The tax year reset on 6 April. Your ISA allowance is back to £20,000, your pension annual allowance is back to £60,000, and your capital gains tax exemption is back to £3,000. Everything starts fresh.

But this year isn’t just a simple reset. There are meaningful changes already in effect, bigger ones arriving in April 2027, and a window of opportunity that won’t stay open forever. Here’s what matters and what you can actually do about it.

Introducing the wiseones Take Home Pay Calculator

We’ve just launched wiseones.co.uk, and the Take Home Pay Calculator is one of the first tools on the site, built for the 2026/27 tax year from day one.

Every number in this article (the frozen thresholds, the NI rates, the pension rules, the student loan changes) ultimately feeds into one question: what do I actually take home?

That’s what this calculator answers. It’s not a rough estimate. It’s a full breakdown. Enter your salary and it calculates your income tax, National Insurance, pension contributions, and student loan repayments down to the penny, then shows you exactly where every pound of your gross pay goes in a visual stacked bar chart.

Here’s what it covers:

All 2026/27 tax rates and thresholds. The frozen personal allowance, the higher-rate band, the additional rate. All current from 6 April 2026.

England, Wales, Northern Ireland, and Scotland. Scottish taxpayers have six income tax bands with different rates. The calculator handles them all. One toggle.

Every pension type. Salary sacrifice, net pay, and relief at source, each one modelled correctly. Slide the contribution percentage and see what it actually costs your take-home pay versus the total landing in your pension. This is particularly important right now with the salary sacrifice NI cap arriving in 2029 (more on that below).

All five student loan plans. Plans 1, 2, 4, 5 (repaying for the first time this year), and postgraduate loans. If you’re repaying two at once, it handles that too.

Tax code parsing. Enter your actual HMRC tax code (1257L, BR, K codes, Scottish S codes) and it adjusts automatically.

No sign-up. No data stored. Just your numbers.

Try it here: wiseones Take Home Pay Calculator

This is just the start. As we grow through 2026, we’ll be adding more tools to help you plan your pensions, investments, and long-term finances. If you want to help shape what we build next, take our short survey and tell us what would be most useful to you.

Now, let’s get into what’s changing and why it matters.

The headline numbers haven’t changed, and that’s the problem

The personal allowance is still £12,570. The higher-rate threshold is still £50,270. The additional rate still kicks in at £125,140. These figures have been frozen since 2022, and they’re now confirmed frozen until at least April 2031, a full decade.

That might sound like stability. It isn’t. It’s a stealth tax rise. Wages go up with inflation, but the thresholds don’t move. So every year, more of your income is taxed at a higher rate. If you earned £48,000 in 2022, you were a basic-rate taxpayer. If your pay has risen with inflation to £52,000, you’re now paying 40% on part of your income, even though you’re no better off in real terms.

This is called fiscal drag, and it’s going to keep biting for another five years.

State Pension: up 4.8%, now dangerously close to the tax threshold

The triple lock has delivered again. The full new State Pension rises to £241.30 per week, that’s £12,548 a year. The basic State Pension (for those who reached State Pension age before April 2016) rises to £184.90 per week.

That new State Pension figure of £12,548 is now just £22 below the £12,570 personal allowance. If you have any other taxable income at all (a small private pension, some savings interest, a part-time job) you’ll be paying income tax on your State Pension income. And with the personal allowance frozen until 2031, the State Pension will almost certainly exceed it within the next year or two.

This is worth thinking about now, not when the tax bill arrives.

Pensions: the biggest changes in a generation are one year away

The real earthquake hits on 6 April 2027. That’s when the Finance Act 2026 brings unused pension funds into scope for Inheritance Tax.

Right now, if you die with money left in your pension, it typically passes to your beneficiaries outside of your estate. It’s one of the reasons pensions have been such a powerful planning tool: not just for retirement income, but for passing wealth to the next generation.

From April 2027, that changes. Most unused pension funds and death benefits will be included in the value of your estate for IHT purposes. If your total estate (now including your pension pot) exceeds the nil-rate band of £325,000 (or £500,000 with the residence nil-rate band), the excess could be taxed at 40%.

To put that in context: the average UK house price is around £300,000. Add a pension pot of even modest size, and suddenly you’re in IHT territory. The government estimates around 38,500 estates will pay more IHT than they would have under the old rules, with the average increase being around £34,000.

Death-in-service benefits remain outside IHT. Pensions passed to a surviving spouse or civil partner are also exempt. But for everyone else, particularly anyone who has been deliberately leaving their pension untouched as an estate-planning strategy, the landscape is fundamentally different.

This is your final year to prepare. The 2026/27 tax year is the last full year before these rules take effect. If you need to review your expression of wish forms, reconsider your drawdown strategy, explore gifting, or simply understand what your estate looks like with a pension included, the time to do it is now.

The Pensions Dashboard: it’s actually happening (probably)

The Pensions Dashboard has been promised since 2016. A decade later, it’s finally close to becoming real. The legal deadline for pension providers to connect to the dashboard ecosystem is 31 October 2026, and around 75% of workplace and personal pension records are already connected.

Public access is expected to follow roughly six months after that October deadline, so we’re realistically looking at spring 2027 before you’ll be able to log in and see all your pensions in one place.

When it does arrive, it will be genuinely useful. The UK has an estimated £31 billion in lost and forgotten pension pots. If you’ve had multiple jobs (and the average UK worker has nine over a lifetime), there’s a reasonable chance you have pension money sitting somewhere you’ve forgotten about. The dashboard will pull all of that together.

It won’t give you financial advice. It won’t tell you what to do. But it will give you visibility, and that’s the essential first step.

Salary sacrifice: use it or lose it (well, most of it)

If your employer offers salary sacrifice for pension contributions, pay attention. This is one of the most efficient ways to save for retirement because you avoid both income tax and National Insurance on the amount you sacrifice. Your employer saves NI too, and many pass some of that saving back into your pension.

From April 2029, this advantage is being capped. The first £2,000 of salary sacrifice per year will remain NI-free. Anything above that will be treated as earnings for National Insurance purposes, meaning both you and your employer will pay NI on the excess.

