Autumn Statement – reaction from investment and financial experts to Chancellor Hunt’s announcements

by | Nov 23, 2022

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Following Chancellor Hunt’s plans for taxes and government spending which were announced in Parliament on Thursday, 17th November, investment and finance experts have been sharing their thoughts and reactions with IFA Magazine as follows:

Dr Matthew Connell, director of policy and public affairs at the Chartered Insurance Institute, said “ This budget was inevitably going to lead to higher taxes, and the freezing of personal allowances in both income and inheritance tax will affect most households. However, with the right kind of financial planning, families can reduce their tax bill. The changes in the budget mean that getting professional financial advice is more important than ever.

“The Chancellor rightly voiced concerns over the increase of 630,000 economically inactive adults since the start of the pandemic, costing the taxpayer billions of pounds. Insurers play a vital role in getting people back to work – Swiss Re research has shown that for every £1 spent by insurers on rehab, £9 is saved by avoiding prolonged economic inactivity. We call on the government to work with insurers to increase take up of insurance such as income protection throughout the UK economy, to realise still greater savings.

“We welcome the government’s decision not try to increase revenue through an increase in insurance premium tax, which is increasingly being viewed as a stealth tax on the most vulnerable, because the people who pose the greatest risks, often through no fault of their own, end up beating the brunt of any rise in tax.

“Our greatest concern remains the delay to the Dilnot reforms to 2025. This means that six generations of elderly people will have spent the average stay of 30 months in a care home from beginning to end since the Dilnot Commission was set up in 2010 (average stay in care home https://www.independentage.org/news-media/press-releases/cost-of-average-length-of-stay-a-residential-care-home-equivalent-to-26) – the public needs certainty about care costs before they can plan for care financially.”

Commenting on the government’s Autumn Statement, Chris Cummings, Chief Executive of the Investment Association, said:

“Investment managers support the government’s commitment to a stable, growing economy, and importantly, the commitment to reviewing financial regulation to identify opportunities to unlock growth, boost skills and foster innovation. A strong regulatory environment is key, but we believe there are untapped opportunities to unlock growth which also protect and benefit the consumers we serve.”

“This will support our industry’s crucial role in powering businesses and helping people across the county to meet their long-term financial goals. Our industry is founded on high regulatory standards and innovation, and it is promising to see financial services identified as a key area for growth. We look forward to working with government on measures to provide stability and support to businesses and communities during this time of international economic uncertainty.”

Chancellor has missed opportunity to reduce inheritance tax avoidance by reforming an unfair system, says STEP

“Today’s Autumn Statement was a missed opportunity to reduce inheritance tax avoidance and reform an ineffective and an unfair system, says STEP, the global professional membership body.

Following today’s announcement, the inheritance tax nil rate bands that are already set at current levels until April 2026 will continue until April 2028.

Commenting on this announcement, Emily Deane TEP, STEP’s Technical Counsel and Head of Government Affairs, said: ‘‘STEP has long argued that the inheritance tax system is too complex, unfair and in dire need of reform.

‘A low-rate tax with few reliefs and exemptions is far preferable than one with a high headline rate that those who can afford professional advice can avoid.

‘However, instead of simplifying the system, which would still benefit the public purse, the government is essentially maintaining the status quo by freezing the nil-rate band.

‘It is incredibly disappointing that the government has frozen inheritance tax until 2028. Tinkering with rates and reliefs will do nothing to address the huge complexity many families face.

‘Any changes must look at the tax as a whole, not just individual reliefs and rates, which if scrapped and amended in isolation can lead to increased avoidance and abuse.

‘Not reforming inheritance tax would be a missed opportunity to make positive changes to address this complex, ineffective and unfair tax.’

Sarah Pennells, Consumer Finance Specialist at Royal London, said:

“The re-instatement of the triple lock is good news for all pensioners, but is particularly important for the 54% of pensioners who rely on it as their main source of income. The triple lock – a 2019 manifesto promise suspended last year because of Covid, means the State Pension will rise by the Consumer Prices Index inflation measure of 10.1%. This will increase weekly payments for the new State Pension from £185.15 to £203.85 from April 2023, taking the annual pension to £10,600.20, above £10,000 for the first time.

