Newsletter: April 2026
Post-budget reflections
In October, I outlined some of the rumours surrounding the Chancellor’s upcoming budget in November, and whilst there was a lot of gossip, it largely proved to be just that, noisy speculation with an unspectacular reality. Indeed, we were even told the Chancellor’s plans before she stood up in the House of Commons, as the OBR (Office for Budget Responsibility) irresponsibly released her statement due to a “technical error”. What a circus!
The backdrop for Mrs Reeves was a downgrade of the UK’s growth prospects. 2026 forecasts for GDP (the size of our economy) were down from 1.9% to 1.4%, with 2027, 2028 and 2029 all down to 1.5% from either 1.7% or 1.8%. These forecasts are not what the Chancellor wanted to hear, and don’t make her life easy, however, it hasn’t stopped her increasing taxes whilst trying not to affect “working people”.
Once again, the 25% Tax-Free Cash in Pensions was heavily rumoured to be changing or even abolished - it wasn’t and is hopefully here to stay. Nor did Income Taxes change, or even a potential Wealth Tax get introduced – perhaps they’re waiting for the Greens to implement this if the next election results in a Labour and Green Party coalition? So, what did change? The two-child benefit cap was scrapped from April 2026, the National Living Wage was increased for workers over the age of 21, Dividend Income taxes were increased, and Property Income and Savings Taxes are to be increased from April 2027.
There were longer-term announcements too, such as a new mileage-based charge on electric vehicles and Council Tax surcharges in 2028, a cap on National Insurance relief on pension contributions through ‘Salary Sacrifice’ announced for 2029, and increases in Fuel Duty each quarter from September 2026.
The bottom line is, if our economy doesn’t grow, the government needs more money each year to fund its spending plans. That money either comes from us, or borrowing, and borrowing is becoming increasingly expensive. In fact, the cost of borrowing has now exceeded that after Liz Truss’ ‘mini budget’ in September 2022 and is at its highest level since the depths of the global financial crisis in 2008! Furthermore, the OBR now predict that borrowing from 2025/26 to 2028/29 will be around £16billion pa higher, on average, than its March 2025 forecast, and Mrs Reeves hasn’t helped this.
It all sounds very negative, and the media have not missed their opportunity to ‘stick the knife in’.
A recent Telegraph article has exposed that “Britain’s welfare bill exceeds income tax revenue”. Whilst this is slightly misleading, in that Income Tax only makes up approximately 26.7% of all tax receipts (according to the OBR), it still paints a demotivating picture for those seeing their taxes increase, whilst struggling with the cost-of-living crisis. To add to this, think tank, ‘The Centre for Social Justice’, modelled at the end of 2025, that to match the benefits of a jobless family with three children, a working family would need to earn approximately £71,000 pa before tax.
Again, this is a demotivating picture for many and is perhaps reflected in the latest polls which see Labour struggling to match either Reform or the Green party. The local elections in May could see both sides of the political spectrum rejecting the current government! We will keep our eyes peeled for any eventually, and of course, report back to you should there be anything in need of urgent action.
On wider shores
Whilst focussing on 2026, we can’t avoid noting that this year started in uncertainty with Mr Trump once again creating front page geopolitical news with his intervention in Venezuela, however, markets didn’t react. Since then, though, the ongoing war in the Middle East has created a great deal of volatility. It is impossible to predict this conflict, with news cycles reacting quickly to Mr Trump and Iran’s war of words, never mind the war on the ground. One minute he says there is a ceasefire, then suddenly global trade routes are shut by Iran with bombs once again flying over Lebanon and the Gulf countries. The next moment, it’s Trump’s turn to block the Strait of Hormuz and is arguing with Pope Leo XIV.
This has increased oil prices – something which has already been passed on to us. Higher oil prices affect everything from petrol at the pump to the cost of goods in shops, and companies reliant on fuel react fast. In March alone, the cost of petrol in the UK went from 132.14p per litre to 148.78p per litre, then by 6th April, it was even higher still at 154.65p per litre. I’m sure you’ve already noticed this increase, which comes at a bad time with the current struggles in the UK I have already outlined, plus our energy uncertainty with Mr Miliband continuing his efforts to push for net-zero, refusing to drill or frack.
Whilst markets remain volatile to the ongoing crises, we must take this in the context of the last few years, and we’ve almost become used to volatility and bad front-page news. I feel like a broken record in saying this, but from COVID-19 to Russia/Ukraine, High Inflation periods, October 7th attacks, and Trump’s Tariffs, we have had to deal with a great deal of pressure, and the resilience shown over this period can be seen in the returns provided by markets.