If you’re on a £50,000 salary sacrificing 6% into your pension, that’s £3,000 per year. Under the new rules, you’d pay NI on £1,000 of that. It’s not catastrophic, but it chips away at the efficiency. For higher earners sacrificing larger amounts, particularly those using it to stay below the £100,000 personal allowance threshold or avoid the high income child benefit charge, the impact is more significant.

The legislation has already passed through Parliament. This is happening.

The message is straightforward: you have three full tax years (2026/27, 2027/28, and 2028/29) to benefit from the current unlimited NI exemption on salary sacrifice. If you’ve been meaning to increase your pension contributions through salary sacrifice, or if your employer offers it and you haven’t set it up yet, this is the time.

Want to see what this looks like for your salary? The Take Home Pay Calculator lets you slide the pension contribution percentage and see exactly how much it costs your take-home versus how much lands in your pot. The ratio is often surprising.

Dividend tax: going up

If you hold investments outside of an ISA or pension, the tax on dividend income is increasing. Basic-rate taxpayers now pay 10.75% on dividends (up from 8.75%). Higher-rate taxpayers pay 35.75% (up from 33.75%). The additional rate stays at 39.35%.

The tax-free dividend allowance remains at just £500. This used to be £5,000 back in 2016/17. The direction of travel is clear.

If you’re a buy-and-hold investor with dividend-paying stocks outside a tax wrapper, this is another reason to think carefully about using your ISA and pension allowances first.

Capital Gains Tax: BADR rates rising again

The standard CGT rates haven’t changed: 10% for basic-rate taxpayers and 20% for higher-rate taxpayers on most assets, with 18% and 24% applying to residential property.

But if you’re a business owner planning to sell, the rate for Business Asset Disposal Relief (BADR) has risen again, from 14% to 18% as of 6 April 2026. That’s the third increase in three years (it was 10% until April 2025). The lifetime limit remains £1 million, but a qualifying gain of £1 million now costs £180,000 in CGT, compared to £100,000 just two years ago.

The CGT annual exemption stays at £3,000. It used to be £12,300. There’s a theme here.

ISAs: this year’s allowance is the last of its kind

The ISA allowance is still £20,000 for 2026/27. But from April 2027, the rules change. If you’re under 65, the maximum you can put into a Cash ISA drops to £12,000. The total ISA limit stays at £20,000, meaning you’d be able to split it as £12,000 cash and £8,000 stocks and shares, but no more than £12,000 in cash.

If you’re 65 or over, this restriction doesn’t apply.

This makes 2026/27 the last tax year where you can put the full £20,000 into a Cash ISA regardless of age. If you’re sitting on cash savings and want them inside a tax-free wrapper, this year is your window.

Crypto in ISAs: the door is closing

If you bought crypto ETNs inside a Stocks and Shares ISA since the FCA lifted the retail ban in October 2025, you should know that from 6 April 2026, that option has gone. Crypto ETNs are being reclassified as Innovative Finance ISA (IFISA) investments only.

In theory, you can still hold them in an IFISA. In practice, almost no mainstream platforms offer IFISAs that support crypto ETNs. None of the 57 currently authorised IFISA providers have plans to add them. So for all practical purposes, the tax-free ISA route for crypto is closed.

Existing holdings in a Stocks and Shares ISA purchased before the deadline can remain, but you can’t add new crypto ETN positions.

The alternative? SIPPs. Self-invested personal pensions have more flexibility around what counts as a qualifying investment, and several providers already allow crypto ETNs within a SIPP. More are expected to follow. If regulated crypto exposure matters to your long-term strategy, the pension wrapper is where it’s heading, though you should remember that means locking the money away until at least age 57 (from 2028).

Student loans: new thresholds and a brand new plan starts repaying

If you have a student loan, the repayment thresholds are changing from April 2026. The headline figures for the 2026/27 tax year are:

Plan 1 (started before September 2012 in England/Wales, or Northern Ireland): threshold rises to £26,065 per year, up from £25,245.

Plan 2 (England/Wales, started between September 2012 and July 2023): threshold rises to £29,385 per year, up from £28,470. But here’s the catch: the government has announced this threshold will then be frozen at £29,385 until April 2030. That’s four years of no increase. As wages rise and the threshold stays flat, more of your income sits above it each year, and your repayments quietly creep up. It’s fiscal drag applied to student loans.

Plan 4 (Scotland): threshold rises to £32,745 per year. Scottish borrowers continue to benefit from the highest threshold of any plan.

Plan 5 (England, started from August 2023 onwards): this is the big one. Plan 5 borrowers will make their first ever repayments from April 2026. The threshold is set at £25,000, the lowest of any undergraduate plan. If you started university in 2023 or later and have already entered the workforce, this is when deductions begin appearing on your payslip. Repayments are 9% of income above the threshold, and the loan is written off after 40 years (compared to 30 years under Plan 2).

Postgraduate loans (Plan 3): the threshold stays at £21,000. It has not changed since postgraduate loans were introduced in 2016. In real terms, it has fallen significantly. Repayments are 6% of income above the threshold, and if you also have an undergraduate loan, both deductions run at the same time.

A quick note for anyone using salary sacrifice: because student loan repayments are calculated on your gross pay (before tax and NI), salary sacrifice reduces the amount on which your student loan repayment is calculated too. If you’re on Plan 5 earning £30,000, sacrificing £2,000 into your pension would drop your assessable income to £28,000, reducing your annual student loan repayment from £450 to £270. The Take Home Pay Calculator models all of this together: tax, NI, pension, and every student loan plan in one view.

What else is changing

A few other things worth noting:

Working from home tax relief is gone. The income tax deduction for employees working from home who aren’t reimbursed by their employer has been scrapped for 2026/27. If you claimed this in previous years, it won’t be available going forward.

VCT relief is cut. Upfront income tax relief on Venture Capital Trust investments drops from 30% to 20%.

Council tax is going up almost everywhere. Most councils in England are raising rates by close to the 4.99% cap. Scotland and Wales are seeing similar or higher increases.

Making Tax Digital arrives for some. From 6 April 2026, self-employed individuals and landlords with gross income over £50,000 must keep digital records and submit quarterly updates to HMRC. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028.

EIS and VCT qualifying thresholds increase. Companies can now have gross assets up to £30 million (previously £15 million) to qualify, widening the pool of investable businesses.

