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PPM Financial Planning, The Needle Factory, British Mills, Albert Street, Bromsgrove (2026)

27/08/2026

PPM's 6️⃣0️⃣ Second Read!

An overdue thaw on mileage rates

One element of the Chancellor’s ‘Great British Summer Saving’ package was an increase in tax-free mileage rates.

There is a curious divide in the way in which HMRC deals with cars used by employees for business:

Company cars: These days, few employers that provide company cars also supply ‘free fuel’ (petrol or diesel) to their employees. The simple reason is that the income tax and national insurance (NI) levied on the benefit is excessive. In most instances, both the employer and employee are better off when:

• the employer reimburses the employee for the fuel used on business mileage; and
• the employee pays for personal use fuel.

For example, if you are a 40% taxpayer with a company BMW 320i, the tax you would pay for ‘free fuel’ in 2026/27 is nearly £4,100. Even at current prices, you could buy over 2,600 litres of petrol for that amount of money.

HMRC publishes ‘advisory fuel rates’ for employers who compensate employees for fuel purchased for business travel in their company cars. The rates are updated quarterly and cover three different engine sizes for petrol, diesel and liquefied petroleum gas (LPG) cars, as well as electric cars either charged at home or using a public charger. Provided your employer pays no more than the advisory rate, there is no personal tax or NI liability.

One current quirk is that you have no taxable benefit for private mileage if a company electric car is charged at the employer’s expense (e.g., at the office).

Personally owned cars: The treatment for compensation for business mileage in an employee’s own car is much less sophisticated, starting with no distinction for engine size or fuel. Until Rachel Reeves revealed a rate change as part of her recent cost-of-living package, since April 2011 the maximum tax-free rates had been:

• First 10,000 business miles per tax year: 45p a mile
• Any additional business mileage in the tax year: 25p a mile
• Per passenger addition: 5p a mile

The Chancellor increased the main rate to 55p a mile, retrospective to 6 April 2026. The 22.2% (10p) rise compares with consumer price index-inflation over the past 15 years of 52.5%.

While the rate increase is welcome and long overdue, it is just another example of how governments of all hues rely on inflation to boost the Treasury’s coffers.

Tax treatment varies according to individual circumstances and is subject to change.

The Financial Conduct Authority does not regulate tax advice.

20/08/2026

PPM's 6️⃣0️⃣ Second Read!

Wealth tax comes around again

Talk of a wealth tax has returned as another difficult Autumn Budget looms.

In the wake of the Covid-19 pandemic, there was much talk of a wealth tax to fill the hole that had been created in the government’s coffers. At the end of 2020, a Wealth Tax Commission, independent of the government, published a report drawing on extensive tax, legal and economic research. The Commission deliberately avoided making any specific recommendations, but the variant that received the most attention was:

• A 5% one-off tax would apply to individual wealth exceeding £500,000. An annual tax was considered but dismissed as administratively difficult and costly.
• The definition of wealth had no exceptions – it included homes, businesses and pensions, wherever located.
• While the tax was a one-off, there would be an option to pay it in interest-bearing instalments over five years.

The Commission calculated that, at the time, such a structure would produce £260 billion of tax – £52 billion a year plus interest. To put that into perspective, total government debt in April 2026 was £2,943 billion (and £2,155 billion at the end of 2020/21).

The proposals of the Wealth Tax Commission were not taken up by Rishi Sunak, either as Chancellor or Prime Minister. His chosen tax-raising measures were increased corporation tax and freezes in tax bands and allowances, which his successors have turned into something close to permafrost.

Currently, the Green Party favours an annual wealth tax of 1% for assets above £10 million, rising to 2% on assets above £2 billion. Wes Streeting has proposed a “wealth tax that works”, by which he means aligning capital gains tax (CGT) rates with income tax. How much either ‘wealth tax’ would raise is uncertain because:

• There is no detailed data on individual wealth. The Green Party has suggested their idea could raise £15 billion a year, but commentators have questioned the figure.
• Much depends on how a small number of extremely wealthy people will react to any change. For example, the most recent figures for CGT show that in 2023/24 just 10,000 people (2.8% of CGT taxpayers) accounted for 64% of CGT paid.

