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5 tips for managing your personal tax as a business owner

Running a successful business can be incredibly rewarding, but ensuring your hard-earned profits translate into personal wealth can be challenging.

Indeed, this exercise requires careful, ongoing planning, and some entrepreneurs spend so much time managing their firm’s operational cash flow that they overlook their personal tax position.

This could leave money on the table and see you paying more tax than necessary.

Fortunately, you have plenty of options to work with, from optimising your salary levels to utilising tax-efficient investment wrappers. Here are five practical strategies you could adopt to help manage your tax liability.

1. Mind the Income Tax thresholds when setting your director’s salary

As the owner of a business, paying yourself a modest salary combined with dividends is often key to tapping into your company’s profits. However, setting the right salary for yourself requires balancing several key factors, including maintaining qualifying National Insurance contributions (NICs) to help build your record for the full State Pension without triggering unnecessary personal tax.

It’s important to remain mindful of higher income thresholds, as they could push you into higher tax brackets and eat into your cash flow.

As of the 2026/27 tax year, Income Tax rates and bands are as follows:

Please note: Scotland has different Income Tax thresholds and rates, which could affect your personal tax liability.

Once your total taxable income exceeds £100,000, your Personal Allowance tapers away by £1 for every £2 earned above this threshold. This creates an effective marginal tax rate of 60% on income between £100,000 and £125,140.

While taking a salary up to the Personal Allowance may be tax-efficient, keep in mind that the employer Secondary Threshold for National Insurance sits at £5,000. So, unless your business qualifies for the Employment Allowance, salaries above £5,000 will trigger employer NICs.

2. Consider whether taking dividends is an appropriate addition to your salary

Dividends offer a flexible way of extracting profits because they are not subject to employee or employer NICs. However, dividends can only be distributed from profits retained after Corporation Tax has been deducted.

The UK government grants each taxpayer a £500 tax-free Dividend Allowance. Dividend income above this threshold is then taxed at rates determined by your overall Income Tax band. These are the rates as of the 2026/27 tax year.

• Basic rate band:75%
• Higher rate band:75%
• Additional rate band:35%

For UK limited company directors, a combination of salary and dividends may be more tax-efficient than taking all of your income as either one alone.

3. Make the most of employer pension contributions to lower your tax liability

Overlooking your pension could be a significant mistake, yet many business owners miss out on the opportunity. In fact, according to data reported by Pensions Age, 50% of self-employed workers made no monthly contributions to a pension or retirement fund.

Whether your long-term plan is to sell your business or build independent wealth elsewhere, paying into a pension delivers dual benefits: building a reliable retirement safety net while reducing your overall tax burden.

Instead of making personal pension contributions from your taxed income, your limited company can make direct employer pension contributions on your behalf.

Because these are usually treated as an allowable business expense, this also reduces your business’s Corporation Tax liability.

Under the standard Annual Allowance, you can contribute up to £60,000 per tax year into registered pension schemes. However, you can only claim tax relief up to 100% of your annual earnings. You may also carry forward unused allowances from the previous three tax years. High earners bringing home more than £200,000 should note that a tapered Annual Allowance may apply. If you have already accessed your pension flexibly, you could be subject to a lower Annual Allowance.

4. Use tax-efficient investment wrappers to protect non-business growth

Pulling wealth from your business is one part of the equation. It’s just as important to consider where you hold those assets. Remember, holding excess capital in standard taxable bank accounts or General Investment Accounts could expose your returns to Dividend Tax, Capital Gains Tax (CGT), and Income Tax.

Maximising your annual ISA allowance enables you to save or invest up to £20,000 each tax year free from Income Tax and CGT.

Keep in mind that from April 2027, ISA rules are changing. A Cash ISA limit of £12,000 will be introduced for savers under age 65.

The total annual ISA limit will remain at £20,000, which aims to encourage further investment in Stocks and Shares ISAs.

5. Be sure to claim all allowable business expenses to reduce taxable profit

Claiming all legitimate business expenses can reduce your company’s net profit, which lowers Corporation Tax and preserves more funds within the business for future investment or distribution.