The bottom line

This financial year is a preparation year. The biggest changes (pensions in IHT, the cash ISA limit reduction, savings and rental income tax rises, the salary sacrifice NI cap) all land between April 2027 and April 2029. But the planning window is now.

Here’s what’s worth doing this year:

Use your ISA allowance. Especially if you want the full £20,000 in cash, this is the last year you can do that (if you’re under 65).

Review your pension. The IHT changes from April 2027 could affect your family. Check your expression of wish, understand your estate value with a pension included, and think about whether your drawdown strategy still makes sense.

Maximise salary sacrifice. The current NI exemption is unlimited. From 2029, it’s capped at £2,000. Three years of unrestricted NI savings is worth taking seriously. Model the impact on your take-home.

Use your CGT exemption. It’s only £3,000. If you have gains to realise, use it or lose it every year.

Keep an eye on the Pensions Dashboard. It’s coming. When it goes live, use it to find any pensions you’ve lost track of.

None of this is advice. It’s information, and knowing what’s changing puts you in a much stronger position to make decisions that work for you.

Here’s to a well-planned 2026/27.

wiseones provides financial guidance, not regulated financial advice. Tax treatment depends on your individual circumstances and may change in the future. If you’re unsure about any of the changes described here, consider speaking to a qualified financial adviser.

But what’s actually inside it? Can you stick crypto in your pension? Shares in your ISA? A rental flat in your SIPP? (Spoiler: please don’t try that last one.)

Most people never think about this stuff. They open an account, pick a fund that sounds sensible, and hope for the best. Nothing wrong with that. But if you want to make the most of what’s available, it helps to know what each wrapper can actually hold.

Consider this your cheat sheet.

Quick Refresher: What Is a Wrapper?

Think of it like a lunchbox. The lunchbox has its own rules. How much you can put in. When you can open it. Whether the taxman gets to peek inside.

But the food is the interesting bit. Shares, bonds, funds, property, crypto. The same investment can sit in completely different wrappers and be treated very differently by HMRC.

Same sandwich. Different lunchbox. Different tax bill.

Let’s open them up.

Pensions (Workplace or SIPP)

The big one. Money goes in, gets tax relief, and stays locked up until at least age 55 (rising to 57 from April 2028). In return, your investments grow completely free of income tax and capital gains tax while they’re inside.

What you can invest in depends entirely on your pension type. And the range is enormous.

A basic workplace scheme like Nest gives you roughly zero choice. You’re in a default fund. That’s it. Don’t like it? Tough. Move up to providers like Aviva, Royal London, or Scottish Widows and the menu opens up to a few hundred funds. Some advanced workplace pensions through Aegon can even unlock full SIPP functionality, meaning thousands of options.

A proper Self-Invested Personal Pension (SIPP) is the full buffet. Individual shares on global exchanges (including AIM), ETFs, bonds, gilts, funds, and even commercial property if your provider allows it. Since October 2025, crypto ETNs have been on the table too. And for experienced investors, Long-Term Asset Funds (LTAFs) now sit in SIPPs as well, giving access to private equity, infrastructure, and real estate. They’re classed as non-standard investments though, so your provider needs to hold extra capital.

Then there’s the SSAS. That’s for business owners (maximum 11 members), and it opens up even more specialist territory: lending money back to your own company, buying commercial property with borrowing. We’ll cover that separately.

Stocks and Shares ISA

Everyone’s favourite. Up to £20,000 per year, and everything inside grows and comes out completely tax-free. No income tax on dividends. No capital gains tax when you sell. Nothing. Nada.

The investment range is solid: shares on recognised exchanges, funds (unit trusts and OEICs), investment trusts, ETFs, and government and corporate bonds. Narrower than a SIPP, but more than enough for most people. No direct property, no alternatives, no commercial lending.

Here’s where it gets interesting. Until April 2026, you can hold crypto ETNs in a Stocks and Shares ISA. After that, they’re moving house to the Innovative Finance ISA. Meanwhile, heading in the opposite direction, LTAFs will become eligible for Stocks and Shares ISAs from April 2026. Private markets in an ISA. That’s new.

Innovative Finance ISA (IFISA)

The quiet one at the back of the classroom. Originally built for peer-to-peer lending, it’s been slowly picking up new residents.

You can hold crowdfunded bonds through providers like Triodos. And from April 2026, crypto ETNs will move in here. That might finally give this wrapper its moment.

Same £20,000 annual limit as all ISAs (shared across the lot). Not many people have one yet. That could change.

One thing to flag. IFISAs are not covered by the FSCS. If your P2P platform goes bust, your money could go with it. Higher potential returns come with higher risk. Eyes open, please.

Onshore Investment Bond

Right, we’re getting into specialist territory now. Stay with us, it’s worth it for some of you.

An onshore investment bond is issued by a UK life insurance company. Technically it’s a life insurance policy. In practice, it’s an investment wrapper with some genuinely clever tax tricks.

You invest a lump sum into a range of funds (unit trusts and OEICs), investment trusts, ETFs, and cash. Some providers like HSBC Life offer over 3,800 fund options including ETFs. That’s broader than most people expect. .

You’re treated as having already paid basic rate tax. If you’re a basic rate taxpayer when you eventually cash in, there might be nothing more to pay. Higher rate taxpayers will face a bill, but there are planning tools to help.

The headline feature is the 5% annual withdrawal allowance. You can take out up to 5% of your original investment each year for 20 years without triggering an immediate tax charge. Don’t use it one year? It rolls forward. Very handy for drip-feeding income in retirement and deferring tax payment.

You can switch between funds inside the bond without creating a personal tax event. No CGT on switches. Rebalance to your heart’s content.

And here’s the kicker. No contribution limit. These sit completely outside your ISA and pension allowances.

Offshore Investment Bond

Same idea, sunnier postcode. Issued by a life company based outside the UK, usually the Isle of Man, Ireland, or the Channel Islands.

The big difference is gross roll-up. No tax is paid on the growth inside the bond while it’s invested. Not corporation tax. Not income tax. Nothing. Your money compounds without the annual drag of taxation, which over the long term can make a real difference to the size of your pot.

The investment range is broadly similar to onshore: funds, investment trusts, ETFs, REITs, and cash. Some providers also allow discretionary investment managers (DIMs) to hold direct equities and bonds within the insurer’s internal linked fund structure. That widens the menu without triggering problems.

