The UK economy grew faster than expected in July, with artificial intelligence (AI) potentially playing a part in the surprise increase. According to the Office for National Statistics (ONS), gross domestic product (GDP) rose by 0.4% during July, despite economists predicting no growth at all. This follows a 0.3% increase in June and no growth in May. What's behind the unexpected growth? Much of July's growth came from the services sector, particularly computer programming. The ONS noted that IT businesses reporting the largest increases in turnover appeared to be linked to AI, although it's still difficult to put an exact figure on how much AI contributed to the economy's growth. Other factors, including the warm weather and the football World Cup, may also have played a part. Is the economy really getting stronger? While the figures are encouraging, economists aren't entirely convinced that the improvement will last. Capital Economics suggested that the resilience seen earlier in the year had continued into the second half, but warned that rising energy prices and borrowing costs could soon put pressure on growth. KPMG also pointed out that the headline figure doesn't tell the whole story. Retail and hospitality activity actually contracted during July, with higher fuel costs and elevated mortgage rates continuing to put pressure on household finances. It's a reminder that growth across the economy doesn't necessarily mean every business or household is feeling the benefit. What happens next? The figures were released shortly before the Bank of England's latest interest rate decision, which saw rates held at 3.75%, and ahead of Chancellor John Healey's first Budget in October. Healey described UK economic growth as still fragile, although he pointed out that Britain had recorded the fastest growth in the G7 during the first half of the year. For businesses, the figures offer some encouragement, particularly around the growing role of technology and AI. However, with costs and borrowing pressures remaining a concern, there's still plenty of uncertainty ahead. If you're running a business and want a clearer picture of how your finances are performing, get in touch.  We can look at your figures and help you plan for what's ahead.

Your pension and inheritance tax: What changes in April 2027? For many people, pensions have traditionally been an important part of inheritance tax planning. Money left unused in a pension could generally be passed on to family members without forming part of the estate for Inheritance Tax (IHT). From 6 April 2027, that's changing. Under legislation introduced through the Finance Act 2026, most unused pension funds and lump sum death benefits will be included in the value of your estate when calculating Inheritance Tax. The change was first announced in October 2024, confirmed at the Autumn Budget in November 2025 and received Royal Assent on 18 March 2026. So this isn't simply a proposal that might happen. The legislation is already in place, with the new rules applying to deaths from 6 April 2027. What does this mean for your pension? Currently, most unused defined contribution pensions, including personal pensions, SIPPs and workplace pension pots, generally sit outside your estate for Inheritance Tax purposes. From April 2027, money remaining in these pensions when you die will normally be included alongside your property, savings and other investments when calculating the value of your estate. This includes pension funds you haven't yet accessed, money remaining in drawdown and most lump sum death benefits. There are, however, some important exceptions. Death-in-service lump sums and certain dependants' pensions will remain outside the new charge. Pension benefits left to a spouse, civil partner or registered charity will also continue to benefit from the existing Inheritance Tax exemptions. Defined benefit pensions, often called final salary pensions, are generally less affected because they don't usually involve an unused pension pot that can be passed on. Annuities are treated differently depending on their structure, although a joint-life annuity continuing to pay an income to a surviving spouse or civil partner isn't affected by these changes. Why could more families face inheritance tax? Inheritance Tax is normally charged at 40% on the value of an estate above the available allowances. The standard nil-rate band remains at £325,000, with an additional residence nil-rate band of up to £175,000 available in qualifying circumstances. The residence allowance begins to reduce where an estate exceeds £2 million. These thresholds are now frozen until April 2031. Bringing unused pensions into the calculation means that some estates which previously fell below the Inheritance Tax threshold could become liable for tax. HMRC estimates that, of approximately 213,000 estates expected to hold inheritable pension wealth in 2027/28, around 10,500 will face an Inheritance Tax bill for the first time. A further 38,500 estates are expected to pay more, with the average additional bill estimated at around £34,000 where pension assets are included. The measure is expected to raise an additional £710 million in 2027/28, increasing to £1.665 billion annually by 2030/31. How much difference could it make? Let's say you have a SIPP worth £150,000 which you intend to leave to your adult son. If the rest of your estate has already used up your available Inheritance Tax allowances, that £150,000 could currently pass to him without an Inheritance Tax charge. From April 2027, it would instead be included in your estate. At 40%, that could mean an additional £60,000 in Inheritance Tax, leaving £90,000. And there's another consideration. If you die aged 75 or over, your beneficiary will normally also pay income tax when withdrawing the inherited pension. Using the same example, if your son is a higher-rate taxpayer and pays 40% income tax on the remaining £90,000, that could mean a further £36,000 in tax. He would be left with £54,000 from the original £150,000 pension: a combined tax charge of approximately 64%. Of course, this is a simplified example. The actual position depends on the value of the wider estate, available allowances, exemptions and the beneficiary's tax circumstances. Pension benefits inherited following a death before age 75 can normally be withdrawn free of income tax, subject to the relevant conditions, including the two-year payment rule. Does this mean you should change your retirement plans? Not necessarily, but it does mean some existing plans may be worth reviewing. Many people have deliberately left their pensions untouched during retirement, using savings and other investments first. The thinking was that pensions could continue growing tax-efficiently and eventually pass to beneficiaries outside the estate for Inheritance Tax. From April 2027, that second advantage will generally disappear. For some people, it may make sense to reconsider the order in which they draw retirement income. However, there isn't a single approach that will suit everyone, and decisions about pension withdrawals should be discussed with a regulated financial adviser. It's also worth remembering that the tax advantages of saving into a pension haven't disappeared. Income tax relief on contributions, employer contributions and tax-free investment growth remain available. The standard annual allowance for 2026/27 is £60,000, although this can be reduced to as little as £10,000 for certain higher earners. Don't forget your will and pension nominations One area that's particularly worth checking is who you've nominated to receive your pension when you die. Many people have nominated children or grandchildren rather than a spouse, partly because of the previous Inheritance Tax advantages. Those nominations may still reflect your wishes, but the tax consequences could now be quite different. It's sensible to review your pension nominations alongside your will, any life insurance arrangements and your wider estate planning. The existing Inheritance Tax gifting rules also remain available, including the £3,000 annual exemption and the seven-year rule for larger gifts. From 6 April 2026, the £2.5 million allowance for 100% agricultural and business property relief also became transferable between spouses and civil partners. Another important change is that responsibility for reporting and paying any Inheritance Tax due on pension wealth will fall to the personal representatives dealing with the estate, rather than the pension provider. Pension beneficiaries can also be held liable for tax on the pension benefits they receive. Executors will therefore need to know what pensions exist and understand the additional responsibilities involved. There's still time to prepare The new rules apply across the UK, although the income tax treatment of pension withdrawals can differ for Scottish taxpayers because Scotland has its own income tax rates and bands. HMRC's Inheritance Tax receipts already reached a record £8.5 billion in 2025/26, and these changes are expected to increase the number of estates facing a liability. The important point is that pensions can no longer automatically be treated as separate from inheritance tax planning. That doesn't mean everyone needs to make drastic changes. For many families, particularly where pension benefits pass to a surviving spouse or civil partner, the immediate impact may be limited. But if your existing arrangements were made with the assumption that your pension would remain outside your estate, now is a good time to check whether they still achieve what you intended.  If you're concerned about how the April 2027 changes could affect your family's finances, get in touch. We can review the tax implications and help you understand where further estate or pension planning advice may be needed