Allowable expenses must be incurred “wholly and exclusively” for business purposes. Common expenses that you may be forgetting to claim fully include:

• Working from home allowance. You can claim the flat HMRC rate or calculate a percentage share of household utility bills.
• Business travel and mileage. You can claim 45p per mile for the first 10,000 business miles (and 25p thereafter) when using a personal vehicle.
• Professional subscriptions and training. Industry body memberships, relevant professional publications, and training directly related to your business operations all count as allowable expenses.

Ensure you maintain clear digital records, receipts, and invoices as part of your system. This provides a transparent paper trail for HMRC and keeps your business secure and compliant.

Take your next steps towards tax-efficient business management

Managing your personal tax position alongside running a successful business requires balance, foresight, and specialist knowledge.

Whether you would like to optimise your profit extraction strategy, structure your pension contributions, or protect your wealth, we’re here to help.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Do ultra-long mortgages provide a solution for struggling first-time buyers?

Rising property prices have left many aspiring homeowners struggling to get on the property ladder. If you’re in this situation, you might consider taking out a so-called “ultra-long mortgage” that you repay over 30 to 40 years.

Traditionally, first-time buyers have taken out a mortgage with a 25-year term. A combination of factors, including property prices, means this isn’t affordable for some buyers. As a solution, more buyers are choosing to repay their mortgages over a longer time frame.

An FTAdviser article (25 August 2026) suggests 66% of mortgage holders under the age of 30 have mortgage terms of between 30 and 40 years.

If you’re facing affordability challenges, an ultra-long mortgage could be a useful option to assess. You should note that mortgage lenders may set a maximum age limit for when the mortgage will end, often linked to retirement age, which may affect your eligibility for a longer mortgage term.

An ultra-long mortgage could reduce your monthly repayments

As you’ll be spreading repayments over a longer time frame, your monthly outgoings would fall if you chose an ultra-long mortgage. This could help you manage your monthly budget.

Imagine you have a £200,000 repayment mortgage with an interest rate of 4.5%. With a mortgage term of:

• 25 years, your monthly repayment would be £1,111
• 40 years, your monthly repayment would be £899.

In this scenario, your monthly repayment would be more than £200 lower by making repayments over 40 years.

When reviewing your mortgage application, lenders will usually assess how affordable the repayments will be, including if interest rates increase. As a result, by lowering the monthly repayment by opting for a longer mortgage term, you could increase the likelihood that the mortgage will be affordable under the lender’s assessment.

A longer mortgage term may increase the cost of borrowing

Assuming you have a repayment mortgage, each month, your repayment will cover the interest charged and reduce the outstanding balance. As you’ll be making these repayments for longer, the total amount of interest you pay could rise.

Referring back to the earlier scenario, where you have a £200,000 repayment mortgage with an interest rate of 4.5%, you’d pay:

• £133,370 in interest over the full mortgage term on the 25-year option
• £231,348 in interest over the full mortgage term on the 40-year option.

In this case, by choosing an ultra-long mortgage, you’d pay almost £100,000 more in interest. As a result, if you can afford to take out a mortgage with a shorter term, it could make financial sense to do so when you consider the longer-term cost.

How to manage the cost of borrowing when you choose an ultra-long mortgage

If you take out an ultra-long mortgage as a first-time buyer, there are steps you could take to reduce the amount of interest you pay.

Shop around to find a competitive mortgage deal

The interest rate you pay will impact your repayments and total cost of borrowing. The interest rate you’re offered may vary between lenders, so exploring different options could help you reduce your borrowing costs. As mortgage advisers, we’re here to help you understand your needs and assess different options.

Make mortgage overpayments

When you overpay your mortgage, the additional payment reduces your outstanding balance. This could help you become mortgage-free sooner and reduce the total cost of borrowing. You may be able to make regular or one-off overpayments.

Overpaying may be a good option if you want flexibility, as you’ll be in control of when additional payments are made. So, if you were making regular overpayments and had an unexpected bill, you could pause them.

Keep in mind that an early repayment charge (ERC) may be applied when making overpayments. Some mortgage deals allow you to overpay up to 10% of the outstanding balance each year without incurring an ERC, but you should check the terms of your mortgage deal.