Now, here’s the bit that catches people out.

HMRC keeps a strict list of permitted property categories (under S520 ITTOIA 2005) that you’re allowed to select. The list covers funds, OEICs, unit trusts, investment trusts, REITs, cash, and a handful of others. Step outside it and the bond gets reclassified as a Personal Portfolio Bond (PPB). That triggers a whole new world and it is brutal stuff. The workaround is to invest through the insurer’s own internal funds or use a DIM who operates within the insurer’s structure. If anyone ever mentions PPB rules to you, sit up and listen.

Offshore bonds also get the 5% withdrawal allowance and have no contribution limit. They tend to show up in planning for trusts, estates, or people who spend time abroad (where time apportionment relief can reduce the UK tax bill on gains made while non-resident).

General Investment Account (GIA)

The GIA is the “everything else” account. No tax wrapper. No shelter. No annual limit. Just a straightforward investment account where you hold whatever you like: shares, funds, ETFs, bonds, direct crypto, alternatives. The full works.

The catch? You’ll pay tax on dividends, interest, and capital gains as they arise.

Think of it as the default. If an investment doesn’t fit inside any of the wrappers above, it ends up here.

But don’t write off the GIA just yet. It’s got a trick.

Bed and ISA

This one’s a proper hidden gem for anyone with investments sitting in a GIA.

Bed and ISA means selling investments in your GIA and immediately rebuying the same ones inside your ISA. Simple as that.

Why bother? Because investments in a GIA are exposed to capital gains tax (the annual exempt amount is just £3,000 per person, or £1,500 for most trusts) and dividend tax (allowance down to £500). Move them into an ISA and all future growth and income become completely tax-free. Forever.

You can’t just transfer shares directly. HMRC won’t have it. You sell, move the cash, rebuy. Most major platforms (AJ Bell, Hargreaves Lansdown, interactive investor, Fidelity) now have a one-click Bed and ISA option that does the whole thing in one go.

A few things to know. You’re briefly out of the market during the trade, so there’s a small risk of price movement. You might get back slightly fewer shares because of the bid-offer spread and dealing costs. And if the investments you sell have gains above your £3,000 CGT allowance, you’ll owe tax on the excess. Couples can transfer assets between them tax-free first to double up on the allowance.

Small prices to pay for getting investments into a tax-free home permanently. If you’ve got money in a GIA and unused ISA allowance, this should be near the top of your annual to-do list. You can do a Bed and SIPP using the same approach too.

The Crypto Question

This is the bit that’s changing fast.

Until October 2025, UK retail investors couldn’t buy crypto exchange-traded notes (ETNs) at all. The FCA had banned them since January 2021. That ban has now been lifted.

A crypto ETN is a listed product that tracks the price of a cryptocurrency (typically Bitcoin or Ethereum) without you ever owning the coins directly. They trade on exchanges just like shares. No wallet needed. No private keys. No dodgy exchange accounts.

Several are now listed on the London Stock Exchange from the likes of BlackRock (iShares Bitcoin ETP), WisdomTree, 21Shares, and Bitwise. All physically backed by actual crypto held with regulated custodians. Fees sit around 0.10% to 0.35%, which is competitive with traditional ETFs.

Here’s how they work across the wrappers.

SIPP: Yes. Crypto ETNs qualify as exchange-traded securities, so most SIPPs allow them. Tax-sheltered growth with tax relief on the way in. Currently the cleanest long-term route for regulated crypto exposure.

Stocks and Shares ISA: Yes, but only until April 2026. After that, new crypto ETN purchases move to the IFISA.

IFISA: From April 2026, this becomes the ISA home for crypto ETNs. Not many people have one yet, so expect a wave of account openings.

Investment Bonds: No. Crypto ETNs don’t sit within the permitted investment categories for onshore or offshore bonds.

GIA: Yes. No restrictions, but no tax shelter either. CGT applies on gains above your allowance.

A few important caveats. Crypto ETNs are not covered by the FSCS. They’re classed as complex, high-risk products. You don’t own the underlying crypto. You own a debt note issued by a financial institution that promises to pay you a return linked to the crypto price. If the issuer fails, the note could become worthless. The FCA has been very clear: don’t invest unless you can afford to lose everything.

For people who want a small, regulated crypto allocation inside a tax-efficient wrapper, this is genuinely new territory. We’ll do a deeper piece on this soon.

What Can Go Where?

Here’s the full picture. Which assets fit in which wrappers, with the key tax and access details underneath.

That’s the map. We’ll be digging into each wrapper in detail. If there’s one you’d like us to tackle first, let us know.

The Wiseones Summary

The wrapper you choose matters. But so does what you put inside it.

Pensions give you the widest investment menu, especially through a SIPP, and the best tax relief on the way in. The trade-off is your money is locked away until at least age 55. ISAs are more limited on what they can hold but everything comes out completely tax-free and you can access it whenever you like. Investment bonds are the specialist tool, best suited for lump sum planning, income in retirement, or estate work, and they come with their own quirks around permitted investments and tax treatment. The GIA holds anything but shelters nothing, so use your Bed and ISA trick each year to move what you can into a tax-free home.

The big changes to watch? Crypto ETNs are now available in pensions and ISAs. LTAFs are opening up private markets to mainstream wrappers from April 2026. And with the CGT allowance stuck at just £3,000, the case for using your wrappers properly has never been stronger.

Know what you own. Know where you own it. That’s the starting point for everything else.

Yet the minute you walk into the protection market, it’s like you’ve wandered into a bazaar: loud, shiny, “special deal for you today,” and somehow everyone’s strangely excited about your monthly budget.

That’s not an accident. It’s the business model.

In the FCA’s pure protection market study, stakeholders told the regulator that indemnity commission is typically a multiple of the annual premium (around 200%) and it’s paid on sale. Translation: two years of your premiums’ worth of commission can land with the seller upfront, the moment you sign.

So yes, there’s “advice”… but there’s also a very obvious incentive to get you over the line quickly, keep you paying for long enough, and (this is the spicy bit) occasionally “review” you into a fresh policy so the commission machine gets fed again. The FCA explicitly flags that commission can drive unnecessary re-broking (switching you when it isn’t needed), even into a worse-fitting policy.

