Financial Planning

When designing the CDI portfolio range, the FAS Investment Committee aim to provide a diverse range of strategies designed to fit the varied needs of our clients; however, market conditions themselves can sometimes dictate an increased demand for a particular portfolio solution.

This was the case at the end of 2020, when global financial markets were grappling with the impact of the Covid-19 pandemic. At this time, central banks around the World cut interest rates aggressively to combat the economic downturn, with the Bank of England reducing the base rate to just 0.1% in March 2020. Savers holding significant cash deposits, or those who use cash interest to boost other income sources, were left facing the choice of either accepting the ultra-low levels of interest from cash, or seeking alternative options. This led to increased demand for a lower risk discretionary mandate, designed to provide attractive returns when compared to cash deposit, and led to the inception of the CDI Cautious portfolio in January 2021.

CDI Cautious in detail

The CDI Cautious portfolio primarily invests in fixed income investments, focusing on short-dated Corporate and Government bonds, together with Money Market deposits, an allocation to Global and UK equities and alternative investments. The aim is to generate an attractive level of natural income, together with some capital appreciation over time, whilst maintaining low levels of volatility. As with all CDI portfolio mandates, the FAS Investment Committee are free to allocate the portfolio across different geographic sectors or regions; however, the portfolio mandate dictates that no more than 20% of the portfolio can be held in equities.

Currently, almost two-thirds of the portfolio is invested in fixed income, with most of this allocation investing in global, rather than UK, bonds. In line with the current strategy adopted by the FAS Investment Committee across the CDI range, the bond allocation is focused on short-duration bonds, where the period to redemption is five years or less. This approach aims to minimise the impact of inflation risk, whilst still capturing the attractive income yields available. Given the risk profile of the CDI Cautious portfolio, the fixed interest allocations are almost entirely held in investment grade bonds, with only a small allocation to high yield issues.

Currently, over 16% of the portfolio is held in cash, with most of this allocation held in Money Market funds. These funds aim to preserve capital and produce modest returns by investing in short-term corporate and government debt, certificates of deposits and other short term debt instruments, and typically offer slightly better returns (net of fees) than overnight cash deposit rates.

Whilst the maximum allocation to equities is 20%, the portfolio currently holds just 14% in equities, spread geographically across the UK, North American, European and Asia Pacific regions. As active fund managers can focus their portfolios on more defensive and value positions, the FAS Investment Committee prefer to allocate a higher weight to actively managed funds in this portfolio, with just over one-quarter of the current equity allocation held in passive funds. Despite the higher allocation to active funds, the portfolio carries a competitive ongoing fund charge of just 0.32% per annum.

Portfolio Performance

Measuring performance over the last three years to 12^th May 2026, the CDI Cautious portfolio (shown in black on the graph below) achieved a total return of 25%, which is comfortably above the returns achieved by the sector benchmark, the IA Mixed Investment Sector 0% to 35% shares (shown in pink). Also shown on the graph below is the Bank of England Base Rate (green line) which represents cash returns over the same period.

Given the investment approach and objectives of the CDI Cautious portfolio, the FAS Investment Committee pay particular attention to the impact any changes to the portfolio have on portfolio volatility, and maximum drawdown. As shown in the graph below, the CDI Cautious portfolio has produced strong risk adjusted returns, not only outperforming the representative benchmark over the last three years but keeping the level of volatility around 25% less than the volatility displayed by the benchmark over this period.

Portfolio appeal

The CDI Cautious portfolio was designed to meet the needs of those seeking returns that are superior to those available on cash deposit, without being exposed to significant levels of investment risk. Given the asset allocation, the portfolio maintains an attractive natural income yield, currently yielding 4.42% per annum.

The appeal of this portfolio is not, however, confined to investors with a lower appetite for investment risk. The portfolio also lends itself well as a smaller satellite portfolio to a more balanced mainstream core portfolio for specific client circumstances. For example, an investor heading towards retirement may wish to carve out a section of a larger pension portfolio into assets with lower volatility, which will be drawn in the short to medium term through Flexi-Access Drawdown.

The CDI Cautious portfolio may also be an ideal option for corporate investments, where directors look to keep surplus funds held within a business productive, and for Trusts, where Trustees seek an attractive level of income for a life interest beneficiary whilst limiting portfolio volatility.

Time for a fresh approach

If you hold surplus savings, that you wish to keep productive without taking excessive risk, or wish to diversify part of a larger portfolio into lower risk assets, then the CDI Cautious portfolio may be an option to consider. Likewise, defensively minded investors who hold portfolios through alternative managers, should regularly review both the performance of their investments, but also the level of risk to which they are exposed. Speak to one of the team to start a conversation about the CDI Cautious portfolio, or any of the portfolios in the range.

The objective of many investment strategies is to focus on capital growth. Whilst this may well be appropriate for those accumulating pension savings or investing for the next generation, there is often an increased need for additional income to supplement pension income as we move into later life.

Retirees are not the only cohort where income production carries greater importance. Trustees of interest in possession trusts need to ensure that life tenants receive an attractive and consistent level of income. Higher levels of natural income can also allow greater gifts out of surplus income for Inheritance Tax (IHT) planning. Finally, individuals privately funding long term care could narrow the shortfall between pension income and care fees by selecting high yielding investments.

