital gains tax works

Like income tax, CGT is calculated on the basis of the tax year. This runs from 6 April to 5 April the following year.

You pay tax on the total taxable gains you make selling assets in the tax year, after taking into account:

• Your annual CGT allowance. (See below).

• Other reliefs or costs that can reduce or defer the gains.

• Allowable losses you made by selling assets that would normally be liable for CGT. (The opposite of a capital gain, in other words).

Everyone has an annual capital gains tax allowance, or ‘annual exempt amount’ in HMRC-speak.

• The allowance is currently £3,000. ²

If your total taxable gains, minus any deductions, come to more than your annual tax-free allowance, then you pay CGT on everything over that allowance.

Capital gains tax rates

• Basic-rate taxpayers pay 18% on their capital gains.

• Higher-rate taxpayers pay 24%. 

These rates were increased in the October 2024 Budget. (The previous levels were 10% and 20% respectively.)

CGT: We’re all in it together

Before the October 2024 Budget, second homes and buy-to-let properties ³ were taxed at higher rates than other assets such as shares.

However CGT rates on non-property assets were increased in the Budget to the same level as those levied on property gains.

Meanwhile the rates levied on property were left unchanged.

Hence all chargeable assets are now taxed at those same 18% and 24% rates.

Your main home is nearly always exempt from capital gains tax under what’s called Private Residence Relief. This is automatically applied, although complications can arise if part of the property has been let out, been used exclusively for business, or includes substantial grounds. In those cases, CGT might be payable.

Note that you might normally be a basic-rate taxpayer, but pay a higher rate on your capital gains. This could happen if the money made via your gains moves you into the higher-rate tax bracket.

To work out what rate you’ll pay, your capital gain is added to your taxable income from other sources (salary, dividends, savings interest, and so on).

It can get a bit complicated. See HMRC’s notes on working out your capital gains tax rate band.

Mind your own business

If you sell a business – or a significant share of a private business – then you might qualify for special rates of capital gains tax on your gains. The main relief available is called Business Asset Disposal Relief ⁴. There’s also the more niche Investors’ Relief.

Since 6 April 2026, both may now enable qualifying disposals to be charged at a potentially reduced CGT rate of 18% (rather than the 24% that would typically be levied as chunky transactions push the taxpayer into the higher-rate bracket).

There’s also a £1 million lifetime limit for both reliefs.

Both reliefs come with strict conditions. You’ll want to take professional advice.

Incidentally, these reliefs have (surprise!) become less generous in recent years. They used to bring the CGT rate down to as low as 10%, and years ago the lifetime limits were £10m.

Yes, despite rampant inflation in recent years, the lifetime limits have been slashed not raised. So much for encouraging entrepreneurs!

What is CGT charged on?

Historically speaking, CGT has been a fairly avoidable tax for most everyday investors in the UK.

(Remember, you’re allowed to mitigate your taxes. Tax evasion is illegal.)

However the big decline in the annual CGT allowance – from over £12,000 a few years ago to just £3,000 – has made it much harder to mitigate a potential capital gains tax bill.

Putting assets into tax shelters before they make any gains has thus become even more important.

Most capital gains on asset sales are taxable, but in the UK capital gains tax is NOT charged on:

• Your main home (in 99% of cases)
• UK Government bonds (gilts)
• ISA and SIPP holdings
• Personal belongings disposed of for less than £6,000 when you sell them
• Your car, unless used for business
• Other possessions with a limited lifespan
• Betting, lottery, or pools winnings (including spreadbets)
• Money which forms part of your income for Income Tax purposes
• Venture Capital Trusts

That still leaves many key assets liable for UK capital gains tax:

• Shares
• Corporate bonds
• Funds
• Antiques
• Buy-to-let property
• Land
• Gold (unless UK coins)

Remember if you can hold these assets inside a tax shelter (ISA or pension) then you’ll escape the sting of capital gains tax. 

Also remember that annual capital gains tax allowance. So you won’t necessarily be liable for CGT just because you’ve sold some taxable assets and made a profit. It depends on your total capital gains for the year.

You might be able to postpone paying your CGT bill by claiming deferral relief on certain government-sanctioned investment schemes (EIS and SEIS). However these investments can be very risky.

Do your research. Don’t risk big losses just to cut your tax bill.

When to report capital gains tax

You need to report your taxable gains via your self-assessment tax return if:

• Your total taxable gain in the tax year exceeds your CGT allowance, and/or

• Your sales of taxable assets are in excess of £50,000 and you’re registered for self-assessment.