Front-loaded commission doesn’t come from magic money. It comes from your premium.

Here’s where people get stitched up without anyone technically lying.

When commission is front-loaded, the insurer is paying the intermediary upfront on the assumption you’ll keep paying premiums for a period, “initial commission” assumed over two to four years, with repayment if the policy lapses).

That setup changes the whole vibe of the sale. Because once commission is paid at the start, the economics push towards:

• getting the premium agreed quickly,

• keeping you on risk long enough to avoid clawback,

• and, in the worst cases, “churn”: selling you a new policy and calling it a review.

But the most important part is this: Front-loaded commission puts pressure on the premium.

The FCA spells out one of the clearest mechanisms: “loaded premiums” (also called enhanced premiums), where an insurer pays a larger commission to a particular intermediary and recovers it from the customer through a higher premium than could be obtained elsewhere.

And in its press release launching the market study, the FCA says it will examine whether premiums are being raised by insurers to pay a higher commission to an intermediary.

So when someone tells you “don’t worry, the advice is free,” what they often mean is: you’re paying for it silently, built into the premium, and sometimes paying more than you needed to because the commission deal is richer.

But commissions got banned… didn’t they?

For investments, yes. For protection, not really.

The FCA’s own consumer guidance states that advisers can’t charge commission (including trail commission) on new investment products bought after 31 December 2012. That’s the RDR world: costs made explicit, fewer hidden inducements.

But the same FCA page is blunt that the commission ban doesn’t apply to protection products like critical illness and income protection.

And that difference matters, because pre-RDR investment commission was exactly the kind of incentive problem regulators wanted to kill. The FCA’s RDR review notes that commissions distorted incentives and that commissions to advisers were banned from December 2012, replaced by adviser charging agreed with clients.

For context, the FCA-commissioned Europe Economics report gives a snapshot of typical pre-RDR commission levels: investment bonds often 5% to 7.5% initial (or 4.5% + 0.5% trail), and unit trusts/ISAs typically 3% initial + 0.5% trail. Trail commission itself is described by the FCA as typically 0.5% per year, often buried inside charges.

So we already ran this movie once. We just… left protection in the sequel.

Unregulated isn’t the right word. Looser is.

Protection is regulated, but the guardrails are not the same shape as investments, and it shows in how it’s sold.

One particularly geeky-but-important nugget from the FCA’s market study pack: the Consumer Duty’s Products and Services and Price and Value outcomes are disapplied for general insurance and protection products (except long-term care), because firms are subject to similar requirements under PROD 4 instead.

That’s not “no rules.” But it helps explain why protection can still feel like a sales arena rather than a planning discipline: commission is permitted, front-loading is normal, and price comparison is messy.

The Wiseones punchline

Protection isn’t meant to be bought like a sofa, tested in a showroom, discounted at the till, delivered with a grin.

It’s meant to be bought like a parachute: based on what it does when things go wrong.

But in a market where commission can be ~200% of annual premium paid upfront, and where the premium itself can be loaded higher to fund that commission, the default experience becomes: lots of selling, lots of bundling, lots of “for just £X more…” and not enough outcome-first planning.

Which is why the smartest move isn’t “get three quotes.”

It’s to walk in knowing what you’re trying to achieve, because the moment you hand over a budget before you’ve defined the outcome, you’re not being advised.

You’re being priced.

But protection is the part of the plan that stops everything else collapsing when life gets messy.

This week, we’re covering the core “personal protection” policies:

• Life insurance (term assurance)

• Income Protection

• Critical Illness Cover

• Whole of Life

…plus trusts, workplace vs personal cover, pension lump sum allowances, and inheritance tax (IHT) traps.

At the end we’ll add a note on business protection (which we’ll do properly in a separate piece).

1) The four pillars (and what each one is actually for)

Life insurance (term assurance)

This is the simplest: you pay a premium; if you die during the term, it pays a lump sum.

Best for: replacing income for a partner/children, clearing a mortgage, paying school fees, or just creating breathing space.

Key point: it only pays out if you die within the term.

Income Protection

Income Protection pays you a monthly income if you can’t work due to illness or injury. It’s designed to cover the boring-but-critical stuff: mortgage/rent, bills, groceries, childcare.

Most policies aim to replace a proportion of your income (commonly around 50–70%) because it’s meant to mirror your take-home pay rather than your gross salary.

Best for: almost everyone who relies on a salary (especially families with commitments).

Key point: it protects your earning power, which is usually your biggest financial asset.

Critical Illness Cover (CIC)

Critical Illness pays a lump sum if you’re diagnosed with a condition listed in the policy (certain cancers, heart attack, stroke, though definitions vary).

Best for: paying off debt, adapting your home, funding time off work, or creating options.

Key point: it’s about diagnosis severity and definition, not simply “being ill”.

Whole of Life

Whole of Life is life insurance that is intended to pay out whenever you die (so long as premiums are maintained and the policy remains in force under its terms).

Best for: planned liabilities at death, most commonly IHT planning (more on that below).

Key point: it’s often the “IHT bill funding tool” when you expect a tax liability and want liquidity for beneficiaries.

2) The Trust question: “in trust” vs “not in trust”

This is where a lot of good intentions get quietly sabotaged.

If a policy is not in trust:

• The payout usually goes to your estate

• That can mean delays (probate), and

• It can potentially become part of your estate for IHT purposes

If a policy is written in trust:

• The payout is generally outside your estate

• It can be paid faster (trustees can often act without waiting for probate)

• It can help keep the proceeds out of IHT calculations for your estate (subject to correct setup)

Most mainstream insurer guidance makes the “outside the estate” point very clearly, and HMRC’s own inheritance tax manuals go into how life policies interact with IHT law.

Wiseones rule of thumb: If your life/whole-of-life policy is designed to look after people after you’ve gone, you should at least explore trusts. It’s often the difference between “money available quickly” and “money stuck in admin”.

(Trusts aren’t one-size-fits-all, and you need them drafted and implemented correctly. But ignoring them is how simple plans become expensive problems.)

3) Workplace life cover and the Lump Sum & Death Benefit Allowance (LSDBA)

A lot of people have death-in-service cover through work (often 2x–4x salary, sometimes more). Great benefit. But the tax wrapper matters.