“The triple lock was introduced in 2010, when the basic State Pension was £97.65 a week and it was designed to ensure that the State Pension kept up with prices or earnings.

“The chancellor also announced that Pension Credit rates would rise in line with inflation. Pension Credit – a top-up benefit for pensioners on the lowest incomes, is one of the most under claimed benefits. Because it’s a gateway benefit to other help, such as with Council Tax, energy bills and housing costs, it can be worth an average of £3,300 a year.

“The State Pension age rise review,  published next spring could bring forward the timetable for increasing the State Pension age to 68 and potentially beyond.”

Commenting on the Chancellor’s decision to keep the triple lock on state pensions, Angela Madden, Chair of WASPI – Women Against State Pension Inequality, said:

“This is the very least that the current government could do to protect pensioners in some of the toughest conditions for old age yet.

“Hundreds of thousands of elderly people are now facing escalating energy and food costs with very little to fall back on. Women born in the 1950s are already on the back foot having had their retirement age changed from 60 to 66 without their knowledge.

“During these winter months, hundreds of our members have been in touch to share their harrowing personal stories. Many WASPI women are currently having to make the choice between heating and eating. 

“The DWP and Treasury refuse even to meet with us to discuss other possible solutions to tackle the poverty which many WASPI women face. We urge Mr Sunak to change his stance on this and meet with us, before more WASPI women die waiting for justice.”

Dean Moore, Managing Director & Head of Wealth Planning at RBC Wealth Management, said: “There were some very large numbers in today’s Autumn statement – with the government’s borrowing requirements reaching a staggering £177bn this year, but is projected to fall to £140bn in 2023. It is a balanced budget statement, designed to raise revenues and cut costs while asking “more from those who have more”. There is no increase to headline rates, but reducing allowances and frozen thresholds will impact earned and unearned income.

“For income tax, the 45% additional rate threshold has been reduced from £150,000 to £125,140. On the other hand, personal allowance, basic and higher rate thresholds have been fixed until April 2028. This means that for individuals earning £150,000 or more will pay an additional £1,200. The freezing of rates will drag more earners into higher rates and reduce real earnings. The dividend allowance cut from £2,000 to £1,000 in 2023 and £500 by 2024 will mean individuals utilising the full allowance will be up to £590 worse off by 2024.

“The capital gains tax allowance has been cut from £12,300 to £6,000 in 2023 and £500 by 2024. This means that individuals utilsiing the full allowance will be up to £2,600 worse off by 2024. Taxpayers should consider realising gains within available allowance while it is higher. As the corporation tax rate rise to 25% is to go ahead in 2023, it increases the tax drag on gains within family investment companies. This, coupled with a reduced dividend allowance, means that extracting profits will come with significant tax consequences.

“Stamp duty cuts to remain until 31st March 2025 which acts as a signal from the Government to support the housing market through the likely recession and until interest rates and inflation stabilise.

“Investors will be pleased no increase to headline rates materialised, but the reduction in allowances will leave personally invested assets more exposed to CGT at 20% and Dividend tax at up to 39.35%. Talk of rising taxes provides a good opportunity to offer clients a review of their structuring and to look at a range of tax efficient investment tools available from ISAs and pensions to international bonds or family investment vehicles as well as EIS and VCT investments to help limit the increased burden.”

Anthony Whatling, Tax Partner at wealth manager and professional services firm Evelyn Partners, says in respect of the income tax changes announced:

‘In 1990 only 1.7 million people paid 40% tax, with the figure rising to 2.1 million when Tony Blair came into power in 1997.[1] HMRC estimated the number of people being drawn into the higher rate band to have surged by nearly 44% since the 2019/20 tax year to 5.5 million this year.

