9 financial resolutions to give your money a makeover in 2026

2025 in review

2025 has been a rollercoaster year for those managing their personal finances. While the year started on a positive note with strong economic growth, inflation easing into safer territory and interest rates gradually declining, the momentum slowed in the second half as the impact of Chancellor Rachel Reeves’ tax rises in her maiden Budget in October 2024 began to ripple through the wider economy.

Inflation crept higher, wage growth lost steam, economic growth faltered and consumer spending was put on pause as the country braced for the end of November Budget. Then came added pressure for savers and investors - a further extension to frozen income tax thresholds, and a 2-percentage-point hike on savings, dividend and property income tax. 
While inflation is now believed to have peaked and the markets anticipating further interest rate cuts, households continue to grapple with high living costs and a much heavier tax burden - both of which could derail savings and investment plans over the long term.

It’s understandable that some people may be feeling apprehensive as they head into 2026 – but there are steps you can take to improve your financial outlook. Committing to a fresh set of New Year’s money resolutions could help you not only strengthen your finances in the short-term but also give your long-term goals a significant boost.

Here are 9 money resolutions which could help transform your finances in 2026:

1. Take advantage of your Cash ISA while you still can
2. Don’t neglect the tax-efficiency of your investments either by utilising your Stocks & Shares ISA too
3. Prepare for a curb on holding cash in Stocks & Shares ISAs
4. Consider taking full advantage of salary sacrifice to give your pension a boost
5. Don’t neglect assets sitting outside a tax wrapper: Use Bed & ISA or Bed & Pension before tax-year-end
6. Build a household budget that sticks to keep savings plans on track
7. Conduct a pension review to ensure you are on track for a comfortable retirement
8. Look at bringing your pensions together into one pot
9. Give your money a makeover and book a review with a coach

1. Take advantage of your Cash ISA while you still can

Cash ISA changes are coming in 2027 with subscriptions set to be capped at £12,000 for those under 65. From that point, those wanting to use their full £20,000 ISA allowance must direct the remaining £8,000 into investments (more on that later).

For committed cash savers, under the age of 65, time is on your side. The rule change doesn’t take effect for almost 16 months, so those that want to use some of their ISA allowance for cash, can funnel up to £20,000 per year across two tax years before the cap kicks in. Keep in mind that the £20,000 annual allowance is across all ISA types so if you contribute the full allowance into Cash ISAs this will leave you no room to use your ISA for investments.

Why is this so important? Because the UK tax burden is forecast to hit 38% of GDP by 2030. That includes a new savings income tax hike, also set to take effect from April 2027. Add to that the extension to the freeze on income tax thresholds - until 2031 - and millions more people will be dragged into taxable territory for the first time or into higher tax bands (and therefore lower personal savings allowances) as earnings rise.

Holding too much in a regular bank or building society savings account risks breaching your Personal Savings Allowance (PSA), making you liable for tax on interest earned – a problem that will worsen as wages go up and when the 2-percentage-point hike in savings income tax (rising to 22% for basic rate taxpayers, and to 42% for higher rate and 47% for additional rate taxpayers) takes effect in April 2027.

At Bestinvest, we don’t offer a Cash ISA product although you can hold cash in our Stocks & Shares ISA.

2. Don’t neglect the tax-efficiency of your investments either by utilising your Stocks & Shares ISA too

Cash is great for covering short-term needs, whether it’s an emergency fund or a savings pot for a summer holiday, but over the medium to longer term, investments have historically delivered higher real returns that beat inflation making investing key for building wealth over a lifetime. Just remember, money invested in financial markets needs a time horizon of at least five years to ride out short-term volatility. Investing is higher risk than cash saving, you may get back less than invested.

Considering the tax efficiency of those investments has never been more important, which is why using a tax wrapper, such as a Stocks & Shares ISA, should be a top priority in the new year. Investors can shelter up to £20,000 in an investment ISA before the end of this tax year on April 5, 2026 with all capital gains and returns protected from tax. As a reminder, this is a use-it-or-lose-it allowance.

This is essential when you consider the 2-percentage point hike in the Dividend tax rate – which will rise to 10.75% for basic rate taxpayers and to 35.75% for higher rate taxpayers from April 2026. The additional rate will remain unchanged at 39.35%. 