Since the Lifetime Allowance was abolished, we now have:

• Lump Sum Allowance (LSA): usually £268,275

• Lump Sum & Death Benefit Allowance (LSDBA): usually £1,073,100

Here’s the key: certain lump sum death benefits can count towards the LSDBA (particularly where the group life scheme is set up as a registered pension arrangement). LSDBA is now the reference point for tax-free lump sums including lump sum death benefits.

Registered vs Excepted group life schemes

Many employers use one of two structures:

A) Registered group life (often “inside pensions”)

• Lump sum death benefits can count towards the LSDBA

• If benefits exceed available allowances, tax can arise (marginal-rate taxation above the allowance)

B) Excepted group life (typically “outside pensions”)

• Often positioned specifically because benefits do not count towards the LSDBA

• BUT: excepted schemes sit in a trust framework that can be subject to IHT trust charges (entry/periodic/exit), although HMRC notes the 10-year charge generally only bites if there’s value sitting in the trust (e.g., undistributed proceeds)

Why you should care: If you’re a higher earner with big workplace death benefits, or you’ve accumulated large pension values, this is one of those “looks fine until it isn’t” areas.

4) IHT: where protection planning can help (and where it can backfire)

There’s a growing focus on IHT planning, and life/whole-of-life policies are often used to create cash at the right time for beneficiaries.

The wrong structure: a large life policy payout lands in the estate, increases estate value, potentially increases IHT exposure and delays access.

The right structure (often): policy written in trust, payout available to beneficiaries/trustees, typically outside the estate and less exposed to probate delays.

And yes, there’s a reason whole-of-life is having a moment in IHT conversations. The press has highlighted increased attention on “inheritance tax insurance” as people worry about future liabilities and liquidity.

5) Income Protection: workplace vs personal (and why “80% vs 60%” can be misleading)

This comes up constantly.

Workplace (Group Income Protection)

Employers often advertise something like 60%, 70%, even 80% of salary.

But here’s the catch: group income protection benefits are usually paid through payroll and taxed as income, because they replace income.

So an “80%” promise can feel more like ~60% in your bank once tax (and sometimes NI) is applied, depending on how it’s set up and your tax band.

Underwriting: group plans often have simplified underwriting or a “free cover” limit, so employees can get meaningful cover without medical questionnaires up front (until higher benefit levels are needed).

Portability: you generally lose it if you leave the employer.

Personal Income Protection

Personal policies are usually designed to pay a tax-free monthly benefit (because you pay premiums personally). That’s why insurers typically cap cover in the 50–70% range. It’s aiming for net-income replacement.

Underwriting: personal policies generally involve full underwriting up front (medical history, GP reports sometimes, etc.).

Portability: it’s yours. You keep it when you change jobs, go self-employed, or negotiate flexible working.

Wiseones way to compare them

Instead of “60% vs 80%”, compare:

• Net benefit in your bank account

• How long it pays for (to retirement age vs 2/5 years)

• Deferred period (how long until it starts paying)

• Definition of incapacity (own occupation vs any)

• Indexation (does it keep up with inflation?)

• What happens if you leave your job

6) Critical Illness: workplace vs personal, similar story, different risk

Group Critical Illness

Group CIC can be cost-effective and simple for employees. Aviva highlights that group policies often use simplified underwriting, making it easier to implement at scale.

But:

• Coverage levels are often linked to salary multiples

• Definitions and ancillary benefits can be more “standardised”

• You usually lose it if you leave the employer (unless there’s an option to convert/continue, which varies)

Personal Critical Illness

Personal CIC is usually:

• More configurable (term length, amounts, optional add-ons)

• Fully underwritten up front

• Portable

The key decision: do you want a lump sum safety net that stays in place regardless of employment?

7) PMI: the new darling (especially for parents)

Private Medical Insurance has become the benefit people talk about first now, and it’s not hard to see why: it’s about access and speed, not just money. I know it is not seen as a protection policy but it all comes under the same umbrella really. Protection for your health and wellbeing ahead of needing the other policies.

Recent reporting shows workplace health insurance claims hit record levels, driven by access pressures. Consumer coverage has also noted rising popularity. And surveys have ranked PMI as the top employer-funded benefit choice for many adults.

Workplace PMI

• Often broad access to private networks

• Usually includes family options (sometimes employee-paid)

• But: it’s typically a taxable benefit-in-kind if your employer pays the premium

• You’ll likely lose it if you leave, unless you can switch to a personal plan

Personal PMI

• You control the level of cover and excess

• You can choose underwriting style (full medical underwriting is often recommended for clarity on pre-existing conditions)

• You keep it regardless of job changes

Wiseones take: PMI is increasingly seen as “quality of life” protection, especially when childcare logistics and waiting times collide. PMI helps you access treatment & paying for care; it is the preventative steps to help you not need the other policies.

8) A simple “what should we prioritise?” ladder

If you’re trying to avoid buying everything at once, here’s a practical order that works for many families:

1. Income Protection (protect the monthly engine of the household)

2. Life Insurance (protect dependants and debts)

3. Critical Illness (create options with a lump sum)

4. PMI (access/speed, especially for families)

5. Whole of Life (usually when you’ve identified an IHT/liquidity need)

Then, once you’ve mapped it:

• Check workplace cover gaps

• Decide what must be portable

• Decide what should be in trust

• Watch the LSDBA interaction for bigger workplace death benefits

9) Quick checklist for the questions that actually matter

If you want to sense-check your setup, ask:

• If I’m off sick for 12 months, what pays the bills?

• Does my workplace cover vanish if I change jobs?

• Is my life policy written in trust (and are trustees appointed)?

• Do I know whether my employer’s death benefit is registered or excepted?

• If it’s registered, could it push me/beneficiaries into LSDBA tax?

• If it’s excepted, do trustees distribute promptly to avoid value lingering in trust?

• Does my PMI cost me tax each year through payroll (P11D)?

• Have we protected both death and survival scenarios?

Business personal protection (separately)

As promised: there are other protection policies that sit firmly in the business owner / director / partnership world. Shareholder protection, key person cover, relevant life, executive income protection, and more.

That deserves its own space, and we’ll cover it separately in March.

The Wiseones Summary

Protection isn’t the sexy part of financial planning. It doesn’t come with performance charts, dinner-party bragging rights, or that satisfying feeling of “I’ve nailed my investments.”