Shorten the mortgage term in the future

Choosing an ultra-long mortgage as a first-time buyer doesn’t mean you have to stick to this time frame.

When your mortgage deal expires, it’s a good time to reassess your financial position. When applying for a new mortgage deal, you could choose to shorten the term if it’s affordable. Again, this could mean you become mortgage-free sooner and pay less interest overall.

Contact us

If you’d like to talk about your mortgage needs and whether an ultra-long mortgage term could be suitable for you, please contact us.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Why gifting your home during your lifetime could be a mistake

With property prices rising across the UK, the home represents the single largest asset in the estate for many families. Indeed, research reported by Zoopla (17 July 2025) shows that the average UK home increased in value by 20% between 2020 and 2025.

That being the case, it’s easy to understand why many homeowners consider gifting their property – or a share of it – to children or grandchildren during their lifetime.

You may be considering it yourself, whether to provide immediate financial support to your loved ones or ensure the home remains within the family. However, for some, the primary reason is to reduce a potential Inheritance Tax (IHT) bill.

While the intention behind the gift is understandable, executing it without careful planning could be a mistake. Here’s why, along with alternative options you might want to consider.

Transferring ownership of your residence exposes you to potential legal and financial risks

Once you gift your property, you no longer legally own it. Even if you have a verbal agreement with your family that you can stay in the home, life events could unexpectedly jeopardise your living situation.

If the person you gifted the property to faces divorce, personal bankruptcy, or dies before you, the house could quickly become an asset involved in legal proceedings. Here, the court or a creditor may force a house sale, leaving you facing unexpected eviction or forced relocation.

Complex tax rules often mean gifting your home is rarely as simple as you think

Gifting a property rarely results in the straightforward tax savings many expect. Here is what you need to consider before making a transfer:

• Gift with reservation of benefit: If you gift your home to your children but continue living there rent-free, HMRC treats this as a “gift with reservation of benefit”. The property will remain part of your taxable estate for IHT purposes upon your death, potentially rendering your original goal moot. To avoid this, you would need to pay full market rent to your children, which could then create an Income Tax liability for them as they effectively become landlords.
• Capital Gains Tax (CGT): While your primary residence is exempt from CGT under Private Residence Relief, gifting a second property or giving a home to someone who does not live there as their main residence may trigger a CGT bill on any growth in value since you bought it, even though no cash changed hands.
• Loss of the residence nil-rate band: Gifting your home during your lifetime can inadvertently complicate or reduce your eligibility for the residence nil-rate band allowance, which is up to £175,000 in 2026/27. This may allow individuals to pass a main residence to direct descendants tax-free upon death. Spouses or civil partners may pass on their unused residence nil-rate band to the surviving partner, potentially doubling their allowance. You should note that the residence nil-rate band will taper by £1 for every £2 that your net estate exceeds £2 million. If you gift your home away entirely during your lifetime and do not own a residence at death, you could forfeit this valuable allowance.

Because these rules interact in complicated ways, they can quickly trigger immediate and future tax liabilities for both you and your beneficiaries, so it’s important to approach the task with caution.

Local authorities may treat the transfer as a deliberate deprivation of assets

If you gift your home to avoid having its value included in a financial means assessment for residential care, then local authorities can investigate under the Deprivation of Assets rule.

If a council determines that your primary motive for transferring the property was to circumvent paying care fees, they still have the power to include your home’s value when calculating your care contribution. They may even seek to recover costs directly from the recipient of the gift.

Navigating these legal and tax hurdles ultimately requires caution, as an unintentional error could leave your family facing higher tax bills than if you had simply retained ownership.

There are safer alternative strategies to support your loved ones

If your goal is to help your family financially or reduce the impact of IHT on your estate, there are several safer ways to go about this task without putting your home at risk.