The CDI portfolio range includes four portfolios designed to provide investors with an attractive and consistent level of income. Whilst the portfolio income yield is a key consideration during the portfolio construction phase, the FAS Investment Committee also aim to ensure that capital growth is also targeted, as a hedge against inflation. Furthermore, as capital values increase over time, additional income can be generated from the higher capital value.

Our risk-rated options

Our advisers regularly review discretionary managed portfolios offered by alternative managers that are aimed at investors seeking income. All too often, these portfolios offer disappointing levels of natural income. The three core income options offered within the CDI portfolio range have been specifically designed to meet the needs of investors seeking a balance between capital appreciation and providing an attractive and sustainable income yield.

• CDI Defensive Income takes a low-to-medium risk approach, investing up to 35% of the portfolio in global equities. The balance of the portfolio is invested in global fixed interest securities, cash and alternative investments, to provide good levels of diversification. As a result, the portfolio has historically only displayed moderate levels of volatility. The current income yield offered by this portfolio is 4.02% per annum.

• CDI Balanced Income takes the middle ground between risk and reward, investing up to 65% in equities, and is suitable for investors comfortable with medium levels of risk and volatility. Given the increased allocation to equities, this portfolio offers a greater balance between capital appreciation and income production than CDI Defensive Income. Nonetheless, the portfolio offers an attractive yield, which is currently 3.44% per annum.
• CDI Progressive Income has a higher allocation to equities than CDI Balanced Income, allocating up to 85% in equities. This provides additional scope for capital appreciation, whilst maintaining an attractive income yield, and is suitable for those investors who are comfortable taking a medium-to-high level of investment risk. Despite the greater allocation to equities, the portfolio currently provides an attractive income yield of 3.27% per annum.

The consistent and disciplined approach adopted by the FAS Investment Committee considers the levels of volatility within every CDI portfolio at each quarterly review stage, to ensure that they remain consistent with the levels displayed by the benchmark. When undertaking the quarterly portfolio review of the CDI Income models, the Investment Committee take additional care to consider the impact of any changes on the investment portfolio income yield.

The three core Income portfolios continue to outperform the representative IA sector benchmarks over the short, medium and longer term. The table below demonstrates the total return (i.e. capital growth and income) achieved over the last 1, 3 and 5 years.

Performance data to 5^th May 2026 Source: FE Analytics May 2026 – figures are net of fund charges, but do not include adviser or platform charges.

CDI High Income

Changes to the way pensions are treated for IHT purposes are leading many to reconsider their financial plans and making gifts out of surplus income is one method of reducing a potential IHT liability. As a result, we have seen growing demand for a discretionary managed portfolio that offers an even higher level of natural income.

The CDI High Income portfolio, which was introduced last year, holds around 40% in equities, with the balance held in fixed income, and contains an increased allocation to high yield bonds than in the core risk-rated mandates. The aim of the portfolio is to generate an income yield that comfortably exceeds the yield on the other three CDI income portfolios. To achieve this, the portfolio composition is naturally focused more closely on income production, although the portfolio also retains prospects for capital appreciation over the longer term. The current portfolio yield is 4.92% per annum.

Consistency of income

When investing to generate natural income, investors need to be mindful that the amount of income paid will differ from month to month. This is unavoidable, as investment funds offer different income payment schedules, with some paying monthly, others quarterly and a smaller number pay income twice a year. Furthermore, as the composition of the underlying portfolio within any fund will change over time, so will the level of income generated.

Despite these challenges, the FAS Investment Committee aim to keep the level of natural income paid by each of the four income portfolios consistent from quarter to quarter, so that investors can estimate their likely income with a degree of accuracy. The graph below shows the historic income yields generated by CDI Defensive Income, CDI Balanced Income and CDI Progressive Income since 2024, and the CDI High Income portfolio since it was introduced last autumn. As demonstrated, each of the portfolios has maintained a consistent level of natural income from quarter-to-quarter.

If you are disappointed by the level of natural income yield you receive from a portfolio designed to generate income, it may be a good time to review the investment approach adopted. Our independent advisers can undertake an impartial performance review of an existing portfolio and provide an unbiased assessment of performance against the CDI portfolio range.

Source: FE Analytics May 2026

In the weeks ahead, the FAS Investment Committee will produce a series of articles giving further insight into the investment process behind the CDI range of portfolios, focusing on asset allocation, performance and looking at how the range of portfolios meets the differing needs, circumstances, and objectives of our clients. In the first of the series, we go under the bonnet of the CDI Balanced Growth portfolio.

FAS Investment Committee process

Investment markets have experienced significant changes over the 35 years since the inception of FAS; however, in the face of changing market trends, which has driven many to adopt a passive-only approach, we remain firm advocates of the benefits of conviction-based investment. The FAS Investment Committee remain steadfast to these core principles that have guided our investment fund selection for more than three decades, and this investment process forms the foundation of the CDI range of discretionary managed portfolios.

When constructing the CDI portfolios, the Investment Committee use the independent status that FAS enjoys, to consider fund solutions from across the whole of the market. All funds available to UK investors are fed through a quantitative screening process every quarter, which continues to be refined and adjusted. Those funds that pass the filtering process are then rigorously assessed before they can be considered for inclusion within a CDI portfolio. Consistently strong fund performance is, naturally, a key factor; however, the Committee also factor in risk, volatility, concentration risk and costs when creating and refining the CDI portfolios.