But it’s the part that makes the rest of the plan real.

Because the truth is simple: the biggest risk most families face isn’t volatility in the markets. It’s losing an income, losing a parent, or having health derail the next 10 years. When that happens, the question isn’t “what’s the best fund?” It’s “can we keep the lights on, the mortgage paid, and the household stable while life is turned upside down?”

Protection gives you time, choices, and control when you’d otherwise have none.

So even if it’s not a conversation you’re excited to have, it’s the one that quietly underwrites every other goal you care about: your home, your lifestyle, your children’s future, and your long-term wealth. The best plan isn’t the one with the fanciest projections. It’s the one that still works on a bad day.

The most important figure to understand is not the cash amount, but the percentage being charged.

If the percentage remains suitable and fair, a higher pound figure often simply reflects that your investments have grown. In other words, rising fees can be a sign of progress, not a problem, provided the charges remain appropriate and deliver value.

This is why good financial guidance focuses on value for money, not just headline cost.

Financial Adviser Charges

Initial Adviser Charges or Ad-hoc charges

Initial charges cover the work required to put a suitable plan in place, including:

• Understanding your objectives and circumstances

• Assessing risk and capacity for loss

• Research, recommendations, and suitability reports

• Structuring and implementing investments

These charges are agreed upfront and are designed to ensure advice is appropriate, documented, and defensible. These could also be a one off charge if you are not having ongoing advice.

Ongoing Adviser Charges

Ongoing adviser charges cover continued support and oversight, such as:

• Regular reviews and rebalancing

• Keeping advice suitable as your life changes

• Ongoing planning, guidance, and accountability

Crucially, ongoing charges also reflect the adviser’s long-term professional responsibility to the client.

Why Charges Exist at All

Charges are an inherent part of investing. Whether you invest directly or with professional support, costs exist for administration, management, regulation, and protection.

The aim is not to eliminate charges but to ensure they are:

• Transparent

• Proportionate

• Suitable for your needs

• Delivering clear value

Left unchecked, charges can erode returns over time. Managed properly, they support better decisions, stronger governance, and long-term outcomes.

Provider and Platform Charges (Including AMC)

Most investments are held with a provider or platform, particularly pensions and ISAs.

The Annual Management Charge (AMC) is the charge taken by the provider or platform. It typically covers:

• Administration and record keeping

• Governance and regulatory responsibilities

• Reporting and online access

In some arrangements, the AMC may include access to a default fund or a limited range of funds. However, this is not always the case, and many funds sit outside the AMC and carry their own charges.

Modern platforms may show this as a separate platform fee, but the purpose is the same: running and maintaining the investment wrapper.

Fund Charges: The Cost of Managing the Investment

Fund charges are separate from platform or AMC costs and relate to managing the underlying investments.

They pay for:

• Investment decision-making

• Asset selection and risk management

• Research and trading within the fund

These charges are usually shown as the Ongoing Charges Figure (OCF) and are deducted within the fund itself.

Actively managed funds generally cost more than passive funds, but higher charges do not guarantee better performance. Suitability and value are what matter.

Discretionary Fund Manager (DFM) Charges

Some investors use a Discretionary Fund Manager (DFM) to manage their portfolio on a day-to-day basis.

DFM charges cover:

• Portfolio construction and asset allocation

• Ongoing monitoring and rebalancing

• Risk management and tactical changes

These charges sit on top of platform and fund costs and should only apply where the service adds clear value.

Dealing Charges

Dealing charges may apply when investments are bought or sold, for example when switching funds or rebalancing a portfolio. These may be charged per transaction or built into platform pricing.

Frequent trading increases costs, which is why long-term, disciplined investing is usually more efficient.

FX (Foreign Exchange) Charges

When investing in overseas assets, foreign exchange charges can apply when money is converted into or out of another currency.

These charges are often small, but repeated conversions can have a cumulative impact on returns.

Bid–Offer Spread: A Hidden Cost

The bid–offer spread is the difference between the price you buy an investment at and the price you could sell it for immediately.

• Assets that usually have a spread:
  Shares, ETFs, investment trusts, and directly traded bonds.

• Assets that generally don’t:
  Open-ended funds (OEICs and unit trusts) and most workplace pension default funds, which are priced once per day at a single price.

Spreads are a normal part of markets, but they are still a real cost — particularly for less liquid or frequently traded assets.

Why Adviser Charges Are About More Than Time

Many people assume adviser fees are simply payment for time spent. In reality, they also cover:

• Regulatory compliance and oversight

• Professional indemnity insurance

• Record keeping and audit trails

• The client’s right to return many years later if advice is ever questioned

This protection exists for the client’s benefit and is a fundamental part of regulated financial advice under the FCA framework.

Consumer Duty and Value for Money

Under Consumer Duty, firms must ensure charges represent fair value, considering:

• The benefits received

• The quality of service

• The ongoing support and protection provided

A charge can look expensive in cash terms but still represent good value if the percentage is appropriate and the service delivered remains suitable.

The Wiseones View

At Wiseones, we believe charges are not the enemy. Poorly understood or unsuitable charges are.

The right focus is on:

• Percentages, not headlines

• Value, not just cost

• Long-term suitability, not short-term optics

When charges are transparent, fair, and aligned to real outcomes, they support better decisions and greater peace of mind. This is exactly what good financial advice and management should deliver.

Financial planning is not about predicting the future or picking the perfect investment. It is about making better decisions with the information you have today, understanding trade-offs, and avoiding mistakes that quietly compound over time.

This guide explains the foundations: the difference between guidance and advice, what financial planning really means, how advisers fit into the picture, and the wider areas, like family protection and estate planning that are often overlooked.

Financial Guidance vs Financial Advice

Let’s start with a distinction that underpins everything.

Financial Guidance

Financial guidance helps you understand your options. It explains how things work, what choices exist, and what questions you might want to ask.

Guidance can help you learn:

• How pensions work and how they’re taxed

• What different investment risks actually mean

• How ISAs differ from pensions

• What typically matters at different stages of life

What guidance does not do is tell you what you personally should do.

Because it’s general and educational, guidance is often free and carries no responsibility for outcomes. That is exactly what we at Wiseones are here to do.