Under the current regime, if you sold £20,000 worth of shares in the year for a total gain of £2,000, there’s no need to report any of it. Your £2,000 in gains is below the annual CGT allowance. And your total sales were less than £50,000. ⁵

In contrast, if you’d sold £52,000 of shares, say, and you are registered for self-assessment, then you would have to report the details to HMRC, regardless of the size of your total gain. That’s because you’ve sold taxable assets in the year in excess of the £50,000 threshold.

Capital gains are pooled together

All capital gains and losses go into the same ‘pot’ from the Inland Revenue’s point of view.

For example, if you made a gain (i.e. profit) of £15,000 selling shares and £8,000 from selling an antique wardrobe, then your total capital gain is £23,000.

Here losses might help you out.

For example, let’s imagine you make a taxable gain on your shares but a loss on selling your buy-to-let property. Your property loss can be offset against your capital gains on shares to reduce or even wipe out the tax bill that might otherwise be due.

See my article on mitigating capital gains tax for other strategies.

Who pays Capital Gains Tax in the UK?

Very few people actually pay capital gains tax. A recent study of anonymised personal tax returns found that 97% of people never make any chargeable capital gains. Those who did were generally drawn from the ranks of the wealthy.

According to the Guardian:

Just 0.3% of people with income under £50,000 had taxable gains in an average year, compared with almost 40% of taxpayers with incomes over £5m receiving some gains.

Almost half of those who made a capital gain lived in the south-east. A quarter lived in London.

So paying capital gains tax puts you into a fairly exclusive club.

For investors, however, capital gains is an occupational hazard. If you are not able to do all of your investing inside ISAs and pensions, then you will probably pay CGT sooner or later.

Especially given how the annual CGT allowance has been slashed in recent years.

How do the UK’s CGT rates compare with other countries?

Even at the new higher rates, the UK regime is fairly competitive. Here are some example headline rates from our peers as of September 2024:

Source: Financial Times

It’s tricky comparing rates between different countries, as there can be lots of quirks, extra levies, and special allowances. Some countries may impose a wealth tax, or seek to generate revenues via higher transaction taxes.

The UK isn’t the only nation with a complicated tax code!

Certain jurisdictions do not charge CGT at all. These include the Bahamas, Belgium, Bermuda, the Cayman Islands, Gibraltar, Hong Kong, Jersey, Guernsey, the Isle of Man, the Netherlands, New Zealand, Qatar, Saudi Arabia, and Singapore.

Capital gains tax and me

I’ve paid CGT. I wasn’t even very wealthy at the time. Certainly my annual income was no great shakes.

I began investing 20-odd years ago with a biggish lump sum that I’d originally saved up as a house deposit.

I should have steadily put this cash into ISAs over the ten years or so it took me to save it. But I was silly and I didn’t. And so when I began investing, I had to build up my ISA tax shelter capacity from scratch. One year’s allowance at a time.

Eventually this landed me with a five-figure CGT bill when I sold the last of my unsheltered investments – and this despite years of diligently defusing my gains along the way.

You make your own luck

That investment had gone up more than ten-fold since I bought it outside of an ISA, a decade or so earlier.

Lucky me, you say?

Perhaps, but remember I wasn’t super-rich. I began as just a determined saver trying to keep up with the runaway London housing market. My initial deposit comprised of several tens of thousands of pounds of hard-won savings that I could have spent instead on holidays, clothes, or simply having more fun in my 20s and 30s, like most of my friends.

That is why I usually write that you ‘make’ a capital gain, or even that you ‘earn’ a gain.

Whereas The Guardian with its own biases says you ‘receive’ it. As if the capital gain just falls from the sky – like windfall!

That is true of an inherited gain, say – at least for the recipient

But capital gains nearly always only come after you’ve risked your own money.

So do what you can to keep hold of that reward in full by shielding your investments from capital gains tax.

1. Update: since I first wrote this article I bought my own home and paid Stamp Duty Land Tax at 5%. Turns out that’s just as annoying.
2. It was halved on 6 April 2024 and has since been frozen at this level.
3. Held personally. Properties held via a limited company are on a different regime.
4. Formerly known as Entrepreneur’s Relief.
5. Remember, these are sales outside of an ISA or SIPP. Sales within shelters are not liable for CGT and not counted at all.