Asset allocation

Maintaining adequate diversification is a key consideration when the FAS Investment Committee adjusts the allocations within any of the CDI portfolios; however, the medium risk approach adopted within the CDI Balanced Growth portfolio allows for a very high degree of diversification. The portfolio can invest a maximum of 65% in equities, although the Committee have taken a tactical decision over recent quarters to reduce exposure to US equities, leading to a current equity allocation of just under 55%. Whilst the portfolio will generally allocate 2% to cash, the decisions of the Committee have led to a temporary balance of 6.7% in Cash, which remains productively held in money market funds.

In addition to diversification across asset classes, the CDI Balanced Growth portfolio also allocates funds across all regions of the World. Whilst the Investment Committee are not constrained by geographic limits, the medium risk and balanced approach would ordinarily dictate that a higher proportion of the portfolio will be allocated across developed markets in North America, UK, Europe, and developed Asia.

As is the case in every CDI portfolio, the Committee aim to blend our preferred conviction investment style, through active managers, with passive funds that provide broad market exposure. As a result, the weighted fund charge of the portfolio is 0.35%, which is highly competitive for such a blended investment approach. In addition, the Committee continue to work with leading fund managers to access lower cost share classes where possible, with the aim of reducing the total portfolio cost of ownership.

Portfolio Performance

Measuring performance over a five-year period from 1^st April 2021 to 1^st April 2026, the CDI Balanced Growth portfolio (shown in green on the graph below) achieved a total return of 40.21%, which was more than double the 19.87% returned by the representative benchmark, the IA Mixed Investment Sector 20% to 60% shares (shown in red).

In addition to benchmarking the CDI portfolios against the IA sector benchmarks, we undertake a regular process which reviews our performance against managed portfolio services offered by leading UK portfolio managers. This process aims to ensure our services offer good value for money and performance remains consistently strong against real-world competitors.

Naturally, performance is the key metric on which we, and of course our clients, will focus; however, the level of risk taken to achieve returns is an important consideration. The FAS Investment Committee consider levels of volatility at each quarterly review stage, to ensure that they remain consistent with the levels displayed by the benchmark. Where changes are made to the portfolio each quarter, the impact of the change on the historic maximum drawdown and value at risk is carefully considered.

Practical applications for the CDI Balanced Growth portfolio

As the most popular CDI mandate, CDI Balanced Growth is an appropriate solution for anyone seeking capital growth wishing to take the middle ground between risk and reward. The portfolio’s diversification allows good levels of participation in rising markets, and allocations to investment grade corporate bonds and cash provide balance and aim to reduce drawdown in periods of market instability. This makes the Balanced Growth portfolio an ideal choice for pension funds, particularly in the pre-retirement phase, trusts and applications where capital growth over the medium term is sought.

Whilst not focused on income production, the asset allocation within the CDI Balanced Growth portfolio will lend itself to providing a modest level of income. The natural gross income yield generated by the CDI Balanced Growth portfolio is currently 3.3%, and therefore those who wish to focus on growth, with income as a secondary consideration, are also well catered for.

If you hold an existing investment portfolio – be it within a pension, Individual Savings Account (ISA) or General Investment Account – it is important to regularly review the performance you have achieved compared to alternative managers. Beyond performance, it is also useful to consider the level of risk to which you are exposed and to determine whether you are receiving good value for money. Our independent advisers can undertake an impartial performance review of an existing portfolio and provide an unbiased assessment of performance against the CDI portfolio range. Speak to one of the team to start a conversation.

Source: FE Analytics April 2026

In the last edition of Wealth Matters, we explored the changes to tax legislation affecting investors, effective from 6^th April 2026, together with practical steps you can take to reduce the burden of tax on your investment returns. Whilst tax-efficiency is an important aspect of any sound financial plan, it should not, however, be the primary driver of investment decisions. Indeed, focusing too much on the potential tax implications of a particular course of action can lead to poor decision making, introduce additional risk and potentially lead to missed opportunities.

Investment decisions

All of us would naturally prefer to receive tax-free investment returns and holding investments within an Individual Savings Account (ISA) provides exemption from income tax on dividends and interest and capital gains tax (CGT) on gains. The annual ISA allowance for stocks and shares investment stands at £20,000, although existing cash ISAs can be transferred to a stocks and shares ISA creating further room for growth in a tax-efficient manner.

Once investments exceed immediately available tax-free wrappers, some investors may choose to limit new investments to the annual ISA allowance and not make further investments, even if funds have been set aside for this purpose.

In most cases, history tells us that this could lead to a worse outcome, even considering the tax deducted on income and CGT on gains on assets held outside of a tax-efficient wrapper, as returns achieved from a diversified portfolio should exceed those available on cash deposit over the medium to longer term.

The chart below shows the return achieved each year by the CDI Balanced Growth portfolio, which adopts a medium risk approach (in blue) and the Bank of England Base Rate (shown in red). In eight out of the last ten years, the invested position has comfortably beaten returns on cash, with 2018 and 2022 being the two occasions when cash outperformed. Looking across the last ten years, rather than by calendar year, the cumulative additional gross total return achieved by the CDI Balanced Growth portfolio – as opposed to holding funds as cash – has been 95%. When you place the modest tax implications of investing outside of an ISA against historic outperformance, this serves as a useful reminder that tax considerations should not be a barrier to long-term investment.