‘At these rates of increase, and given that earnings are rising quite rapidly, it is probable that the number of people subject to 40% income tax will exceed 8 million under this prolonged freezing of allowances until 2028. That will be double the number of higher rate taxpayers when the initial freeze was announced by Sunak in 2021.[3] 

‘The threshold at which the top rate of income tax is paid has been frozen at £150,000 since it was introduced in 2010. Initially it was paid by 236,000 workers but is now paid by 629,000 – and with the slashing of the threshold to £125,140 it has been estimated that number could now jump by another 246,000. 

‘There is not a great deal most taxpayers can do about this. One route to mitigate exposure to higher and additional rate income tax is through making pension contributions, as these currently provide tax relief at the marginal rate. Those who have the option of contributing to their pension via salary sacrifice should certainly consider it as this system offers relief from National Insurance in addition to income tax. 

‘Annual bonuses can also often be paid direct into pensions, affording relief from taxation. Likewise, other workplace schemes that allow products and services such as electric vehicles, bicycles and child care to be purchased out of gross pay will all go to help.’ 

Chris Eastwood, Co-Founder of leading pensions provider Penfold, comments on the government’s commitment to ‘triple lock’:


“Pensioners across the country will be welcoming today’s commitment to triple lock. Hopefully, today’s decision brings an end to the uncertainty and turbulence that has characterised the pensions industry for some months now. The removal of the triple lock would have only added to the worrying levels of pensioner poverty we are already seeing. However, at only £200 per week, the state pension is still not enough to afford a moderate lifestyle when you retire so we are encouraging savers to consider alternative means of getting ready for life after work such as saving into a SIPP alongside your workplace pension and combining old workplace pensions throughout your career so you’re able to keep track of how much you have saved and where you need to get to.”

Commenting on the Autumn Budget and the rise in taxes, Andrew Aldridge, Partner at Deepbridge Capital, said: “The Chancellor had an unenviable job of attempting to increase the public purse whilst also appeasing his Party’s low tax evangelists. It is, therefore, no surprise that many personal allowances have been frozen for an extended period, which will mean inflation will likely push more individuals into higher rates of income tax, national insurance, and inheritance tax. Government tax incentive schemes, such as the globally envied Enterprise Investment Scheme, will become even more important for individuals seeking to benefit from the generous tax reliefs offered in exchange for supporting growth focused companies.”

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown:

“Entrepreneurs are being penalised with the increase in taxes on both capital gains and dividends, and those people who have diligently invested over the long term to build up their financial resilience will no doubt feel unfairly swiped by this grab from profits. But as the cost-of-living crisis rages, affecting those on low incomes the worst, it also needs to be recognised that many owners of assets like shares or property have benefited from a huge upswing in values over recent years, while wage earners have seen their incomes stagnate. So, taking a greater slice on money they make on their investments is being viewed as a fairer way of evening up the playing field, rather than clawing more money from pay packets.

“However, there is a risk that the government may still end up receiving less in tax because investors hoard assets. Tinkering with the capital gains tax exemptions will only penalise a minority of taxpayers but is still set to reap significant sums for the Treasury, which will which is why these measures have been swooped on. It means investors who hold money in funds or shares outside a pension or an ISA will face a greater tax burden.

“This rise is a stark reminder of the value of ISAs in protecting investors from having to consider CGT or dividend tax, so anyone who hasn’t exploited their ISA allowance to protect these investments may be inspired to do so.

“For buy-to-let investors who own property as part of a limited company these changes could be a triple whammy, coming on top of rises in corporation tax.  They will not only have to pay more tax on dividends on profits from rent but now that CGT has been aligned with interest rates and they sell up, they could be faced with a hefty bill in just one hit. This could discourage them from selling, causing parts of the housing market to potentially seize up. With house prices already facing a significant correction, if even more potential sellers try and avoid selling at what they perceive as a loss, fresh paralysis will add further uncertainty to a highly sensitive market.”