• Use your lifetime gifting allowances: You can gift up to £3,000 tax-free each year under your annual exemption, alongside small gifts of up to £250 per person so long as they have not benefited from other gifting allowances, without triggering an IHT bill.
• Make a potentially exempt transfer: You can gift cash, investments, or other assets outright. Provided you survive for seven years after making the gift, the value will fall outside of your taxable estate. If you do not survive for seven years, then IHT may still be reduced according to taper relief.
• Gift out of your surplus income: If you have regular surplus income that you do not need to maintain your standard of living, then you can make regular tax-free gifts that are immediately exempt from IHT, provided they are well documented.
• Use life insurance held in trust: If you are concerned about a potential IHT bill, consider putting a life insurance policy in trust to provide a dedicated, tax-free cash payout upon your death that is specifically designed to cover any IHT liability.

Exploring these structured alternatives with a financial planner means you can support your family during your lifetime while still maintaining control over your home and financial security.

This is something we can help with, so get in touch and let’s explore your options.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, tax planning, or trusts.

Remember that taper relief only applies to gifts in excess of the nil-rate band. It follows that, if no tax is payable on the transfer because it does not exceed the nil-rate band (after cumulation), there can be no relief.

Taper relief does not reduce the value transferred; it reduces the tax payable as a consequence of that transfer.

How to balance your goals when you’re flexibly accessing your pension

Flexible pension withdrawals have reached record levels since Pension Freedoms were introduced in 2015. While total control over your retirement fund can be liberating, it places the onus on you to ensure you’re managing your finances responsibly.

UK retirees rely heavily on flexible access to their pensions, and the data supports this. According to figures reported by MoneyAge (30 July 2026), total taxable flexible pension withdrawals have exceeded £124.7 billion since Pension Freedoms were introduced.

In the 2025/26 tax year alone, retirees withdrew £22.4 billion, driven by an increasing number of individuals accessing their defined contribution pension pots.

While accessing your pension flexibly means you can shape your retirement income around your lifestyle, it’s even more important to strike a balance that works for your unique circumstances.

After all, you likely want the freedom to enjoy the early, active years of retirement without running out of money later in life.

Here are four strategies to help you find the right balance.

1. Calculate a sustainable withdrawal rate

One of the largest risks in flexible drawdown is withdrawing too much, too soon. This is especially the case during the early retirement period or in times of market decline.

This is also called sequencing risk – or the danger of negative returns occurring early in your retirement. This could disproportionately shrink your capital and affect future investment growth.

To avoid depleting your pot prematurely, it may be important to establish a sustainable withdrawal rate.

A general guideline some people use is the 4% rule as a benchmark, as Fidelity (3 February 2026) notes. However, a rigid percentage doesn’t account for real-world volatility.

Your ideal rate may change and depends on your personal circumstances, expected lifespan, investment portfolio performance, and inflation rates.

Importantly, adjusting your withdrawals during market dips allows your portfolio time to recover and means you can preserve more capital for the future.

2. Consider a hybrid approach with annuities and drawdown

To build a resilient plan, it helps to understand the core distinction between your options.

• An annuity exchanges a portion of your pension pot for a guaranteed, lifelong income stream.
• Flexi-access drawdown keeps your funds invested in the market but allows you to take variable withdrawals as needed.

You don’t have to choose strictly between flexi-access drawdown and a traditional annuity. A hybrid approach allows you to combine the security of a guaranteed lifetime income with the growth potential of drawdown. This could secure essential expenditure and help fund discretionary spending.

• Securing essential expenditure: You can use a portion of your pension pot to purchase an annuity, guaranteeing a lifetime income to help you cover essential living costs such as utilities and Council Tax.
• Funding discretionary spending: The remaining funds in your pension can stay invested in flexi-access drawdown, so you can use flexible withdrawals to fund other goals, such as travel, hobbies, or helping family.

By blending both products, you remove the stress of funding your basic needs with potentially volatile investments while maintaining the flexibility to adjust your lifestyle as needed.

3. Be tax-smart with your withdrawals

How you access your money can significantly affect how long it lasts.

You can generally take up to 25% of your pension tax-free, subject to your Lump Sum Allowance, which is capped at £268,275 as of the 2026/27 tax year. This is frozen until April 2031.

Taking this in phased lump sums over time rather than a single upfront payment can help keep your overall income in lower tax brackets.

As a note, here are the Income Tax rates and bands as of 2026/27.