Indeed, the tax treatment of investments held outside an ISA is often more forgiving than people expect. The Personal Savings Allowance covers the first £1,000 of savings income for basic rate taxpayers and £500 for higher rate taxpayers, and the Dividend Allowance covers the first £500 of dividend income received. These allowances can catch a proportion of the income generated within a General Investment Account. Beyond these allowances, the rate of tax applying to dividends in the hands of a basic rate taxpayer is 10.75%. Considering this another way, a basic rate taxpayer gets to keep almost 90% of dividend income that exceeds the Dividend Allowance.

As the annual ISA allowance resets each year, a practical solution is to sell investments held within a General Investment Account to fund future year’s ISA allowances. This will achieve greater tax-efficiency over time, whilst keeping funds invested.

CGT – look through a different lens

Another key investment decision where tax should not be the only consideration, is the decision to sell an investment outside of an ISA that will generate a CGT liability. It can be tempting to fall into the trap of choosing not to sell an investment, due to the CGT liability that would be generated; however, it can be helpful to look at the decision through a different lens. An individual who pays basic rate tax would keep 82% of the profits over and above the available CGT exemption and higher rate taxpayers would retain 76% of the profit over and above the exemption. Reinvesting the net sale proceeds into another investment, which then outperforms the investment that was sold, could lead to substantially improved returns, despite the tax bill incurred.

Pensions and Inheritance Tax (IHT)

One of the most frequently discussed areas of financial planning concerns unused pension funds. Under current legislation, pension funds sit outside of your estate for IHT purposes, and in situations when pension income is not needed, it has proved sensible planning to simply leave the pension undisturbed, as it can be passed to surviving spouse or family members without being subject to IHT. This position will change from April 2027, when unused pension funds are brought under the scope of IHT, which will lead to those impacted facing important decisions as to how to deal with existing pension funds. One option is to gift the value of the pension away to family members, and in the case of the Tax-Free Cash, which is usually 25% of the value of the pension up to the Lump Sum Allowance, this decision doesn’t carry any personal tax implications.

Beyond Tax-Free Cash, any pension income whether generated through an annuity or via Flexi-Access Drawdown, is potentially subject to Income Tax in the hands of the pension holder. Even if income is not needed, it may be sensible for a basic rate taxpayer to pay the 20% tax on pension income, and then spend or gift the income, rather than their estate suffer a potential liability to IHT on the unused pension, which is levied at 40%. Paying a smaller tax bill now to avoid a larger one later is a perfectly rational outcome, and a good illustration of why tax should inform decisions, not dictate them.

An impartial view

Whilst tax-efficiency is an important driver of investment returns, there are wider considerations that need to be taken into account. This is where holistic financial planning advice can help in taking an impartial view of your circumstances and provide an alternative perspective, which can help overcome inertia when it comes to taking decisions that create a tax liability. Speak to one of our experienced and independent financial planners to start a conversation.

Source: F E Analytics April 2026

As a means of drawing income in retirement, annuities have made a comeback, and for good reasons.

Source: ABI 

In 2014, the then Chancellor (and now podcaster), George Osborne, pulled a rabbit out of the Budget hat that nobody had seen coming. He announced the ending of the effective requirement for personal pension plans to be converted into an annuity in retirement.  Osborne’s ‘pension freedoms’ came as a shock to pension providers and a near-death experience to insurance companies active in the annuity market. Share prices in the life assurance sector plummeted as the inevitable question was asked, “Who will buy an annuity now?”

As the graph shows, pension annuity sales fell from nearly £7 billion in 2015 to £4 billion in the following year, and then flatlined until recovering in 2023. That was when annuity rates recovered from historically low levels, thanks to an increase in long-term interest rates. The latest annuity sales figures, for 2025, have recently been released by the Association of British Insurers (ABI), showing that £7.4 billion was invested last year – £0.5 billion more than in 2014. Adjust for inflation – about 40% cumulatively since 2024 – and annuity sales are still well down in real terms.

The ABI data revealed some interesting trends:

• Sales of annuities with purchase prices of over £250,000 rose by 31%, while sales above £500,000 increased by 54%.
• There was an 8% rise in sales of annuities to those aged 70 and older.
• Escalating annuities, under which payments increase each year, attracted a tenth more sales than in 2024, accounting for one in five of all annuity sales.

The jump in higher value sales could be the first signs of a response to the plans to bring unused pension pots into the ambit of inheritance tax (IHT). From 6 April 2027, if death occurs on or after age 75, the effective tax rate on the unused pot could be 64% (40% IHT and then 40% income tax) or more. Faced with that level of tax and the associated complexities of managing income drawdown and the estate administration, an annuity offering guaranteed income for life (and no death benefit) has clear attractions. For a 65-year old, at present that income could start at over 5.25% and rise in line with the retail price index (RPI) inflation each year.

The value of your investment and any income from it can go down as well as up and you may not get back the full amount you invested.

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

The Financial Conduct Authority does not regulate tax advice. 

The start of a new tax year heralds further changes to the UK tax landscape, affecting dividends, Inheritance Tax, and tax relief on certain investments. Investors, business owners, and landlords need to be aware of the changes, which naturally bring the tax efficiency of investments into sharp focus.

