Every simplification the projection makes, and everything it leaves out.
Not financial advice. Uses 2026/27 UK rates. Salary sacrifice reduces income tax and NI; personal/relief-at-source reduces income tax only; bonus sacrifice is always treated as pre-tax and pre-NI. These are simplifications of how each scheme actually works.
Pension percentages apply to full salary (auto-enrolment's legal minimums use a narrower band of qualifying earnings). Employee NI is per employment against standard annual thresholds. The personal allowance, the tax bands and the National Insurance limits are held in cash until 5 April 2031 and rise with prices after that, which is the law as announced at Budget 2025. So pay that only keeps pace with prices is taxed a little more each year until then. The same freeze is applied to every cash threshold the model taxes against, including corporation tax, the capital gains bands and the £100,000 and Child Benefit tests, several of which are not indexed by law at all; treating those as frozen for forty years would be as wrong as indexing them. Two thresholds sit outside the setting. The £3,000 capital gains exemption is held at its real value. Inheritance tax is worked out on the estate's cash value in the year of death against today's cash bands, so its bands stay frozen for the whole plan whatever the setting says. The nil-rate band has not moved since 2009. The tool can instead assume every threshold rises with inflation, or stays frozen for the whole plan as a stress case.
Where you live changes two things. A Scottish taxpayer's earned income, pensions and most other income are taxed on Scotland's bands (in 2026/27: 19% to £16,537, 20% to £29,526, 21% to £43,662, 42% to £75,000, 45% to £125,140 and 48% above), while savings interest and dividends stay on UK rates, as do National Insurance and capital gains tax. The Scottish limits are frozen and uprated with the rest of the thresholds under the setting above, which is an assumption: Holyrood sets them each year. And funded childcare follows the nation: in Scotland every 3- and 4-year-old gets 1,140 hours a year with no income test, so there is no funded-hours cliff at £100,000 there, only the Tax-Free Childcare one. In Wales every 3- and 4-year-old gets 10 hours of nursery education in term time, and the Childcare Offer raises that to 30 hours for 48 weeks where each parent works and has gross income of £100,000 or less. Gross means before pension contributions and salary sacrifice, so the pension routes that lower adjusted net income do not bring the offer back. In Northern Ireland the funded hours are not modelled and only Tax-Free Childcare is counted.
Student loans are repaid at 9% of income over the plan's threshold (£26,900 for Plan 1, £29,385 for Plan 2, £33,795 for Plan 4 and £25,000 for Plan 5 in 2026/27), and 6% over £21,000 for a postgraduate loan, on top. The income is the pay National Insurance is charged on, so salary sacrifice lowers the repayment and a personal pension contribution does not; unearned income such as dividends counts in full once it passes £2,000. Repayments stop when the balance is cleared or the loan is written off, 25, 30 or 40 years after the April they were first due. Thresholds are held at their real value, since they rise with RPI; interest is modelled only above inflation (nothing for Plans 1, 4 and 5, up to 3% for Plan 2 depending on income, and 3% for a postgraduate loan), so the gap between RPI and the inflation assumption is left out. A balance left blank is treated as unknown, and repays until write-off. Pension income in retirement is not counted towards repayments.
Rules with a date on them are applied in the year they start. The dividend rates are 10.75% and 35.75% from April 2026. The Lower Earnings Limit, £6,708 in 2026/27, rises with prices. The minimum age for drawing a pension is 55 until 5 April 2028 and 57 after, so anyone 55 or 56 today can draw only until then. State Pension age is taken from each person's year of birth (67 if born 1960 to 1976, 68 if born 1977 or later) unless you type your own. From April 2029, salary-sacrificed pension contributions above £2,000 a year pay National Insurance, while keeping their income tax relief. Not yet applied: the two-point rise in tax on savings and property income from April 2027, so rent and interest in later years are taxed at today's rates.
Partners are taxed independently but share one investable pot, one budget and one timeline; both employed pay and a director's extraction are worked out afresh every year, on that year's income in today's money, so the salary and dividend split, the bands and the Lower Earnings Limit floor all apply to the year they fall in.
Equity: RSUs and unapproved options are treated as employment income taxed at your marginal rate with employee NI when they vest or are exercised, stacked on top of salary and bonus, which is why a vest can push you into the personal-allowance taper. EMI options granted at market value are treated as free of income tax and NI on exercise; selling the company itself is a separate milestone, taxed with Business Asset Disposal Relief at 18% up to the £1m lifetime limit. Unvested equity is never counted in net worth. Only shares you already hold are. Vested shares you already hold grow at your assumed share price rate and are never sold by the plan, so no gain on them is realised; selling the taxable account, a second property or the company all are modelled and taxed.