This is yet another hit for investors who have been dealt several blows in recent years: the annual allowance for tax-free dividends was slashed to just £500 at the start of the 2024-25 tax year, a tenth of where it sat as recently as the 2017-18 tax year. In addition, the annual Capital Gains Tax (CGT) exemption is now just £3,000 after being systemically lowered by the former Conservative Government to less than a quarter of the £12,300 it was in the 2022-23 tax year. CGT rates on share sales also increased in the 2024 Autumn Budget – to 24% for higher rate taxpayers and 18% for basic rate taxpayers. It means holding investments within the confines of a tax-protected ISA really makes more sense than ever. 

Even if you can’t max out your allowance in full, ISAs will become increasingly valuable as people find more income and investment returns get swallowed up by tax. For those fortunate enough to receive a windfall – whether from a business sale, inheritance or prize draw win - there's an opportunity to protect up to £40,000 from tax in the coming months. You can contribute £20,000 to your investment ISA before April 5, 2026 and then add a fresh £20,000 when the new tax year starts on April 6 2026.

The value of investments can go down as well as up, and you may get back less than you invested. Tax treatment is subject to change.

3. Prepare for a curb on holding cash in Stocks & Shares ISAs

Another ISA rule change to note – while details are not yet available - holding cash in a Stocks & Shares ISA, will be limited or penalised from April 2027. In the aftermath of the Budget, HMRC announced this is to prevent savers from sidestepping new Cash ISA rules by parking cash in investment ISAs instead – a workaround currently permitted.

Holding cash in a Stocks & Shares ISA has always been useful for de-risking during volatility or setting aside funds for big expenses like mortgage overpayments or school or university fees. It's also necessary for dividend payments or when investors are between trades and want time to consider their next investment decision. Under the new rules, the Government will ban transfers from Stocks & Shares ISAs to Cash ISAs, apply a charge on interest earned on cash held in investment ISAs (which some might say undermines the very essence of what a tax-free ISA is all about), and potentially restrict  access to 'cash-like' investments, such as money market funds.

The good news? You have time. This change does not take effect for almost 16 months, so for now investors can still hold cash in their investment ISA and benefit from their provider’s interest rate – at Bestinvest that currently sits at 3.23%. This rate is subject to change without notice and is set by our custodian, SEI. If you have the funds, you can load up your Stocks & Shares ISA now and then take your time to choose investments carefully to develop a strategy you can continue to employ after the rule change comes into force.

Choosing the right assets for your risk profile can get clouded by market noise, which can leave investors second guessing their options. Waiting for a market downturn can mean missing out on some of the best days in the markets and risks falling into ‘analysis paralysis’.

One approach can be to invest on a regular basis, such as monthly, rather than trying to time a lump sum investment. This takes advantage of pound-cost averaging - buying smaller amounts of higher-cost units and greater amounts of lower-cost units, and so not being hostage to the market conditions at a single point of entry. It can help to cushion the effects of volatility over the short- to medium-term and smooth out returns over the long-term – while also removing the stress of timing the market. With your Bestinvest account you can set up monthly savings into your favourite funds by Direct Debit.

Also, ensure your portfolio is fully diversified - across asset classes, sectors, geographies and fund styles - and take the right level of risk for your investment timescale. For DIY investors that want an active approach but prefer to remain hands off, managed portfolios, also referred to as ready-made portfolios, can be a smart solution. These off-the-shelf investment products, where experts build a diversified portfolio tailored to a particular risk level, offer ongoing monitoring and rebalancing.  These can be invested predominantly in actively managed funds, or low-cost passives, but the key is that rather than spending hours researching and picking the right mix of stocks, bonds and funds to build a coherent investment strategy, the professionals handle asset allocation on your behalf.

4. Consider taking full advantage of salary sacrifice to give your pension a boost

The Chancellor announced in the Autumn Budget relating to workplace pensions that National Insurance (NI) relief on salary sacrifice pension contributions will be capped at £2,000 per year from April 2029. Salary sacrifice remains permitted, but the NI savings that make it so tax-effective for both workers and businesses will be restricted from April 2029. Employees and employers will only receive NI relief on the first £2,000 of salary sacrificed annually. Beyond that threshold, contributions will still go into pensions, but without the NI advantage. Not every employer offers these schemes, but if yours does, now might be a good time to increase your contributions – provided you can afford it.

While restricting salary sacrifice is yet another tax hit for people trying to save efficiently for retirement, the new cap does not come into effect for well over a year. This gives workers a unique window to take full advantage of the tax benefits before the deadline. Salary sacrifice schemes reduce income tax and enable both employee and employer to pay lower National Insurance contributions (NICs), making pension saving even more tax efficient. 