The changes in detail

Perhaps the most immediate change investors will notice is that Dividends are now subject to higher rates of tax in the hands of basic rate and higher rate taxpayers. Both rates have increased by two percentage points, with basic rate taxpayers now paying 10.75% on dividend income and a rate of 35.75% applying for higher rate taxpayers. For those who pay income tax at additional rate, the top rate of 39.35% remains unchanged.

With the Dividend Allowance remaining static at just £500, even modest portfolios held outside of a tax-efficient wrapper, such as an Individual Savings Account (ISA), are likely to incur a higher tax charge.

It is not only investors who need to consider the hike in dividend tax rates. Company Directors may well need to reconsider the most efficient way to extract profits from their business.

Following changes announced at the end of 2025, Agricultural Relief and Business Relief is now subject to a combined cap of £2.5 million, up to which 100% Inheritance Tax (IHT) relief can be claimed. Qualifying assets with values above the cap will only benefit from 50% relief (in other words an IHT rate of 20%) which stands in marked contrast to the position before 6^th April when an unlimited value of assets could qualify for either Agricultural or Business relief. The combined £2.5m allowance for qualifying assets is transferable between spouses and civil partners, which is a welcome change from the original draft legislation announced in 2024, and provides the opportunity to consider the ownership of assets.

Shares quoted on the Alternative Investment Market (AIM) will now only benefit from 50% relief making the effective IHT rate 20% on these assets. As a result of these changes, those holding AIM investments may wish to rethink whether accepting a lower rate of IHT relief is significant justification for continuing to hold AIM investments or consider alternative investments that benefit from relief.

The sale of business assets, which qualify for Business Asset Disposal Relief (BADR) will now attract a rate of 18% on gains, an increase of 4% on the rate which applied in 2025/26 and significantly above the 10% level which applied before 2025. The lifetime limit for capital gains which qualify for BADR remains at £1m in the new tax year.

Income tax relief on Venture Capital Trust (VCT) investments has been cut from 30% to 20%, which represents a blow to smaller businesses, who rely on VCT funding, and skews the ratio of risk and reward when investing in fledgling unquoted UK businesses. At the same time as reducing the tax relief, other VCT rules have been relaxed, which allow larger and more established companies to apply for VCT funding. Over time, these changes may well improve the quality of VCT portfolios and reduce risk. In the intervening period, we wait to see the impact of the reduction in income tax relief on the ability of VCT managers to successfully raise funds.

From 6^th April 2026, landlords with gross annual rental income exceeding £50,000 are required to maintain digital records and submit quarterly updates to HMRC, under Making Tax Digital, in addition to completing their annual tax return. The scope of the regime will broaden significantly in the coming years. Landlords with gross rental income above £30,000 will fall within its requirements from April 2027, with the threshold reducing further to £20,000 from April 2028.

Practical steps to take

The changes introduced from 6^th April will see higher rates of tax applying to dividends and allowances reduced. There are, however, practical steps you can take to be more tax efficient.

The simplest step is to make sure that you use all available tax allowances. The annual ISA allowance remains at £20,000 for all investors in the 2026/27 tax year and dividend income earned from investments held within an ISA is tax-exempt. Whilst the Dividend Allowance may well be modest at just £500, married couples can arrange their investments held outside of a tax wrapper carefully to ensure that both allowances are used.

Looking further ahead, the income tax rate on savings income is due to increase from April 2027, and pensions will enter the scope of IHT from the same date. Planning now, rather than reacting later, can help build greater tax-efficiency and strengthen your financial position.

The benefit of personalised advice

The new tax regime has introduced further changes that investors and business owners need to consider. Whilst we have set out practical steps you can take, personalised and individual financial advice can deliver significant benefits. Our experienced advisers at FAS can consider your personal financial situation and provide independent advice on effective ways both to reduce your tax burden and ensure your investments, pensions and other arrangements are professionally managed and reviewed.

If you would like to discuss how the changes affect you, we would be delighted to start that conversation.

Most of us understand, in a general sense, that saving for retirement is important. Keeping existing retirement savings – such as pensions – under regular review is a sensible step that everyone should take, irrespective of their stage of life.

The years immediately preceding retirement, however, demand much greater attention. Decisions made during this period are among the most complex and consequential, as they often have financial implications that last for the remainder of your life.

It is important to remember that your date of retirement is never fixed, and in some instances may arrive sooner than anticipated due to unforeseen circumstances. Redundancy, ill health, or a change in family circumstances can all bring retirement forward unexpectedly. Those who have already reviewed their position, consolidated their plans, and considered their options are far better placed to adapt than those who had assumed they had more time.

Take pension reviews to the next level

In the years before your intended retirement date, it is essential to understand your existing pension provisions. Obtaining up-to-date valuations and collating multiple pensions that most people accrue during their working life is an obvious first step to take. Fully understanding the pension income options at retirement offered by each plan is equally important. Many older style arrangements may not be able to offer the flexibility provided by modern pension contracts, and reviewing these at an early stage can help identify plans with limited options and allow timely action if necessary.

As retirement approaches, it is also important to review the investment strategy adopted within each plan. If investment markets suffer a downturn in the period immediately before you retire, this could have a lasting impact on your retirement income if your portfolio is not positioned to manage that risk.