In the UK, high-quality guidance is also available if you’re over 50 and approaching pension decisions through Pension Wise, which offers one-to-one guidance with a trained specialist.

Financial Advice

Financial advice is different. Advice is personal.

If someone considers your income, family, goals, pensions, savings, and tolerance for risk and then recommends a specific course of action. That is financial advice. It is regulated, comes with accountability, and is designed to protect consumers when decisions carry real consequences.

A simple way to think about it:

• Guidance explains

• Advice recommends

Wiseones focuses on the first, while recognising when the second can be extremely valuable.

Financial Planner vs Wealth Manager

These terms are often used interchangeably, which can cause confusion. While there is overlap, they are intended to serve different purposes.

Financial Planner

Financial planning is a big-picture process. It looks at how all parts of your financial life fit together over time.

Good financial planning considers:

• Income and spending

• Short- and long-term goals

• Pensions and retirement

• Investments

• Tax efficiency

• Protection for life’s “what ifs”

• Family and estate considerations

At its core, financial planning asks:
“What do I want my money to do for my life?”

Wealth Manager

Wealth management is usually narrower and more investment-focused. It tends to centre on managing portfolios and asset allocation, often for people with significant capital.

Wealth management can be part of a financial plan, but without planning, investments risk becoming disconnected from real-life goals.

A small caveat: the terms are often used interchangeably. Some wealth managers are also financial planners, and many financial planners provide wealth management services. As a rule of thumb, both will be regulated financial advisers, the difference is usually emphasis, not regulation.

What a Financial Adviser Actually Does

A financial adviser’s role is not to beat the market or sell products. At its best, it is about structure, clarity, and judgement.

A good adviser helps people:

• Prioritise competing goals

• Avoid emotional decisions during uncertainty

• Make sense of complex rules around tax and pensions

• Adjust plans as life changes

• Make sure the advice you get is suitable

In the UK, advisers who provide personal recommendations must be authorised and regulated by the Financial Conduct Authority, which provides consumer protections and accountability.

The Core Building Blocks of Financial Planning

1. Cash Flow Thinking

At the heart of planning is understanding cash flow over time, not just what you earn today, but how money moves through your life.

This helps answer questions like:

• What happens if I retire earlier or later?

• How much flexibility do I really have?

• What risks could derail my plans?

Clarity here often reduces anxiety more than any investment choice.

2. Investments in Context

Investments are tools, not goals.

What matters is:

• When you’ll need the money

• How much uncertainty you can tolerate

• Whether growth, income, or stability matters most

The “right” investment depends on timing and purpose, not headlines or past performance.

3. Understanding Risk (Emotionally, Not Just Mathematically)

Risk isn’t just numbers on a chart. It’s how you react when markets fall, plans change, or uncertainty appears. A good adviser will spend a lot of time explaining this.

A thoughtful approach to risk balances:

• What you need to achieve

• What you can afford to lose

• How you are likely to feel during downturns

When Paying for Advice Makes Sense

Advice is usually worth considering when:

• Decisions are complex or irreversible

• Pensions, tax, or inheritance are involved

• You want accountability, not just information

• The cost of getting it wrong is high

Guidance is often enough when:

• You’re learning the basics

• Exploring options

• Making lower-impact decisions

Wiseones exists to help you recognise the difference.

One-Off Fees vs Ongoing Advice Fees

How advice is paid for matters and it’s something many people don’t fully understand.

A one-off charge typically pays for a snapshot in time. It covers advice based on your circumstances as they are right now. This can be useful for a specific decision or review, but it does not adapt automatically as life, markets, or legislation change.

An ongoing fee pays for an ongoing service. This usually includes:

• Regular reviews

• Monitoring investments

• Adjusting plans as your family and circumstances change

• Ongoing assessment of suitability as rules and markets evolve

In simple terms:

• One-off advice answers “What should I do now?”

• Ongoing advice focuses on “Are we still on track, is this still suitable and does this still make sense?”

Neither is inherently right or wrong. The value depends on complexity, confidence, and how much ongoing support you want.

Looking Beyond Investments: Family, Protection, and Estate Planning

Financial decisions rarely affect just one person.

Protection Planning

Life insurance, critical illness cover, and income protection exist to protect lifestyles and families. These areas are often neglected because they’re uncomfortable to think about, yet they underpin long-term financial resilience.

Estate and Inheritance Planning

Estate planning is not just about tax. It’s about clarity, fairness, and reducing stress for those you leave behind.

This includes:

• Having an up-to-date will

• Reviewing pension beneficiaries

• Understanding how assets pass on death

• Considering lifetime gifts and longer-term planning

Pensions, in particular, can be powerful estate-planning tools when understood properly.

Trusted Sources of Free UK Guidance

If you want impartial, government-backed help:

• MoneyHelper – support with pensions, savings, debt, and money decisions

• Pension Wise – free guidance for over-50s approaching pension choices

A Wiseones Checklist: Things Worth Thinking About

• Do I know where my money is actually going?

• What decisions will matter most in the next 5–10 years?

• Do I understand my pensions well enough?

• What happens financially if life doesn’t go to plan?

• Have I thought beyond investments alone?

• Do I know when guidance is enough and when advice matters?

Wiseones Disclosure – Read This First

Wiseones is financial guidance providing general financial information and education only. Content published here is designed to improve understanding and awareness and does not constitute regulated financial advice or a personal recommendation.

All information is generic and does not take account of individual circumstances. Tax, pension, and legislative references are based on UK rules at the time of writing and may change in the future.

Investments can fall as well as rise in value. Past performance is not a reliable indicator of future results.

Where personal recommendations are required, readers should seek advice from a financial adviser authorised and regulated by the Financial Conduct Authority.

For free, impartial guidance, readers may also wish to visit MoneyHelper or Pension Wise.

Different investment vehicles exist for different purposes. Each has its own rules around tax, access, limits, and suitability. Used in the right order, they work together efficiently. Used in the wrong order, they create unnecessary tax, complexity, or risk.

The flowchart sets out a logical investment hierarchy, based on access age, tax efficiency, and purpose.

Different stages of life have different demands. This is a basic framework and does not include everything. Go from the top to the bottom

Each wrapper that is used for the investments has its own unique qualities. The pension and the ISA are the most common and well known. You can deep dive into each wrapper to see what you may need to make use of in your own life.