The Bigger Picture: Five Years of Growth
Where any long-term investments are concerned, it is important to look at the big picture so that we can see how far we’ve come. I, therefore, thought it would be helpful to highlight the best-known UK market indicator, the FTSE100 (Financial Times Stock Exchange), and how it has performed.
The FTSE100 is up 53.81% since April 2021, and a huge 34.44% in just the last year!
Despite the doom and gloom around politics, wars, and in the media, investments have given us a great deal to be positive about and good fund managers have taken advantage.
Over the past five years, well-diversified investment portfolios have delivered strong, positive returns. Stock markets across the US, UK, and Europe have all performed well, and investors who stayed invested through that period have been rewarded. Furthermore, those diversified across even wider global markets such as across Asia and South America have been rewarded too.
This is why we recommend specialist Investment Managers who create portfolios which hold a hugely diversified range of underlying investments. After all, investing is a long-term journey, and any good fund manager ensures that they are prepared for any eventuality, can react quickly to short-term changes, and positioned well for the long-term.
We are very happy with the companies we recommend; they have consistently delivered us and our clients strong, benchmark-beating performance whilst maintaining competitive charging structures. However, we maintain relationships with them which are focussed on avoiding complacency; their mission to deliver is constant in the knowledge that we monitor them to ensure they are producing the service and returns both you and we expect to see.
Should You Be Worried?
It is completely natural to feel uneasy when markets fall, however, history tells us that periods like this are a normal part of investing - and that patient investors are typically rewarded. I hope the charts provided in your meetings with your advisers show that the progress made over the last 5 years remains firmly in place in spite of a short-term dip caused by the current Middle Eastern volatility.
Businesses both at home and abroad are still generating profits, employment levels remain relatively stable, and technology continues to push forward in innovation. These are the things that are really driving investment returns and will continue to do so long-term.
Our focus remains firmly on the long term: keeping your investments well spread across different areas, holding quality assets, and avoiding knee-jerk reactions to short-term news.
In truth, now is a great time to use your allowances. As always, 6th April marks the start of a new tax year (2026/27) and a great time to revisit financial goals. Your annual allowances for ISAs and pensions have now been reset, giving you a fresh opportunity to shelter your money into tax-efficient investments. Being proactive and doing so at the start of each tax year can take the weight off, but also represents an investment opportunity, giving your plans longer to realise growth potential versus completing them last minute next March.
ISA Allowance - £20,000
Every adult can save up to £20,000 into either a Stocks & Shares or Cash ISA (Individual Savings Account) in this tax year. However, this is the last tax year for under 65’s to place a full £20,000 into a Cash ISA. The government announced in November that the Cash ISA limit will reduce to £12,000 for under 65’s from 6th April 2027, and should you wish to utilise the remaining £8,000 of the allowance it must be done through Stocks & Shares ISAs.
Whilst we readily recommend utilising Stocks & Shares ISAs for long-term growth, Cash ISAs are a great way to minimise personal savings taxes on your cash reserves. Any money held inside ISAs remains free to grow without potential Income and/or Capital Gains Tax (CGT) implications, meaning they remain one of the simplest and most effective ways to protect your savings from tax.
ISA Type Allowance:
Stocks & Shares ISA
£20,000 (2026/27)
£20,000 (2027/28)
Cash ISA
£20,000 (2026/27)
£12,000 (2027/28)
Pension Allowance - Up to £60,000
Once again, you can contribute up to £60,000 into a pension this tax year and receive tax relief on those contributions. This means the government effectively tops up your pension contributions up to £60,000 - basic rate relief means 20% is added automatically, and higher rate taxpayers can claim back even more. This was something else facing rumours around last year’s budget which didn’t change.
Pension contributions are one of the most tax-efficient things you can do. If you are not already making the most of this or wish to make use of allowances earlier in the tax year, then now is a great time to contact us. Using these allowances early in the tax year means your money has longer to grow, even spreading contributions throughout the year may be better than leaving it until the last minute.
Annual Pension Allowance:
£60,000 Or 100% of earnings if lower
Tax Relief (Basic Rate) - 20%, but Higher Rate taxpayers may claim more
What Happens Next?
Nobody can predict exactly when current uncertainty will ease, but markets have a long track record of recovering once the picture becomes clearer. Some of the best days in markets happen during and just after difficult periods, which is why staying invested matters.
We are keeping a close eye on developments and will continue to ensure your investments are positioned appropriately for the long term. If you have any questions about anything else covered in this letter, please do not hesitate to get in touch. We are always happy to talk things through.