To protect against this, most workplace pensions now adopt a lifestyle investment approach, which automatically reduces the level of risk within the investment strategy as you near retirement; however, this strategy is prescribed and may even be detrimental to longer-term pension income if the strategy does not fit your plans.

For example, a strategy that aims to purchase an annuity at retirement would have a very different risk profile in the lead up to retirement than a strategy designed for transition into Flexi-Access Drawdown at retirement. Furthermore, the schedule of risk adjustment and scheme’s normal retirement date may not align with your plans. This could result in the portfolio either carrying excessive risk in the years approaching retirement, or conversely holding too little in equities, leading to missed growth potential.

Defined Benefit pensions – call to action

The need to review pensions well in advance of retirement is not limited to those with personal pensions. If you hold a Defined Benefit pension — sometimes called a final salary scheme — the rules of the scheme will largely govern what you receive and when; however, the administration of these pensions can be slow, and in some cases has become significantly slower in recent years.

Some public sector pension schemes carry substantial backlogs, which could lead to delays in receiving Tax-Free Cash and pension income after applying to take benefits. This has been particularly acute within the Civil Service Pension Scheme, where Capita took over administration of the pension scheme in December 2025. Inheriting an extensive backlog, the company are aiming to work through outstanding pension claims as quickly as possible, although delays persist. The Government have indicated that pension members experiencing unacceptable delays may be entitled to compensation; however, this may be of little immediate assistance to those without an income during the intervening period.

State Pension applications

The State Pension sits at the foundation of most people’s retirement income. From 6^th April 2026, the full new State Pension is currently worth around £12,547 per year, and under the triple lock it is protected to increase each year by the highest of inflation, average earnings growth, or 2.5%. It is, therefore, worth protecting your entitlement to it carefully.

Practical steps to take include checking when you reach State Pension Age and reviewing your National Insurance record in advance of retirement, to identify any gaps. These gaps could be filled to help you reach the 35 qualifying years of contributions needed to benefit from the full new State Pension.

Many reaching State Pension age do not appreciate the need to apply for the State Pension payments to commence and assume the payments will automatically start when reaching State Pension age. As there is also the option to defer payments, individuals must actively apply to start receiving the State Pension. An invitation letter is sent out by Government approximately four months before reaching State Pension age, providing details of the online and telephone application routes.

Advice is key

Deciding when to retire is a daunting proposition as it marks the end of one chapter in your life and the beginning of another. Financial decisions taken at this juncture require careful consideration, and as outlined above, taking control of the process at an earlier stage than you might expect can yield substantial benefits. Given the importance of making the right decision with retirement savings, independent financial planning advice can really add value at this crucial stage. Our experienced advisers can take a holistic view of your plans and help you take the most appropriate action to meet your goals in retirement.

If retirement is on the horizon — whether that means two years away or ten — now is the right time to start getting your plans in order. The earlier you begin, the more options remain open. Speak to one of the team to start a conversation.

For businesses that find themselves holding significant cash reserves, leaving funds idle in a business bank account, earning little or no interest, is rarely the most efficient strategy. Whether the surplus cash has arisen from profitable trading, the sale of an asset, or simply disciplined cash management, company directors should consider the benefits of keeping surplus funds productive, whilst balancing prospective returns, access to capital and risk.

Most companies will aim to keep a safe operating balance held on immediately available cash. The amount that a company should hold as cash varies depending on a range of factors, including fixed operating costs, anticipated expenditure, Corporation Tax and other liabilities, together with any expected variance in forthcoming trading conditions. We always recommend directors consult with their company’s accountant to help determine the most appropriate level to hold as immediate working capital.

Once immediate needs have been determined, it is important to look to keep additional funds productive, as not doing so presents a missed opportunity to generate additional returns on idle funds but also leaves company cash exposed to the eroding impact of inflation. It is sensible to identify the investment time horizon for any funds not held on immediate cash, to divide funds into a proportion that is easily accessible and separate funds that can be committed to longer-term investments.

Savings options

Business savings accounts provide a straightforward option. Easy access savings accounts tend to offer lower rates of interest, but provide quick access to funds, which may prove invaluable if the business needs to deploy funds at short notice. Beyond immediate access, banks and other financial institutions offer notice and fixed term deposit options, which offer higher rates of interest, but require cash to be locked away for a defined period. In the case of fixed term deposits, the bank will almost certainly not allow earlier access to funds during the fixed term, and therefore caution should be employed to make sure sufficient liquidity is maintained.

Corporate investments

Businesses are not restricted to holding surplus company funds as cash. Investing surplus company funds can generate improved returns to those available on deposit; however, care is needed to select the right mix of asset classes, considering when funds may conceivably be needed, and the level of risk that the directors feel comfortable with.

The first option to consider are money market funds, which are pooled investments that invest in fixed and floating rate notes, high-quality debt instruments and short-dated gilts and corporate bonds. Despite the composition of a money market fund, the fund is not risk free, although returns offered are generally higher than cash deposits.

Companies seeking to employ company cash more effectively could consider investment grade corporate and government bonds, with the aim of generating better returns than those offered by money market funds. When investing in fixed income securities, inflation risk can effectively be reduced by selecting bonds with short dates to redemption.