This can be particularly effective for those nearing crucial tax cliff edges where an individual’s marginal rate can jump dramatically. This includes employees close to the £50,270 earnings threshold where the higher 40% tax rate kicks in – they can potentially dip under it by using salary sacrifice pension contributions. For those nearing the £100,000 threshold, salary sacrifice can help mitigate the unique tax challenge where every £2 of taxable income above £100,000 reduces the personal allowance by £1. Combined with the 40% income tax rate, this creates an effective tax rate of over 60%. Salary sacrifice can also be beneficial for those that might lose out on child benefit because their salary is too high.

There are, however, some aspects of salary sacrifice to bear in mind, for example:

• it impacts how much you can borrow: Credit providers typically calculate how much you can borrow based on your salary. A lower figure might influence what size mortgage you can get
• it impacts other earnings-related benefits such as life cover or statutory maternity pay
• changing this arrangement might only be allowed at certain times e.g. annually

As such, salary sacrifice might not be right for everyone. 

5. Don’t neglect assets sitting outside a tax wrapper: Use Bed & ISA or Bed & Pension before tax-year-end

Many people own assets, such as shares or funds outside tax-free wrappers like ISAs or pensions that are exposed to tax unnecessarily. Moving these investments into a tax-protected space can boost tax efficiency and reduce future liabilities, especially if you can’t utilise your current allowances in cash. 
Crystallising gains before the end of the tax year can also be a smart move for those that haven't used their annual CGT exemption of £3,000. 

To do this, investors can use a process known as ‘Bed and ISA’ (or ‘Bed and Pension’) which involves selling your shares or funds and using the proceeds to fund an ISA or pension contribution – keeping future returns out of the reach of tax charges - tax treatment is subject to change. Keep in mind that you can't access money in a pension until age 55 (rising to 57 in 2028).

While investors are liable for CGT on any profits above their annual allowance when they sell their investments, once the money is inside a tax wrapper it’s protected from tax going forward. Remember, the Bed & ISA process can take a few days so while the money is out of the market during this process the market value can go up or down. You might consider cracking on with this process early in the New Year to ensure the transaction completes well before the April 5 tax-year-end deadline.

How to carry out a Bed and ISA on Bestinvest

How to carry out a Bed and SIPP on Bestinvest

6. Build a household budget that sticks to keep savings plans on track

There’s no point aggressively saving and investing in a bid to build a brighter future if you can’t keep your monthly household budget in balance. Consistently overspending will quickly wipe out the benefits of saving and investing for the long-term, especially if you rack up debts with heavy interest charges. 

A budget is a powerful tool that helps you take control of your finances, track spending, understand where your money goes and ensures you have enough to cover everyday expenses as well as savings, investments and life’s little luxuries.   

Creating a monthly spending budget can be a very simple process. First, jot down how much money is coming in, then list your essential spending, such as rent or mortgage costs, utility bills, council tax, insurance, food, transport, phone and broadband. Then add in those ‘like-to-have' expenditures, such as going out, holidays, new clothes, gym membership and subscriptions and, finally, don’t forget to account for savings and investments.

Tot up your total expenses and subtract that sum from your net income (your take-home pay after tax) to see what's left. If you’re overspending, cut back on the non-essentials first. To help you do this, comb through your direct debits and standing orders for unused subscriptions and cancel them. Negotiate better deals on regular essential bills such as utilities, mobile and broadband contracts. Finally, automate big payments to leave your bank account at the start of the month after you have been paid, such as mortgage repayments, utility bills, car finance, debt payments, phone bills and savings and investments. That way, you know exactly what’s left for day-to-day spending over the rest of the month. Once your Budget is set, you'll have a clear picture of how much you can save and invest for the future.

Tools like Grow my money on Bestinvest can help you see the impact of investing different amounts over time.

• Existing Bestinvest clients can access this tool in their online account or mobile app (under Life plan).
• And if you’re not investing with Bestinvest yet, you can try the tool here.

7. Conduct a pension review to ensure you are on track for a comfortable retirement  

Pensions remain the most tax-efficient way to build a retirement pot despite constant tweaks by successive Governments. This is because contributions attract tax relief at your marginal rate, and investments grow free from income and capital gains tax - though withdrawals are liable to income tax at your marginal rate. Basic-rate taxpayers receive 20% relief, higher-rate 40%, and additional-rate 45%, making pensions a powerful tool to turbocharge retirement savings. Tax treatment is subject to change and the value of your investments can go down as well as up.