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If you don’t fancy a ten-year reckoning for Brexit, then please skip to the money and investing links. No offence taken, no harm done. Cheers!

The post Weekend reading: Harping on about Brexit, 10th anniversary edition appeared first on Monevator.

Is it okay to give nominal bonds the boot? Can they just be replaced wholesale by index-linked bonds, thus solving the glaring weakness of the 60/40 portfolio at a stroke?

“What’s the glaring weakness again?”

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The first Weekend Reading every month can be read by anyone on the Monevator website. Subscribe for free to our email newsletter or become a member to ensure you see the rest.

I guess we’ve all got used to prices going up again by now. But a £2,100 jump in just 12 months in the income needed to fund a comfortable retirement is still a little shocking.

That figure comes from the latest Pensions UK Retirement Living Standards survey:

Source: Retirement Living Standards

Most people are not on track to enjoy the right-hand side of that reality. Yet if you talk to them about their imagined retirements, they hardly describe a basic Pot Noodles and the telly lifestyle.

As Which reports:

Pensions UK says that around 82% of the working population are expected to reach the minimum standard of living in retirement, with just 23% and 9% expected to reach the moderate and comfortable standards respectively.

Last week, the Pension Commission warned that 15 million people are undersaving for retirement.

Of course Monevator readers are a different breed: mostly numbers run, plans in place or crystallised. But if you want a quick sanity check, wealth manager Quilter calculates you now need a £691,000 pot to retire comfortably.

Its figure is based on a single person retiring at 66 on a 6.1% escalating annuity, and with no housing costs:

Source: Trustnet / Quilter

We’ve looked at the Retirement Living Standards numbers before. They always generate disbelief disgust disquiet a lively discussion.

The Accumulator has called dibs on diving deeply into them again in the near future, so don’t go retiring* until you’ve read his take.

Have a great weekend!

*Not investment advice. Retire when you’re ready to. But be prepared to do so with fewer of TA’s puns and 1970s children’s TV references at your back.

From Monevator

UK tax brackets and personal allowances – Monevator

Laissez-FIRE – Monevator

From the archive-ator: Comparing the cost of electric car ownership – Monevator

News

Half of London flats are selling at a loss, and the crash is spreading… – This Is Money

…with house prices in most regions mostly softening, too – Which

Cash ISA rush sees savers pour £83.2bn into accounts – This Is Money

UK assets face underestimated risk event [Andy Burnham], analysts warn – CNBC

Britain to suffer biggest G7 jump in unemployment, says OECD – This Is Money

Tenant unions mobilise to oppose any rent increases – This Is Money

Third of Britons say university not worth it, as student loan inquiry begins – BBC

Alphabet’s $80 billion stock sale in ‘unprecedented territory,’ says Goldman – CNBC

Puffin and bumblebee among 18 creatures shortlisted to feature on banknotes – BBC

CAPE ratios haven’t been indicating like they used to – Piper Sandler

Products and services

^{Disclosure: Links to platforms may be affiliate links, where we may earn a commission. This article is not personal financial advice. When investing, your capital is at risk and you may get back less than invested. With commission-free brokers other fees may apply. See terms and fees. Past performance doesn’t guarantee future results.}

Barclays scraps monthly customer fee for self-directed investors – Yahoo Finance

Monzo is launching a mobile network with a loyalty bonus – Be Clever With Your Cash

Seven mistakes to avoid with your mortgage application – Which

Get up to £1,500 cashback when you transfer your cash and/or investments to Charles Stanley Direct through this affiliate link. Terms apply – Charles Stanley

Cheapest buy-to-let deals for landlords – Which

How to keep your Amex points when you cancel – Be Clever With Your Cash

Get up to £200 cashback when you open an Interactive Investor SIPP. Terms and fees apply, affiliate link – Interactive Investor

How to save money on cinema tickets – Which

Landlords rush to protect income over Renters’ Rights Act fears – City AM

Homes for sale with water views, in pictures – Guardian

Comment and opinion

The dangerous allure of Die With Zero – Jordan Grumet

Being useful is more attractive than being rich – Of Dollars and Data

How much should retirees worry about inflation [US but relevant] – Morningstar

MSCI: the global equity tollbooth – Fiscal.AI

“Am I lower-value human capital?” [Paywall] – FT

William Bernstein: the many utilities of retirement – Advisor Perspectives

Please, stop chasing fund performance – Behavioural Investment

The triumph of capital – Slow Boring

Selling abstraction [Deeeeep…] – Asterix

Investors don’t allocate rationally shocker [Research] – Alpha Architect

SpaceX IPO mini-special

How will these IPOs change the face of the stock market? – Morningstar

UK investors have just a few days to sign-up for IPO shares – This Is Money

By catering to SpaceX, index companies have destroyed their credibility – Phil Bak

What is SpaceX really worth? – Morningstar

SpaceX needs to get to $5 quadrillion to rival Mag 7 magic – Bloomberg via A.P.