Planning for a tax or tax change that does not exist is generally to be avoided. It is better to concentrate on the tax rules as they are rather than end up making a pre-emptive mistake. For proof, look at those people who rushed to draw their pension lump sum before the last two Budgets.

Tax treatment varies according to individual circumstances and is subject to change.

The Financial Conduct Authority does not regulate tax advice.

13/08/2026

PPM's 6️⃣0️⃣ Second Read!

Writing your will? Remember to choose your executors with care

HMRC has published fresh information on the mechanics of collecting inheritance tax (IHT) on pensions.

In the October 2024 Budget, the Chancellor announced that most pension death benefits would become potentially liable for IHT from 6 April 2027. However, it was not until March 2026 that the relevant primary legislation was passed into law. Even that is not the end of the story, as HMRC now must pass regulations to make the new rules work, then consult on and produce “detailed guidance and other supporting materials”. The final elements are not due until next spring, uncomfortably close to the April 2027 start date.

The protracted process reflects the complexities in developing a system that works for:

• The personal representatives (PRs) – normally the will-appointed executors,
• The pension scheme’s administrators and trustees,
• The beneficiaries of the pension death benefits, lump sum and/or income, and
• HMRC, which could be demanding both IHT and income tax on the pension benefits.

At the end of May, HMRC issued an extensive ‘technical note’ setting out its view of the current state of play. This highlighted the significant new responsibilities placed on PRs:

IHT liability: The PRs will be primarily responsible for reporting on and paying any IHT due on pension benefits. However, once the pension scheme determines that an individual is entitled to a lump sum or a pension, that beneficiary also becomes jointly and severally liable. This means that if the PRs do not pay any IHT due, the beneficiary will have to.

Withholding funds: As anyone who has experienced estate administration will know, it takes time to track down the deceased’s assets and their value at the date of death. To help cover this inevitable delay, PRs will be able to request that a pension scheme withholds up to 50% of a beneficiary’s entitlement as a reserve against a potential IHT liability. The maximum withholding period is 15 months. However, a withholding notice cannot apply to beneficiaries classed as exempt (mainly surviving spouses and civil partners) nor to a limited range of excluded benefits (such as dependants’ scheme pensions, joint life annuities and death in service payments).

The new duties for PRs mean that you might wish to review who you have appointed as your executors. If you have no will, then the changes to IHT have given you another reason for making one.

Tax treatment varies according to individual circumstances and is subject to change.

The Financial Conduct Authority does not regulate wills or estate planning advice.

06/08/2026

PPM's 6️⃣0️⃣ Second Read!

A ‘comfortable’ retirement for only 9% – what the headlines mean

How true are recent media headlines that fewer than one in ten will enjoy a comfortable retirement?

As meteorological summer started with heavy rain, a further dampener was put on proceedings by a storm of media headlines thundering that only 9% of people could look forward to a ‘comfortable’ retirement. As is often the case with shock-horror statistics, the reality is rather more nuanced.

The gloomy coverage was prompted by a Retirement Living Standards (RLS) report from Pensions UK, a trade group for the retirement savings industry. The RLS report, which has been published each year since 2021, is an attempt to show the costs of retirement (excluding housing costs) for single-person and two-person households based on three different standards of living:

• Minimum: defined as “Covers all your needs, with some left over for fun”,
• Moderate: defined as “More financial security and flexibility”, and
• Comfortable: defined as “More financial freedom and some luxuries”.

The headlines related to the top-tier category. An alternative banner of ‘Over four in five on target to reach a Minimum standard of living in retirement’ would have been equally accurate, but less attention-grabbing. The reason for the large gap between the Minimum and Comfortable groups becomes obvious when you examine the yearly costs assessed by Pensions UK, in conjunction with Loughborough University:

These amounts exclude housing costs, meaning that if you rent or still have a mortgage to pay in retirement, you would need more.

Pensions UK calculates that for a single person living outside London to achieve the Comfortable level requires a pre-tax income of £54,720 – more than enough to make them a higher-rate taxpayer anywhere in the UK. For a two-person household, Pensions UK puts the gross income needed as £36,045 each (£72,090 in total).