Costs you type (childcare, recurring commitments and one-off spending) are treated as today's money and inflated to the year they land, matching how the budget buckets behave; a house price is used exactly as typed, since property follows its own price path you should set deliberately. The downside and upside band flexes investment returns only, not your income, spending or inflation.
Milestones draw from the shared pot; a house creates an amortising repayment mortgage, pays the purchase tax where you live on the way in (stamp duty in England and Northern Ireland, LBTT in Scotland, Land Transaction Tax in Wales) and appreciates at the property growth rate you set; loans amortise with no asset attached. The allocation treats every class (private equity, infrastructure, VC and commodities included) as one liquid pot growing at the blended rate; in reality private-market stakes are illiquid, often drawn down over years, and can't fund a deposit at short notice. The tool warns when a plan needs cash you won't have or commitments outrun saving. The annual-allowance facts ignore carry-forward and taper detail.
Capital gains use Section 104 pooled cost with losses carried forward; inheritance tax uses the nil-rate and residence bands with pensions inside the estate from April 2027. The capital gains exemption can be used each year as an option on the Wealth page; left off, the projection models no disposals at all.
The projection itself is one fixed return a year. The simulation on the Projection tab runs that same plan a thousand times over with the returns varying, and changes nothing else: the cashflows, the tax, the milestones and the drawdown are the ones the projection already produced, and only the growth applied to each year's opening balance is redrawn. Fed the projection's own return it reproduces the projection to the pound, which is asserted by a test rather than assumed.
Returns are drawn from a lognormal distribution each year, independently: a fall one year makes neither a recovery nor another fall more likely the next. Real returns are not quite like that: bad years are more extreme than a normal distribution allows, and volatile years come in runs. This page used to say that independent draws therefore understate the worst cases. That was tested rather than left as a guess: the simulation was re-run against years drawn from two volatility regimes (calm, and stressed at two and a half times the volatility about one year in ten, with stressed years tending to follow each other), holding the same overall volatility and the same average return. Over twenty thousand runs a plan, on a long accumulation and on two retirements, the chance of the money running out and the tenth-percentile outcome did not move beyond sampling noise. The one-in-a-hundred outcome was a few per cent lower, and the one-in-ten best outcome a few per cent lower too. So independent draws do not understate the figures this tool shows, and they are kept. What neither version includes is any tendency for markets to recover after a fall or keep falling after one.
The spread comes from your mix. Annualised standard deviations assumed, long run and nominal: equities 17%, property 13%, private markets 22%, commodities 16%, bonds 6%, cash 1%, and a holding in a single company 35%. That is roughly twice an equity index, because an index has already diversified away everything except market risk and one company has not. These are round numbers in the range the historical record supports, not estimates from a particular dataset; a figure like 16.3% would imply a precision nobody has.
Correlation is two numbers rather than a matrix: growth assets are assumed to move together at 0.7, growth and defensive assets at 0.2, and a single company with equities at 0.7. A full matrix would look more rigorous and would not be more accurate. The portfolio's standard deviation is computed from those weights and correlations, so diversifying reduces it and concentrating in one holding raises it. That is how a concentrated position visibly widens the range.
The average return is not a second opinion: it is the mean of the rates the projection itself used, so a glidepath or a drifting mix is carried through without the simulation needing to know what either is. Inflation, income, spending and tax bands do not vary. Only investment returns do. A run "fails" when the balance reaches zero before the plan's end age, which is a definition and not a prediction; a real household would change what it spent long before that. A thousand runs shows the shape of the range and does not support reading a single percentile to the pound.
Not modelled: the same-day and 30-day share matching rules, US withholding on RSU vests and double-taxation treaty relief, section 431 elections and the EMI, CSOP and SAYE scheme rules, business and agricultural relief, trusts, and charitable inheritance-tax rates, IR35 status, the National Insurance annual maximum for people with more than one job, the funded childcare hours in Northern Ireland, leaving profit in the company rather than paying it all out each year, the two-point rise in tax on savings and property income from April 2027, tax on dividends and interest arising inside a taxable investment account each year and the Lifetime ISA bonus and withdrawal charge.
Nothing here connects to your accounts. Every figure is typed in by you, which is deliberate.