With the 2026/27 tax year soon upon us, with it comes a valuable opportunity to plan with confidence. In this month’s newsletter, we share our latest market perspective, highlight key tax allowances and revisit how pensions continue to play a central role in long-term planning. Amid constant headlines, thoughtful preparation remains one of the most powerful tools you have.
Market update – staying focused
Markets have already had plenty to absorb this year. While short-term movements can feel dramatic, long-term investing is rarely about reacting to the latest headline.
Michael’s update looks at what really matters – maintaining balance, staying diversified and ensuring your investments remain aligned with your long-term objectives. If recent events have prompted questions, we are always happy to talk them through with you.
2025 has been a year of twists and turns for investors – volatile at times but ultimately rewarding for many. Equity markets rose with many markets soaring to new all-time highs, supported by improving fundamentals and upward revisions to corporate earnings. For 2026, we have seen, and expect to continue to see, the positive picture to remain supportive for equity markets, but with global growth slowing, equity returns are unlikely to be as strong. Positive for fixed Income too, where the outlook is constructive now that bonds are once again delivering real yields. Our core thesis for 2026 is unsurprisingly comparable to 2025. Markets will invariably have both ups and downs but, as in 2025, it is important to remain invested and diversified, and to resist the urge to over-react, which is key to achieving good long-term portfolio returns and achieving your long-term financial goals.
Specifically, our long-term capital market assumptions estimate the annualised equity market returns to average between 6.3% and 6.9% with fixed income returns delivering between 4.2% and 5.0%, so it is important to maintain a long-term focus and not let any market pullbacks lead to knee-jerk reactions. In fact, periodic pullbacks will occur. We are positioned for the outperformance of equity markets over fixed income markets. Valuations are slightly elevated and markets are overly focused on the threat of an Artificial Intelligence bubble but there are plenty of equity market upside risks too. Recession risks are low and corporate earnings are predicted to continue to drive returns upwards. Overall, macroeconomic conditions remain supportive for equity markets and we are positioned to benefit.
A quick word on the recent escalation of conflict in the Middle East. The impact on the global economy remains uncertain at present and will depend on where commodity prices go, the impacts on inflation and the potential for it all to trigger a global recession. The markets have initially reacted with caution. We are monitoring the medium-term picture, including the duration of the conflict and the extent of disruption to energy flows, to determine whether there will be any impact to our capital market assumptions.
New tax year – making the most of your allowances
With the 2026/27 tax year soon beginning, it’s worth considering how best to use the allowances available to you.
There are never guarantees that tax allowances will remain unchanged in future so, where possible, we encourage clients to make use of them while they are available.
Capital Gains Tax (CGT)
The annual CGT tax-free allowance remains at £3,000. If you hold investments that have increased in value, using this allowance each year can form part of a longer-term planning strategy.
With rates on gains above the allowance higher than in previous years, forward planning remains particularly important.
ISAs – Have you made full use of your 2025/26 allowances and preparing for 2026/27?
If you have not made full use of your 2025/26 £20,000 tax-free stocks & shares ISA allowance, then get in touch to take action before 5th April 2026. (Please note that the end of the tax year falls on Easter Sunday this year so if you do want to check your allowances for the current year then be sure to get in touch in March before we hit that Bank Holiday weekend!) The tax free allowance for stocks & shares ISAs will remain unchanged at £20,000 until 2030. However this is the last tax year in which you can allocate the full £20,000 to a Cash ISA. From the 2027/28 tax year, for those under age 65, the maximum that can be held in Cash ISAs will reduce to £12,000. The remaining £8,000 of the annual ISA allowance will need to be invested in a Stocks & Shares ISA or an Innovative Finance ISA.
For many investors, ISAs remain one of the simplest and most effective ways to build tax-efficient wealth. Once funds are inside, there is no Capital Gains Tax or Income Tax on returns.
Don’t forget pensions
Pensions continue to provide valuable tax relief on contributions and remain one of the most efficient ways to save for retirement.
For basic-rate taxpayers, tax relief effectively boosts contributions. For higher-rate taxpayers, additional relief can be reclaimed through a tax return. For some individuals, pension contributions may also help manage income thresholds that affect personal allowances and other benefits.
Pension rules have evolved in recent years, particularly around how pensions are treated within estate planning. If you would like to revisit how your pension fits into your wider plan, we would be very happy to do so.
As always, tax treatment depends on individual circumstances and may change in the future.
Planning together
Retirement and long-term planning are rarely individual decisions. They often involve shared goals and expectations.
If you haven’t already seen it, you may find this article helpful:
Are you and your partner on the same retirement page?
https://www.raymondjames.uk.com/article/are-you-and-your-partner-on-the-same-retirement-page/
It’s a gentle reminder that good financial planning starts with good conversations.
If you would like to review your ISA position, pension contributions or overall tax planning for 2026/27, please do get in touch. A short conversation early in the tax year can often make a meaningful difference.
Community News!
Our very own Business Manager, Nicki Pope will be treading the boards at the Queen Mother Theatre, Hitchin from Monday 9th – Saturday 14th March in Shakespeare’s Titus Andronicus. Tickets are available from the Queen Mother Theatre: https://qmt.org.uk/production/titus-andronicus/ . Please join us in wishing Nicki and the whole cast the best of luck for this production.
With warm wishes,
Faye & Susie
Raymond James Hitchin
Important notice: Past performance is not a reliable guide to the future. The value of investments and the income from them can go down as well as up. The value of tax reliefs depend upon individual circumstances and tax rules may change.
The FCA does not regulate tax advice. This client letter is provided strictly for general consideration only. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case.
Disclaimers: The information contained in this client letter is for general consideration only and is subject to change dependent on specific legal implementation. Tax treatment depends on individual circumstances and may also change in the future.
You should not take, or refrain from taking, action based on its content and no part of this document should be relied upon or construed as any form of advice or personal recommendation. Accordingly, Raymond James has no responsibility whatsoever for all and any losses that may result from such action or inaction and it is essential that professional advice is taken. If you have any questions, please speak to your wealth manager in the first instance.
With investing your capital is at risk.
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