The State pension in 2026/27 is £12,548 a year, so reaching the Comfortable tier requires a significant amount of private pension and/or investment income. But before you think you can make do with the Minimum, remember that summer rain and the fact that the bottom-rung retirement level assumes only a single week’s UK holiday.

The value of the investment and the income from it can fall as well as rise and investors may not get back what they originally invested, even taking into account the tax benefits.

30/07/2026

PPM's 6️⃣0️⃣ Second Read!

Pensions Commission Mk II: a warning on retirement saving

The new Pensions Commission has issued an important interim report that could signal a stark warning for pension planning.

The first Pensions Commission was established back in 2002 and over the following four years developed a range of proposals covering:

• The creation of a low-cost occupational pension scheme into which individuals would be automatically enrolled;
• Reforms to the State pension system to reduce means-testing; and
• Systematic increases to the State pension age (SPA) to reflect rising life expectancy over time.

Those recommendations have since been largely implemented, changing the nature of retirement provision for millions of people.

Last summer, the government announced the launch of a second Pensions Commission, tasked with examining what changes are needed to the UK’s pension system in an economic and employment environment, which is significantly different from the pre-iPhone era of the Pensions Commission Mk 1. As is often the case with major government commissions – including the original Pensions Commission – there was a suspicion that the government was using an arm’s-length group to de-politicise a difficult message about costs and benefits.

The new Pensions Commission has just published a 190-page interim report, ahead of making final recommendations next year. The main points the interim report makes are:
• The controversial triple lock basis for State pension increases has brought the full new State pension to around 30% of median full-time pay, a target of the first Pensions Commission. By implication, increases could now slow down.
• While the flat-rate State pension plays a foundational role in retirement, more is needed from earnings-linked private pension savings to help people achieve a decent standard of living after they stop work.
• Although the UK’s SPA is not low by international standards, the UK is an early retiring nation, with an average age for leaving the labour market lower than many international counterparts.
• Using an updated version of the original Pensions Commission’s target replacement rates for retirement income, around 43% of the current working-age population (15 million people) are under-saving. ‘Generation X’ (born 1965–1980) are projected to have the worst outcomes, a finding echoed in other recent research.
• Only 17% of the self-employed currently save into a pension, a proportion which falls to just 4% for those who earn only from self-employment.

The Commission’s likely main conclusion in 2027 will be that a phased increase is needed to the minimum contributions for auto-enrolled pensions. If you do not want to fall into the 43% of under-savers, think about raising your own contributions now.

The value of the investment and the income from it can fall as well as rise and investors may not get back what they originally invested.

23/07/2026

PPM's 6️⃣0️⃣ Second Read!

How long am I going to live?

The Office for National Statistics (ONS) has thought again about our life expectancy calculations.

Life expectancy calculations matter, and not just to answer that perennial question. Any long-term economic projections, such as the scary ones that the Office for Budget Responsibility (OBR) produces each year, have life expectancy as a key component. However, life expectancy is only one of the demographic factors used, and others, such as the fertility rate (about 1.4 children per woman currently) and the net migration rate, are less easy to estimate in the longer term.

The ONS recently revised projections for UK life expectancy, using past and projected mortality data from its 2024-based national population projections. Normally, the ONS issues updates every other year and the latest are little different from their immediate 2022 predecessors. However, an examination of the 2014-basis projections reveals a surprising change. It is well illustrated in the graph below, which shows projected life expectancy for men and women who reached or will reach the age of 65 from 2020 onwards.

Life expectancy on the 2024 basis for a woman aged 65 in 2026 has fallen by 1.8 years compared with the 2014 basis and by 2.4 years for her male counterpart. Make no mistake, life expectancy is still rising over time – hence the upward sloping lines – but the ONS has significantly reduced its estimate of the pace of improvement. That could have an impact on the government’s imminent decision about when to increase the State pension age to 68; it is currently in the process of moving to 67 by April 2028.

If you want to see the ONS projection for your age, then the ONS has a dedicated calculator. Don’t just look at the headline number the calculator produces but scroll down the page to see your life expectancy graph and chances of living to 90 or 100. At ages above 50, men have at least a one-in-three chance of reaching age 90, while for women the odds are nearly even. The question then should be: ‘Is your pension going to last that long?’