Luke Bartholomew, senior economist, abrdn, said:

“Having learnt the hard way the risks of shocking financial markets, the government’s fiscal announcements today were all largely as leaked and so expected. As such there likely to be a very limited market reaction.

“That doesn’t however, make them any less economically painful.

“The economy is heading for a deep recession, with tighter fiscal policy adding yet another headwind to growth. However, with the UK suffering from pronounced underlying inflation pressure, it is far from clear that there is much space for significantly easier fiscal policy to support growth. The government’s strategy appears to assume that by tightening fiscal policy, this means that monetary policy will not have to tighten as much, with the consequence that interest rates will stay lower than they otherwise would have. This means interest rate sensitive parts of the economy, the housing sector in particular, is more protected than it would have been.”

Stewart Sanderson, Head of Private Clients at Brooks Macdonald, comments on the implications for high net worth individuals:

“Money’s too tight to Mention …. No, not a Simply Red re-run, but how many will be feeling after the fourth budget this year. “Weathering economic storms” and “difficult decisions” was the tone, with a huge reversal on the £45bn of unfunded Kwarteng cuts announced in September. A blend of tax rises and spending cuts adds around £55bn to address inflation and pay down UK debt. Ultimately, this budget means that everyone will be paying more, but the real losers are high earners and investors.

“Investors will be hit by the Chancellor reducing the annual allowance for capital gains tax by half next year to £6000, and then again to £3,000 in 2024-25. Furthermore, Hunt has reduced the dividend income allowance from £2000 to £500 by 2024. This could cause a real squeeze on smaller investors who rely on dividend income from their shares. Investors need to start thinking now about reviewing their financial plan, using losses to offset and extending allowances as the tax impact will impact their cash flow plans. Inaction is not an option and could result in loss of income.

“The government has favoured so-called ‘stealth taxes’, which includes extending the freeze to the nil-rate band of inheritance tax. As inflation pushes up house prices, this will have the effect of driving more and more of estates above the inheritance tax threshold, meaning that people may not be able to leave loved ones as much as they might have hoped.

“High earners will be paying more income tax on earnings, with the threshold for paying the 45p top rate of income tax lowered from £150,000 to £125,140. Income tax bands will remain frozen to 2028. The good news is that there’s potential for using pensions relief which appears untouched to contribute to lowering your overall tax liability, both in terms of current limits and using carry forward allowances of the previous year.

“There is some silver lining, at least for pensioners, who will see the triple lock kept in place and with that, their income retained in line with inflation.”

Marcus Brookes, chief investment officer at Quilter Investors comments:

“Today’s Autumn Statement has painted a bleak picture for the UK with a black hole of £54bn being plugged with a mixture of spending cuts and tax rises. We have come a long way since the mini budget of just eight weeks ago when the Office for Budget Responsibility was cast to the side-lines. It has equally produced a glib outlook for a UK economy that is already in recession. The OBR has forecast peak inflation in 2022 with slow moderation going forward. It is, however, a lagging indicator and the economy will continue to slow in 2023.

“Markets originally reacted well to the steady hand of Jeremy Hunt. They will continue to give him the benefit of the doubt and see the impact of this plan, however, there is also a chance that they see this as an overcorrection and that the measures could stifle what economic growth was present. The government will be hoping that these measures are merely temporary in order to stabilise the ship ahead of an election in just two years’ time.

“Hunt made clear that fiscal and monetary policy must work together. However, given interest rate expectations have moderated of late and economic growth turning negative, and remaining sluggish after getting back to positive territory in 2024, the Bank of England may need to pause or pivot in monetary policy sooner than we may have previously expected. Monetary and fiscal policy will need to adapt quickly or find themselves out of lockstep in 2023.

“For investors, the UK remains somewhat of a difficult place to judge right now. We are not necessarily at the end of the train of bad news and with a prolonged recession priced in we may need to wait for a more sustained downward path of inflation. However, fixed income looks more attractive than it has in quite some time, while quality companies with resilient revenue streams will outlast any recession that does take root. Being selective with the opportunity set will be key, but it is important investors are not put off by the bleak news and simply sit this period out.”