While reforms, such as bringing unused Defined Contribution pension pots within the scope of Inheritance tax from April 2027 – and speculation over further tweaks like a lower cap on tax-free lump sums - may cause concern, pension saving should not be neglected.

An annual pension review can be the wake-up call needed to get retirement plans on track. Whether you do it yourself or seek professional advice, it is important to ensure your retirement savings align with your goals. No one wants to run out of money later in life when health or care costs loom, so decisions made now can shape your future quality of life.

If you have little or no pension provision, you might want to consider rejoining a workplace scheme if you previously opted out or contributing to a personal pension. You could also explore other ways to boost your pensions savings like taking full advantage of employer perks such as higher employer matching or salary sacrifice schemes, which remain highly tax-efficient but employees and employers will only receive NI relief on the first £2,000 of salary sacrificed annually from April 2029.  

You might also be able to take advantage of ‘carry forward’ rules to use unused annual allowances from the past three tax years. This means a large bonus or inheritance, for example, might allow you to make contributions well above the £60,000 annual allowance – but only if you have relevant earnings that at least cover the total pension contribution within the carry forward annual allowance. If all carry forward allowances were available, the highest earners could potentially pay up to £220,000 into a pension this tax year. Finally, review your investment mix and risk level to ensure they still suit your goals.

8. Look at bringing your pensions together in one pot 

Thanks to auto-enrolment, millions more people are now saving into a workplace pension than ever before. Challenges remain, however, with workers either not saving enough for retirement or losing track of the multiple workplace pension pots they acquire over the course of their career as they moved from one job to the next.  

When you consider the average worker typically has around a dozen jobs during their career, that’s a lot of paperwork that can get lost, particularly if people move home and forget to update their address with their pension provider. The Government has a free pension tracing service to help you track down the contact details for lost pensions.

Bringing your pensions together into one pot can give you a clearer picture of whether you’re saving enough to fund your retirement. It also means one password to remember and one place to monitor performance, making it easier to check how your money is invested and whether it aligns with your long-term financial goals.

A Self-Invested Personal Pension (SIPP) is one way for savers to gain control and visibility over their retirement savings and consolidate legacy pensions from previous employers – having checked that they don’t offer any special protections or benefits - into one place.   

Keep in mind that SIPPs are not suitable for everyone. If you don’t want to invest across different asset classes or don’t think you will make use of the investment choices that SIPPs give you, then these might not be the right account for you. They may also cost more than other pensions.

Before making a decision about bringing your pensions together, you should check if you will lose any valuable benefits or features or incur any penalties. In some cases it may not be advisable to transfer so it’s important to get personalised advice that will help you weigh up all the pros and cons.

Unless you are fortunate enough to have adjusted income of more than £260,000 a year (and will therefore be subject to a tapered allowance), the annual allowance limit you can pay into your pension per tax year is £60,000 gross or 100% of your relevant earnings – whichever is lower -  a limit that encompasses all contributions across all pension arrangements, including tax relief and employer contributions.

9. Give your money a makeover and book a review with a coach

You’ve got to grips with a budget, savings and investments, so now might also be a good time to adopt a fresh money mindset for the new year – one that ensures you reduce spending and increase savings and investments to safeguard your future.   

Financial education and the power of good advice should never be underestimated. People who take advice on preparing for retirement are typically much better equipped to fund the type of life they would like after they finish working. While bespoke financial planning might not be for everyone, free or low-cost investment coaching – where clients can receive guidance on what they ‘could do’ with their money – is one solution that can help plug that gap.  

Investment coaching can be a cost-effective way to help households tackle the fundamentals of saving and investments, giving them the confidence they need to start investing or equipping them with the knowledge to take more control of their portfolio. Guidance on the power of regular saving, understanding tax-efficient products such as ISAs and pensions, choosing the right type of investments for your attitude to risk and addressing short-term money challenges such as budgeting and getting out of debt can be invaluable. 

Online investment coaching is available to both existing and prospective Bestinvest clients.

• Existing Bestinvest clients can book a session directly from their online account or mobile app (under Coaching).
• Prospective Bestinvest clients can book a session here or learn more about coaching here.

Our Coaches cannot provide specific investment advice but if this is something you feel you would benefit from, let your Coach know and they can direct you to the relevant team from our parent company, Evelyn Partners, who are a UK leader in wealth management.