Naughty corner: Active antics

Why isn’t oil more expensive? – Semafor

What if the AI boom goes into reverse? – Reuters

Disrupted or dead: AI is crushing pre-ChatGPT startups – CNBC

Are auditors good stock pickers? – Klement on Investing

Berkshire beyond Buffett – Max Anderson

Are Diageo shares a recovery play? [Affiliate link] – II

Software stocks bounce on comments from nVidia’s CEO – Sherwood

The family feeling – Investment Masterclass

Kindle book bargains

Quit Like a Millionaire by Kristy Shen – £0.99 on Kindle

The Algebra of Wealth by Scott Galloway – £0.99 on Kindle

Misbehaving: Behavioural Economics by Richard Thaler – £0.99 on Kindle

Wankernomics by James Schloeffel – £0.99 on Kindle

Environmental factors

The way Americans farm pigs is a sin – Noahpinion

UK’s green economy worth more than £100bn a year, research finds – Guardian

The Amazon’s path from crisis to durability – Mongabay

“Day and night no longer exist”: life in the hottest place in India – BBC

Dismay as Trump officials to dismantle key ocean monitoring system – Guardian

Reform council vows to call off the climate emergency – BBC

Robot overlord roundup

How do you teach a robo-taxi London? Waymo explains – City AM

Model routing is one fix for AI overspending – CNBC

Is OpenAI on its way to becoming Lyft? – Sherwood

Inside the AI boom’s arctic outpost – Time

Starbucks retired its AI agent just months after deployment – Fortune via Yahoo

Can we trust AI to build a better version of itself? [Paywall] – FT

Microsoft says new quantum chip 1,000 times more reliable – BBC

Not at the dinner table

Britain is a swamp of lies, and we got here on the Brexit bus – Guardian

Why Europe shouldn’t close its doors to immigration – Uncharted Territories

Trump’s puzzling strategic retreat from East Asia – Drezner’s World

Wealthy Americans: just stop moaning and pay your taxes [Paywall] – FT

Trump takes his cut – The Atlantic

Off our beat

Did you already win at life? – Kindness FP

Doing weights for two hours a week slashes the risk of early death – Sky

Restaurant critics on 14 ways to order the perfect meal… – Guardian

…and Feynman’s formula to find the best holiday restaurant – Guardian [& Paper]

Orcas and ourselves – Aeon

After a baby, there’s no ‘normal’ way to return to work – The Joint Account

No slave to the smartphone – Simple Living in Suffolk

Just make the coffee – The Retirement Manifesto

[Want to feel old?] Spotify’s most-streamed albums ever – Voronoi

And finally…

“If you look at a 40-year chart, the market-performance graphs are smooth and rising. But living through this period on the ground, there were many moments of terror when it seemed like the world was coming to an end.”
– Lloyd Blankfein, Streetwise

Note this article includes affiliate links, such as from Amazon and Interactive Investor.

The post Weekend reading: Retirement Living Standards revisited appeared first on Monevator.

Big picture, my approach to FIRE ¹ has followed all the usual principles:

• Minimise spending where possible
• Maximise my earnings
• Invest wisely and aggressively

But, contrary to my expectations, the further I get, the less certain I feel.

Initially, the strategy seemed clear. Multiply your expenses by 25 and then charge towards that target as quickly as possible.

But at the same time as I worked towards that goal, life was happening. My expectations were changing. My priorities were adjusting. 

At one point it was all about finding exciting work that would stretch me and position me for the next promotion. Now I have children, and I get more enjoyment from playing with them at the weekend than jetting off to a conference.

These days I’m even less sure what my target even is. But I’m still making good progress towards financial freedom.

I’ve started calling this path Laissez-FIRE.

The background

I’ll save you the long history of my childhood.

The short version: I grew up with frugal parents and grandparents. I knew my way around a savings account, and how to avoid over-spending at the supermarket.