Chancellor Hunt’s extension of the freeze on the Inheritance Tax threshold could lead to many being caught by surprise with a large bill at an already painful time following the passing of a loved one, according to national IFA firm Continuum.

Martin Brown, managing partner at Continuum, said: “This morning Chancellor Jeremy Hunt announced an extension to the freeze on inheritance thresholds to April 2028. Prime Minister Rishi Sunak had previously frozen the threshold at £325,000 until April 2026 during his tenure as Chancellor, so the extension of the freeze comes as no surprise.

“However, the extension means it is likely that more estates will become liable to inheritance tax, thanks to rising house prices and soaring inflation. Many people may find they are caught by surprise at the impact on their estate at an already painful time following the passing of a loved one.

“Inheritance tax is charged at 40% of an individual’s estate falling above the £325,000 nil rate band. For homeowners, there is an additional residence nil-rate band for inheritance tax, currently £175,000 when the family home is inherited by their direct descendants such as children or grandchildren on their passing. Therefore, with the appropriate planning in place, it is possible for a couple to leave up to £1m of wealth to their children or grandchildren without liability to inheritance tax, depending on the value of the net estate.

“There are also many other measures that people can take to ensure they leave as much wealth as they can to their family instead of the tax man. This is one of many areas where a financial adviser experienced in estate planning can really add value.

“At Continuum we are pleased to see an increased awareness amongst clients to begin planning for wealth transfer earlier in the financial planning process. We have also seen a real appetite from clients to get other family members involved. We always encourage clients to include younger generations of their family in meetings to talk about estate planning and intergenerational wealth transfer. In the past two years we have seen a notable increase in the number of clients including their family in discussions with their Continuum adviser.”

Paul Barham, Partner at Mazars commented: “Income tax was always going to be in the government’s sights. With a gaping hole in the public finances, it’s an easy target for the treasury. Putting the thresholds on ice, and lowering the 45p tax band, is a double whammy and will raise billions for the treasury. Millions will be in the higher and additional rate tax bands in the coming years. And high earners will really feel the hit, with a higher proportion of their income subject to the 45% tax rate. Tax bills are only going in one direction for millions of people, and that is up. “This makes tax planning even more critical. If salary sacrifice is an option through your employer, consider using it to reduce your taxable earnings or think about increasing your pension contributions. Benefits like a season ticket loan, company car, cycle to work scheme or claiming tax-free childcare can also be used cut your taxable earnings.”

Rachael Griffin, tax and financial planning expert at Quilter comments on the implications for second home owners through CGT changes as follows:

As was expected the Capital Gains Tax allowances have been slashed to help plug the fiscal blackhole the UK is suffering. It was ripe for the chopping block as just 323,000 taxpayers in 2020/21 suffered a CGT charge and so will not turn out to be politically damaging when the Conservatives need to help bolster their image with the general public.

“The annual tax-free allowance for capital gains will be cut from £12,300 to £6,000 next year and fall to £3,000 from April 2024. This will spell bad news for anyone looking to sell shares, other assets or second homes.

“Take for example a second homeowner who bought their property five years ago for the average house price in 2017 of £227,000. They would have made a gain of £67,559 at today’s average house price of £294,559 and therefore next year when the allowance is cut to £6,000 would pay £17,236 in CGT and if they sold the year after would pay £18,076 when the allowance is £3,000 assuming they are higher rate taxpayers.

“These changes will only come into effect from April 2023 so while the sale of a second property is hard to shield from these changes to CGT, there is still time use up ISA allowances which would be exempt from CGT altogether if you were to sell shares.”