• Personal Allowance (0%) – Up to £12,750
• Basic rate (20%) – £12,750 to £50,270
• Higher rate (40%) – £50,271 to £125,140
• Additional rate (45%) – over £125,140

Moreover, keeping Income Tax thresholds in mind when you’re making your withdrawals could help you manage your tax liability.

4. Conduct regular financial reviews

Retirement is dynamic, not static, and your spending habits will naturally evolve through different stages of retirement.

They are often higher in your early active years, may dip mid-retirement, and rise again due to long-term care needs.

Reviewing your portfolio, withdrawal rate, and health goals annually helps ensure your strategy adapts to shifting markets and changing personal priorities.

Find your next steps towards a more secure future

Yes, managing a flexible retirement income requires balance, but you don’t have to navigate it alone.

For a tailored strategy specific to your circumstances, talk to us today.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.

The hidden emotional challenges of gifting assets during your lifetime

Passing assets to your loved ones during your lifetime could have many benefits. Yet, that doesn’t mean it’s simple, and you might experience emotional challenges even if you’re sure it’s the right thing to do in your circumstances.

According to an FTAdviser article (29 July 2026), 7 in 10 people believe financial support should be given to beneficiaries early when it could make the biggest difference. Just 8% of people believe wealth should mainly pass on after death.

As well as potentially providing support when your loved ones could benefit the most, a living legacy means you could see the impact your gift has.

Another reason gifting during your lifetime is growing in popularity is that it could be useful from an Inheritance Tax (IHT) perspective. Not all gifts are immediately outside your estate when calculating IHT. However, some gifts may fall outside your estate for IHT purposes if you survive for seven years after making them.

As a result, passing on assets earlier in your life could reduce a potential IHT bill.

Despite the benefits, it’s normal to have misgivings about passing on assets. Here are three emotional challenges benefactors might face.

3 emotional challenges and how financial planning could help

1. You’re worried gifting assets could affect your long-term financial security

Even if you’re confident in your finances, you may worry about how your circumstances could change in different scenarios.

You might worry that gifting assets now could compromise your financial security if an unexpected event occurred. Indeed, the FTAdviser article notes that 37% of respondents said the risk of running out of money was the biggest barrier to providing financial support.

Having a cashflow model could ease your concerns. A cashflow model can illustrate how your financial position could change over your lifetime based on different decisions you make.

So, if you’re thinking about gifting assets now, you might review how this would affect your long-term finances. You can model unexpected events too, such as how gifting assets and then experiencing a high unexpected cost or a period of market volatility might affect you.

You should note that the results of a cashflow model depend on the data entered and the assumptions used. As a result, they cannot be guaranteed.

However, being able to visualise the impact of different scenarios on your financial security could provide peace of mind or highlight potential risks before you proceed.

2. You’re concerned about how the beneficiary will use the gift

You’ve worked hard during your life to become financially secure, and giving up control of assets might feel daunting. What if your loved one uses the gift differently from how you intended?

Working with a financial planner could help you explore your options.

One option would be to involve your beneficiaries in relevant parts of your estate-planning discussions. This could allow you to state how you’d like them to use the gift and help them understand its financial implications.

Another option might be to establish a trust. Some trusts allow you to set out conditions about how and when the assets are to be used.

Trusts are a legal arrangement, and you may not be able to remove assets once they’ve been placed in a trust. Seeking both legal and financial advice could help you assess whether using a trust is the right choice for you and your beneficiaries.

3. You suspect gifting assets might lead to difficult discussions about your estate plan

Passing on your assets during your lifetime often leads to wider discussions about your estate plan, such as the contents of your will or your wishes if you need care later in life. Some people may delay deciding because they find these topics difficult to discuss.

These conversations can be challenging, but they’re often important. Working with a financial planner can help you consider practical points and prepare you for talking to your loved ones.

Contact us

As your financial planner, we could help you assess different options for passing on wealth to your loved ones and provide reassurance if you’re concerned about the implications. Please get in touch to talk about your estate plan.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

The Financial Conduct Authority does not regulate cashflow modelling, trusts, or estate planning.

Investment market update: September 2026

In September 2026, markets experienced some volatility due to conflict in the Middle East and the impact it had on energy prices. Discover other factors that may have affected the performance of your portfolio.