I tested these principles in the corporate world. My first job involved finding ways to slash spending in the wake of the 2008 financial crisis. It was every bit as grim as it sounds.

On the plus side, I was fortunate enough to come across the FIRE movement in my twenties. At that point, I lived in a mortgaged flat with my girlfriend.

Fast forward a few years, and we’re married with kids. We now live in a mortgaged house – close enough to London to maintain our careers.

On paper, that’s not the set-up for a rapid advance to financial independence.

Investing the boring way

In the intervening years though, we’ve been stashing as much as we can into passive global equity funds in our ISAs.

At first, we could only afford £2,000 each year, but in recent years we’ve been able to max out the £20,000 ISA allowance.

We have both earned above-average salaries since graduating and have maintained mid-five-figure salaries over the years. And by my reckoning, we have directed more than 50% of our net earnings into either the mortgage or investments for several years now.

Perhaps I should have made it to six-figures. But I was always the one who would leave the office when the work was done, rather than get stuck into someone else’s pet project after hours.

Not too many regrets there, in all honesty.

We’ve also taken advantage of employer pension schemes of varying quality, and transferred the investments out to SIPPs whenever we got the chance, gaining more control over our investments.

FIRE in the hold

I’ve been hoovering up FIRE blogs and articles for over a decade, so it seems like this is where I’m supposed to talk about my progress.

• How many years are left until I hit my FI goal?
• What percentage of my ISA goal have I achieved?

But I actually don’t know. I haven’t set any goals yet.

It’s about the journey, not the destination

A couple of things have repeatedly caught me out over the years.

I’ve discovered I’m an awful market timer. Just ask me about the Bitcoin I sold for the price of a Big Mac before most people had even heard of it.

At least I’ve learned my lesson there. All my investments are passive now!

Another is that – despite being a habitual planner – I either can’t or don’t account for all of the things that might crop up in life.

Everyday life decisions with big ramifications

After graduating, both of us had found work in London.

Now, I wasn’t too fussed about living on the tube map. But equally, commuting from Stoke for 8am starts in the centre of London didn’t seem like the smartest move.

We knew we were buying property in an expensive suburb, but that seemed a fair trade-off. Living close to the capital helped both of us to earn decent salaries. 

Eventually, I figured, we’d sell up and move to the North or the South West.

After all, property only seemed to go up in value. And once we sold up, that might give us enough to buy the next place outright.

I’d also calculated that having kids wouldn’t be financially ruinous. We were quite happy to scour charity shops and rely on hand-me-downs. Nursery would be expensive, but there were ways to mitigate that.

Sounds good so far.

Where you live can be surprisingly sticky

Suddenly though, I’ve got a young kid in an ideal school that I fought tooth and nail to get them into. If I move to another county, all that hard work goes up in smoke.

Grandparents are visiting all the time, too, and the kids love seeing them.

Additionally, I’ve unexpectedly become a carer. Proximity to relatives and specialist hospitals is not just a convenience, it’s a central part of my life right now.

The upshot?

Having kids has actually been surprisingly cheap, in terms of day-to-day costs.

But with my plan to move to a cheaper area thwarted, I need to find a suitable house for the next decade or so. In one of the most expensive parts of the country.

Oops.

Children skew house prices

What I’d once though basic features of a family home, like a driveway and a garden you can kick a football in…around here those come with properties approaching seven figures.

And if I also wanted to guarantee my kids access to a top-performing secondary school in this area? Well, catchment area house prices are the ultimate middle-class stealth tax. I’d be straight into the £1m-plus house price bracket.

The point isn’t that we deserve sympathy or a high-performing school. I’ve accepted that I’ll bleed mortgage interest to stay near grandparents, maintain my caring commitments, and give my kids a potential better future.

Rather, it’s that I’ve often been caught out by things I didn’t anticipate.

When I originally scouted out suitable suburbs for our jobs, it never occurred to me that a few years later we’d have tied ourselves to the area we chose.

In turn, I had never expected to be debating the merits of £1m houses, or contemplating mortgage terms that could end beyond my ideal retirement age.

But here we are.

So is my whole FIRE plan scuppered?

Let’s talk numbers. Remember those ISAs I mentioned?

If we followed a 4% Safe Withdrawal Rate and assume that our expenditure rises only with inflation, the ISAs could cover about 90% of expenditure – excluding the mortgage.

I don’t know if you found the 90% figure surprising, but I certainly did. I’d never actually checked until I decided to write about it.