Steven Cameron, Pensions Director at Aegon, comments:

“While the freeze on thresholds for basic and higher rate income tax will create more tax take ‘by stealth’, there’s nothing stealthy about the cut in the additional rate threshold which rather than being frozen is being reduced from £150,000 to £125,140. This will cost anyone earning over £150,000 an extra £1,243 a year, in sharp contrast to the savings Kwasi Kwarteng’s mini-Budget would have granted by removing the additional rate entirely. But in current conditions, it’s not surprising that those who can afford to shoulder a greater part of the burden of tax increases are being asked to do so.

“Note that the existing gradual phasing out of the personal allowance once individuals earn over £100,000 means earnings between £100,000 and £125,140 are already effectively taxed at 60%.  It now means thereafter, the marginal rate will be 45%.

“Together, these higher rates of income tax make paying personal contributions to pensions, which get relief at full marginal rate, particularly appealing.

“After last month’s disastrous mini-Budget, Chancellor Hunt had to make this one studiously surprise free and fastidiously funded. The key aims were addressing the huge challenges of returning the UK’s finances to a sound long term footing and of regaining international market confidence. Many of the measures were, therefore, all about collecting more in taxes or managing public expenditure.

“All Budgets, but this one perhaps more than ever, require judgement calls and cross-subsidies. The package of Budget measures does include important support for the most vulnerable, with the retention of the triple lock for state pensioners, many of whom are vulnerable, and an inflation increase for those on benefits, including pension credit. The significant costs of these will be borne by those of working age including through income tax threshold freezes. Those on higher incomes or with more wealth will, as is reasonable, contribute greatest through the reduction in the additional tax rate threshold and wealth tax announcements.

“While the UK is currently in a ‘needs must’ situation, with only two years until the next General Election, Manifesto Commitments from all parties for the next 5 years will never have been more interesting.”

“Despite heavy rumours, the Chancellor in his Budget did not extend the freeze on the pensions lifetime allowance. It is already frozen for five years at £1,073,100 until April 2026. This means the maximum fund individuals can build up in their pension without paying a tax penalty is reducing year on year in real terms. While this may be seen as only affecting the wealthy, hundreds of thousands of middle earners including many in public sector defined benefit pension schemes are already facing genuine limitations on how much they can save in pensions.

“Ten years ago, in 2012, the pensions lifetime allowance sat at £1.8m and this would have been much higher now if increased each year in line with inflation. So while few would have expected the lifetime allowance to be unfrozen right now, there’s a glimmer of hope in the Chancellor resisting freezing it for a further 2 years.”

Sian Steele, Head of Tax at Evelyn Partners, says that Chancellor Jeremy Hunt’s speech today included some significant tax announcements and went well beyond what we would usually see at an Autumn Statement as she comments:   

“As widely expected, the Chancellor focused on freezing allowances, dragging more and more people into higher rates of tax.  This has the biggest impact when inflation is high as prices, asset values and earnings increase but the amount on which we can keep tax-free does not. The consequences of this sort of ‘stealth tax’ are becoming better and more widely understood so these moves might provoke more uneasiness among taxpayers than the Chancellor was hoping for. In particular, the freezing of the personal allowance and higher rate threshold for income tax will impact those on low and medium incomes.  

“The personal allowance is less of an issue for the highest earners, for whom it starts to disappear from the £100,000 mark onwards. But for them, the threshold at which individuals pay tax at 45% has been reduced to £125,140. While it might satisfy some demands for fairness, measures like these will not go far enough towards funding the public finances gap unless economic growth comes to the rescue by boosting tax revenues – a prospect that currently looks remote. So it would not be surprising if further tax announcements arrive next year in a full Spring Budget.

“Simplicity and certainty are the key requests our clients have for the tax system. We have long heard commitments from Chancellors to simplify the tax system, but have not yet seen the root and branch reform that is desperately needed.  With the proposed abolition of the Office of Tax Simplification the drive for simplicity needs to be taken on seriously by the thought leaders in Government, the Treasury and the tax authorities.  We hope to see evidence of this at the next Budget and in responses to current consultations.” 