17/07/2026

Celebrating 20 Years...

A New Chapter for PPM Financial Planning🎉

16/07/2026

PPM's 6️⃣0️⃣ Second Read!

Reinventing the State pension

Could the State pension be replaced with a more flexible income scheme? A new report thinks it would be possible.

There are now 12.6 million people over State pension age (SPA), meaning that government expenditure on the State pension is about 5% of gross domestic product (GDP), second only in cost to the health service. Work carried out by the Office for Budget Responsibility (OBR) projects that by 2070, the pension outlay will rise by over half, as pensioner numbers increase to more than 18 million.

Politicians have long been aware of this rising bill, but their manifestos have suggested the opposite. No political party wants to be the first to promise less generous benefits for pensioners; a slice of the electorate with a greater than average propensity to vote. So, it is perhaps appropriate that the think tank of a former politician, Tony Blair, should propose a radical solution.

The Tony Blair Institute (TBI) wants to scrap the State pension and replace it with a Lifespan Fund from 2030. Three major reforms would be bundled together in the move, according to the TBI:

Triple lock replacement: Instead of payments rising each year by the greater of earnings growth, price inflation and 2.5%, increases would follow a smoothed earnings link, keeping pensions aligned with earnings over the long term, while ensuring their value never falls in real terms. This approach mirrors a proposal made by the Institute for Fiscal Studies.

Payment flexibility: This provides an option to bring forward some State pension entitlement during a working life, e.g., on unemployment or retraining, and then rebuild it on return to work by paying higher contributions. The TBI suggests that this “would effectively be a loan from an individual’s own future pension”.

End a fixed State pension age (SPA): Instead of one SPA for all, the aim would be to create a uniform 20-year entitlement. In practice, within limits, you could choose when to retire and then receive a personalised State pension payment “calculated on an actuarially fair basis”, using information about your age and health circumstances.

The TBI proposals have received much criticism on grounds of complexity, practicality, privacy and political reality. However, their main justification – spiralling government cost – has not been challenged. If nothing else, the TBI has underlined the dangers of relying solely on the State pension in retirement.

09/07/2026

PPM's 6️⃣0️⃣ Second Read!

What goes into the tax cocktail?

New data from HMRC shows how much the government relies on just four taxes.

The Labour Party went into the 2024 general election with pledges on four major taxes in its manifesto:

• “Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.”

• “Labour will cap corporation tax at the current level of 25 per cent, the lowest in the G7, for the entire parliament…”

At the time, the tax promises were seen as politically necessary to counter suggestions that a Keir Starmer government would operate tax-and-spend policies. However, the quadruple tax lock was widely criticised by many economists for the half decade constraint that it placed on the Chancellor in uncertain times.

Fast forward about two years from the publication of that manifesto, and the economists have been vindicated. New data from HMRC, published at the end of April, showed that in the past tax year, income tax, national insurance (NI), VAT and corporation tax accounted for 86% of all tax receipts. That is not surprising – as the graph shows, over the past ten years, the quartet account for more than £4 out of every £5 tax collected.

Despite the manifesto promise, income tax receipts rose by 9% in 2025/26 from the previous year – faster than the growth in prices or the UK economy. That outpacing is due to the freezing of the personal allowance and tax thresholds, dragging more people into tax and more existing taxpayers into higher tax bands.

NI receipts grew even faster – 16.3% up – thanks to the manifesto-challenging changes to the level of employer’s NI contributions. Together, NI and income tax – the two taxes on earnings – accounted for 56.5% of all that flowed into HMRC’s coffers.

The jumps in taxes on earnings contrasted with the growth in the third largest source of tax, VAT, which grew by 5.7%. Corporation tax had even slower growth (4.6%), but that might be because employers claimed more tax relief on those higher NI contributions.

The dominance of the big four manifesto-locked taxes explains why the Chancellor has made so many tweaks to the overall system to raise additional revenue. Be prepared: it is beginning to look like that process will be repeated at the next Budget.

Tax treatment varies according to individual circumstances and is subject to change.

The Financial Conduct Authority does not regulate tax advice.

07/07/2026

Happy Birthday to our Financial Planner Stuart Ashton.

PPM Financial Planning

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