For company funds that can be invested for a longer period, a diversified portfolio of equities (shares) could provide greater returns, albeit with higher levels of investment risk. By constructing a portfolio across these asset classes, in combination with a sensible strategy for short term cash, businesses can look to build a portfolio designed to keep surplus funds productive, whilst meeting liquidity requirements.

The graph below demonstrates the performance of the CDI Defensive Growth portfolio, a discretionary managed portfolio taking low-medium levels of investment risk, compared to a deposit account that tracks the Bank of England base rate, over the last 3 years. The graph shows the total return achieved, i.e. with income reinvested, but does not take into account investment management or platform charges.

As demonstrated by the graph, by taking a relatively modest level of investment risk, an invested portfolio has historically outperformed returns on cash, although some investment volatility will have been tolerated.

HMRC investment company rules

In our experience, directors are often unaware of HMRC rules when investing surplus funds held by a business, which can have significant consequences if not followed, including the potential loss of Business Asset Disposal Relief, which delivers a reduced Capital Gains Tax rate when directors sell shares in a “trading company”.

HMRC broadly define a “trading company” as one where the majority of the activities undertaken relate to a trade, rather than the investment activity itself. As a rule of thumb, if

20% or more of the company’s income is derived from investments, or 20% of the directors’ time is spent dealing with investments, or 20% of the company’s assets are held in investments, this could jeopardise a company’s trading status in the eyes of HMRC. These are, however, only guidelines, and we regularly liaise closely with company accountants to review the financial position of the company and the implications of any investments held.

Streamlined solutions

When speaking with company directors, we often find investment of surplus funds to be something of an afterthought; however, with sensible planning and expert advice, businesses can aim to keep surplus funds productive.

Thanks to our independent status, we have access to a range of investment platforms that can provide an ideal solution for surplus company cash. Through careful due diligence, we have identified UK based platforms that offer readily accessible savings and fixed term deposits via a range of renowned deposit takers, but also provide the ability for a discretionary managed or advisory investment portfolio to be held on the same platform. This provides a streamlined solution, easing the administrative burden and providing clear visibility.

We are very used to helping businesses invest surplus cash effectively. We can construct bespoke investment portfolios aimed to match the time horizon and risk profile for the funds in question, or manage funds on a discretionary managed basis, thus ensuring the portfolio is regularly reviewed and rebalanced.

If you are a director of a company that holds surplus funds, speak to one of our independent advisers about the options available to deploy those funds more productively.

Minimising tax – or eliminating a potential tax liability altogether – is one of the key drivers behind most sensible financial planning decisions. Whether using efficient vehicles such as Individual Savings Accounts (ISAs) or pensions, or considering investments that provide tax relief, such as Venture Capital Trusts, achieving a tax-efficient outcome can maximise investment returns; however, there are limited situations where paying tax can be beneficial, and one of these is centred on decisions to crystallise gains where Capital Gains Tax (CGT) becomes payable.

Background to CGT changes

Over the past few years, tax legislation on gains made from the sale of an asset has been tightened on multiple fronts simultaneously. CGT is paid on the profit made on disposal of an asset that has increased in value. There are only limited exceptions where CGT does not apply, for example investments held in tax wrappers such as an ISA or pension, or the sale of your primary residence.

Since 2023, the annual CGT exemption (on which CGT is not paid) has been slashed from £12,300 all the way down to £3,000 in the current tax year. This means that many more investors are now dragged into paying CGT, and for those with larger portfolios, CGT is becoming much harder to avoid. Apart from the reduction in CGT exemption, rates of CGT payable have also increased, with basic rate taxpayers now paying 18% on gains above the exemption and higher and additional rate taxpayers now paying 24%. These rates are 8% and 4% higher respectively than the rates that applied before October 2024.

Practical steps to reduce a CGT liability

There are limited steps you can take to reduce or avoid a liability to CGT. Firstly, using tax-efficient wrappers, such as ISAs, Investment Bonds or Pensions, is a sensible step as gains made within these wrappers are exempt from CGT.

Despite the sizeable reduction in the CGT annual exemption, it is important to make use of the exemption where possible. As we approach the end of the tax year, now is a sensible time to review whether you should take action to make use of the exemption.

Married couples can maximise the use of their individual CGT exemptions by transferring assets to each other. Such transfers between spouses are exempt from CGT and provide the opportunity to take full advantage of both allowances.

A further consideration for those in later life is the uplift assets receive when valued for probate purposes. As the base cost that beneficiaries acquire assets from an estate is reset to the value at date of death, unrealised gains are effectively wiped out under current legislation.

Consider the opportunity cost

With the reduction in CGT exemption and higher rates of CGT payable, it can be tempting to fall into the trap of trying to actively avoid taking action, for fear of the CGT consequences. Giving back 18% or 24% of the profit made in tax, whilst unpalatable, however, may be preferable to the potential cost of not taking action.

Consider the position of Mary, a higher-rate taxpayer, who holds a single investment worth £100,000, which has doubled in value from the original £50,000 cost of purchase. The investment has traditionally performed well, but has struggled over recent years, and Mary therefore contemplates selling the investment. If she goes ahead, this crystallises a gain of £50,000, which is £47,000 above Mary’s annual exemption of £3,000. As a higher rate taxpayer, Mary would pay CGT at a rate of 24%, leading to a CGT liability of £11,280.