As I said, I’ve not set any targets, or even thought about them. But plugging away and cost-averaging into index funds gathers steam over time.

Add the SIPPs on, and we’ll be in a good place in a couple of decades when we can (hopefully) access our pension cash.

The key achievement here is building resilience.

There’s enough in the ISAs to weather some time between jobs, and enough in the SIPPs for us to maintain our current spending when we reach retirement age.

You may be thinking this is about to pivot into a smug retirement post. But that would be ignoring those key words above: excluding the mortgage.

Yes, as good as things look, I’ve got a six-figure hole in my plan.

And it will probably get worse.

What’s next?

We have some fairly big choices to make.

The main one is deciding on the next house.

I’ve drawn a fairly tight oval in Rightmove of acceptable postcodes, taking into account everything from family to hospitals to secondary school catchment areas.

But even within that boundary, there’s a vast range of properties – from terraced shoeboxes to century-old semis with generous living spaces.

A FIRE purist might say buy the cheapest house you can, and retire as early as possible.

But I’m expecting to live in my next house for at least a decade, with children growing up. Right now, they might be happy with a tiny bed in the corner of a room and a teddy, but eventually they will need their own spaces to live and study. If we’re lucky, they’ll have some friends they want to invite over.

Finding a comfortable house for all of us could mean borrowing hundreds of thousands of pounds on top of my existing mortgage – and paying potentially six figures in interest costs alone.

I’m less worried about the interest than you might think, given that inflation will reduce the value over time. But servicing it each month is still a strain.

Even with the perfect house, nothing is certain

Unless the UK magically fixes its housebuilding problems in the next ten years, when my kids reach 18, they’re unlikely to immediately rent their own properties to live in. Let alone buy.

So perhaps I’ll be moving at that point to find a place with an annexe – or as I’m told they’re now called, grad pads.

Or maybe I’ll be surprised again and find we are all so settled that even I’m opposed to relocating somewhere cheaper.

Eventually, once our children have their jobs sorted, we might be weighing up whether to raid the ISAs to see if the Bank of Mum and Dad can help with house deposits.

The only conclusion I can draw is I don’t know what life will be like in ten years, let alone 20.

Some off-the-cuff principles of laissez-FIRE

I wouldn’t want to suggest that the laissez-FIRE approach is best for everyone.

If you’ve got a solid plan that you can stick to, more power to you.

However I’ll try to boil my personal principles down to some key pointers:

• Focus your spending on a few specific things that give you happiness. You don’t know when you’ll retire, so it’s important to enjoy the journey.
• Figure out how you can earn money without driving yourself crazy. A slightly longer but happier journey will work better in the long run.
• Automate your investments and then ignore them as much as possible. As Charlie Munger once said, the big money comes from waiting.
• Measure success by experiences and life goals at least as much as financial targets. If every bit of spending is construed as a delay to your FIRE date, you risk stripping out all enjoyment.
• Projections and targets are best when they’re vague. There’s no point disappointing yourself when the goalposts inevitably move.
• Be kind to yourself! You can’t get every promotion, smash every bonus and choose the optimal financial option every time, so relax and trust the process.

What does ‘Retire Early’ look like for me?

Some people will say their only goal is to retire completely, as fast as possible.

I used to feel like that.

Thankfully, I’m not completely burned out on my career yet. If anything, I see career flexibility as part of the plan.

I’m quite happy to try out different jobs and employers, to see what works for me and my lifestyle at the time. The job that suited me ten years ago wouldn’t suit me now, and I’m sure the same will be true in the 2030s.

I want a role that pays me enough to feel worthwhile, but doesn’t excessively drain my energy and mental health. To my mind, it’s madness to run myself into the ground just to build a bigger retirement pot.

In the long run, I’d like to emulate a friend’s ‘stick it’ retirement. As he puts it, he takes on various contracts and ad-hoc pieces of work, with sufficient money in his SIPP that when he finds himself disliking the work or the people, he can tell them where to stick it.

If my ISA swells, that might give me more scope to support my kids. It could give me more flexibility over when and where I move, and give me more freedom with work.

Or maybe my ‘stick it’ threshold will have fallen so low that I’ll barely be working at all!

The one thing I know for sure is that my situation will change again before I’m ready to retire.

I have no idea what I’ll do at that point.

But thanks to my laissez-FIRE habits so far, at least I’ll have options.

1. That is, Financial Independence Retire Early.

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