Markets got off to a weak start on 1 September. A global government bond sell-off, caused by concerns about inflation and government debt, led to markets falling. Among the indices affected by the dip were London’s FTSE 100 and Germany’s DAX, both of which were down by 1.1%.

Asian markets were also impacted by the sell-off when they opened. On 2 September, it was reported that Japan’s Nikkei 225 index was down 2.7%, while South Korea’s KOSPI (-3.3%) and China’s CSI 300 (-1.4%) also fell.

Concerns about rising energy prices led to European markets falling on 8 September. Unsurprisingly, energy companies bucked this trend, with FTSE 100 firms BP (0.8%) and Shell (0.35%) opening higher.

This continued on 9 September, when it was reported that UK and European gas prices had surged to multi-year highs as oil reached $100 per barrel. British gas prices were reportedly at their highest level since late December 2022. While the FTSE 100 was down 0.6%, energy firms once again were among the only businesses to see share prices rise.

For several months, worries about AI companies being overvalued have affected markets, and this concern reared its head again on 14 September.

AI-linked stocks slowed down, which affected share prices across the globe. For example, in Tokyo, SoftBank, a major AI investor, saw its share price fall by 13%, and chipmaker SK Hynix, which is listed in South Korea, fell 5.75%.

European markets weren’t spared. The STOXX Europe 600 index fell 2.3% between 31 July and 14 September following calls for the AI industry to slow down for safety reasons.

Trade tensions between the US and China have contributed to volatility throughout 2026. However, on 21 September, trade talks between the two nations, coupled with oil prices declining, led to investor optimism that provided a welcome boost to Asian markets.

UK

UK GDP beat forecasts with 0.4% growth in July, putting the economy on track for a stronger-than-expected third quarter of 2026. The boost was supported by AI activity, high temperatures throughout the summer, and the FIFA World Cup. The figure represents the fastest pace of growth since February 2025.

However, inflation remained high. In the 12 months to August 2026, inflation was 3.1%. Despite inflation being above the Bank of England’s (BoE) 2% target for months, the central bank opted to hold interest rates where they were.

However, market experts from IG expect the BoE to increase interest rates four times by July 2027, including a rise this year.

Purchasing Managers’ Indices (PMI), which provide an economic indicator of business activity, were above the 50 mark that indicates growth for the manufacturing and service sectors. Nevertheless, both sectors face challenges as inflation will affect input costs.

Indeed, 31% of service sector businesses said costs were rising, compared to just 1% that noted a fall.

Europe

Eurozone inflation hit a three-year high of 3.2% in the 12 months to August. The increase was linked to rising energy costs and put it well above the European Central Bank’s (ECB) target of 2%. In response to the inflation data, the ECB increased interest rates for the second time this year in a bid to bring inflation under control.

There was good news from other economic data.

The eurozone private sector growth hit a three-and-a-half-year high, helped by AI activity and defence spending. The PMI reading was 53.

Manufacturing PMI was also positive at 52.7. The reading was the highest in more than four years, with the bloc’s largest economies, Germany and France, both enjoying strong growth. Export sales were also up for only the second time in four and a half years, with particularly strong performances in Austria, Germany, and the Netherlands.

US

US inflation fell slightly to 2.4% in the 12 months to August 2026, though it remains above the 2% target.

Despite pressure from President Donald Trump to slash interest rates, the Federal Reserve raised interest rates for the first time in three years. The hike will see interest rates of 3.75% – 4% after a quarter of a percentage point increase.

Asia

Japan’s central bank was among those hiking interest rates in September. The quarter-percentage-point increase to 1.25% means the country’s interest rates are at the highest level since 1995.

China’s economic indicators suggest that the country’s growth is slowing down. For example, consumption and investment are both underperforming, though notably exports and industrial production are stronger than expected. Policymakers are facing renewed pressure to increase stimulus spending as a result.

The long-awaited initial public offering from fast fashion giant Shein may be a disappointment to investors. The company’s shares listed in Hong Kong tumbled at the start of the month. The company has been affected by regulatory changes in the US and the EU, which could remove reduced import duties on small packages.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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