Mary goes ahead with the sale and reinvests the net sale proceeds of £88,720 (£100,000 sale proceeds less CGT payable) into another investment fund with better prospects for outperformance. After four years, Mary reviews her decision and notes that the new fund has made a compound return of 9% per annum since disposal, whereas the fund Mary held previously has only produced compound returns of 4.5% per annum over the same period. Mary’s investment value now exceeds what her investment would have been worth, taking into account the CGT payable, and she is holding a fund showing improved returns which could potentially mean her decision to switch investments becomes even more valuable in years to come.

Other hidden dangers

The above is a simple example that demonstrates the need to look beyond the potential tax hit and consider the opportunity cost of avoiding a CGT liability. There are, however, other risks that inertia can bring. One risk that could be exacerbated by avoiding a CGT liability is that an investment grows disproportionately in size compared to other assets held, leading to excessive concentration risk. This is particularly true for single investment holdings, where investors are faced with the growing risk that a downturn in the particular market could have an even greater impact. By regularly reviewing an existing portfolio and taking decisions on a discretionary managed or advisory basis, you can keep a cap on unrealised gains and avoid this situation occurring.

An impartial perspective

When faced with investment decisions that could create a CGT liability, inertia could prevent you taking actions that could damage your financial wealth over the longer term. Reframing the tax liability as a tax on gains already made, and focusing on the potential benefits of redeploying funds, can be beneficial. Independent financial advice can prove hugely valuable in this regard, as the input of a skilled and experienced adviser can provide you with an impartial perspective on the best course of action to take. Speak to one of the team to start a conversation.

The key anxiety affecting market confidence is the impact a prolonged regional war could have on global energy supplies. Around 20% of global oil supply passes through the Straits of Hormuz, where tanker traffic has effectively ceased due to drone attacks, and understandably, insurers are not willing to cover traffic movements. The US has mooted the possibility of providing insurance and naval escort, which may help ease the logjam.

Despite this, oil prices are likely to remain elevated for the foreseeable future, and gas prices have also jumped higher after Qatar temporarily halted the production of liquified natural gas; however, to put the price increases in context, Brent and WTI crude prices still remain a considerable way below the highs seen just after the Russian invasion of Ukraine in 2022.

The partial blockage of the Straits of Hormuz is likely to weigh most heavily on countries that rely on energy supplies from the Gulf, such as Japan, South Korea, and India. In addition, freight that now needs to use the route around the Cape of Good Hope will be subject to delays in reaching its intended destination and additional costs.

Furthermore, broader conflict of this scale is likely to weigh on specific industries such as tourism and could potentially have a broader impact on consumer confidence, particularly if an expected hike in energy bills adds further pressure to household budgets.

Thus far, global equity markets have only given back a small percentage of the gains made over the last 12 months; however, the conflict adds to an already complex picture, with markets contending with the fallout from the US Supreme Court decision on tariffs and increasing investor concern over the funding of major capital expenditure by the world’s biggest technology companies.

Given concerns over valuations and perceived market complacency, the FAS Investment Committee took the decision to reduce allocations to US equities in the CDI portfolios in both August and October of last year, and the CDI portfolios continue to carry higher levels of cash than would usually be the case. This allocation insulates against further market uncertainty in the short term. The CDI discretionary managed portfolios are also well diversified, holding exposure to equities across a range of sectors and regions, and carry a good proportion of actively managed funds, where fund managers will be reviewing asset allocation to position their portfolios to take best advantage of the prevailing and expected conditions.

A sustained regional conflict is also likely to exert an increasing impact on monetary policy. Should energy prices remain elevated, this will impair central banks’ ability to cut interest rates to bolster flagging economic growth. The Bank of England may well adopt a “wait and see” approach, before taking action to cut interest rates further. In the US, markets are now expecting no further easing by the Federal Reserve until June or July. As a result of the changing outlook, bond yields have risen over recent trading sessions.

Despite the expected path for interest rates, the FAS Investment Committee have continued to focus on short-dated corporate debt over recent months, due to concerns that inflationary pressures could resurface. This outcome now appears more likely; however, our focus on bonds with less than five years to redemption should provide insulation if bond yields continue to rise in the short to medium term.

The outbreak of conflict in the Gulf is a sharp reminder of the need to hold a diversified investment portfolio, to limit exposure to sectors and regions that are likely to face the greatest impact. History has consistently shown that those who maintain a disciplined, long-term approach are rewarded for doing so, despite periods of volatility. Market sentiment can change rapidly, and attempting to trade conditions such as those we are currently experiencing is not a sensible course of action.

We do not believe the events of recent days merit a material change to the longer-term outlook for global markets, although should the conflict endure for an extended period, this may have an increasingly negative impact on market sentiment in the short-term. The FAS Investment Committee have carefully reviewed the CDI portfolios in the wake of recent events and feel that the portfolios remain well positioned both in terms of asset allocation and portfolio strategy.

Whilst the next review and rebalance for the CDI portfolios is scheduled for May, the FAS Investment Committee will remain vigilant to events, and if they deem action is appropriate, can arrange an ad hoc rebalance at short notice.

We hope these comments help to provide reassurance; however, please do contact us if you have any questions or concerns.