Liz Field, Chief Executive of PIMFA, commented: “While we support the Government’s long-term aim to stabilise the country’s finances and balance the books, regular changes to tax policy can be unhelpful and create confusion for those trying to save for their financial future or leave a legacy to their loved ones. Clarity in terms of tax policy allows people to save and invest for the future, safe in the knowledge that there will be few sudden changes that require them to adjust their own plans.’

“The measures outlined in the Chancellor’s statement today will clearly impact on the ability of UK savers to put money aside as well as incentivising them to do so. We would urge the Chancellor to keep these under review to ensure that millions of people are incentivised to save and invest in future.”

Andrew Gething, managing director of MorganAsh said: “The chancellor made it very clear in advance that his statement will lead to “all of us” paying more tax. That is certainly the case as the measures mean the tax burden on households could be at its highest for 70 years. Even if salaries do go up, the chancellor’s freezing of income tax and national insurance thresholds will see an increase in the proportion of earnings paid to the taxman.

“But even with confirmation of benefits rising in line with inflation, safeguarding the pension ‘triple lock’ and offering further cost of living payments, there’s no question many households will see a significant fall in disposable income. This challenging environment will undoubtedly see more people bearing the full force of the cost-of-living crisis and push more into the ‘vulnerable’ category.

“As a result, monitoring customer vulnerability must now move higher up the agenda for all financial services firms. This is especially true with the arrival of Consumer Duty in July ensuring lenders, providers, brokers and IFAs are all duty bound to prevent foreseeable harm and deliver good outcomes for customers.”

Jonathan Prescott, director at Praetura Ventures, comments:

“As anticipated, the measures announced in the Autumn Statement mean that the whole of the UK is going to pay more tax. Amongst other measures, freezing the inheritance tax nil rate band and lowering the threshold for the top rate of income tax, means millions more will be pulled into higher tax brackets as the value of their wages and assets rise.

“Whenever such a substantial shift in the tax landscape takes place, it creates an additional need for financial planning, as investors look to manage their way through the various tax implications whilst continuing to work towards their longer-term objectives. For financial advisers, this will mean more conversations with clients around succession, pension and tax planning, and a greater demand for tax efficient investment options such as Venture Capital Trusts and the Enterprise Investment Scheme.”

Jenny Holt, Managing Director for Customer Savings and Investments at Standard Life said: “There is often speculation that higher rate pension tax relief will be reformed given it comes at considerable cost to the government and the size of the budget challenges this time made its inclusion more likely. However, the chancellor has opted to leave the system untouched, and this is likely due to the complexity of making changes, particularly in relation to defined benefit schemes and in finding a system that incentivises all savers.

“At the moment savers receive tax relief at their highest marginal income tax rate. For higher rate taxpayers cutting the rate of relief received from 40% to the basic rate of 20% would mean a significant reduction in the value of their pension contributions. In the past a flat rate for both higher and basic rate taxpayers, potentially at 25%, has been floated. This has its potential advantages in terms of fairness and simplicity but changes of this nature need to be carefully considered to assess what impact they will have on the nation’s savings habits.”

“We’ve seen no movement in relation to the pensions lifetime allowance, despite speculation the freeze on the limit could be extended beyond 2026 as currently planned. With inflation at around 10%, the lifetime allowance of £1.073m has effectively lost £107,300 of value in real terms in the last year alone.

“While a savings limit of over £1m sounds like a huge sum, many middle earners who save regularly over a lifetime will eventually hit the limit which punishes people for doing the right thing and preparing for the future.

“The effects of the policy are particularly noticeable in the NHS where an exodus of senior staff is being linked to pension tax bills and in September the former health secretary set out measures designed to help retain higher earning NHS employees facing this challenge. If current rates of inflation continue, the current freeze is likely to come under more pressure as more and more people are brought into scope.”

Stephen Muers, CEO, Big Society Capital: “The Chancellor today was right to acknowledge the pressure on the public purse and the challenges that this creates for the government. To achieve the stability, growth and support for public services he set out, the government will need to be creative in how it responds.”

“He called for ‘better outcomes for citizens and better value for taxpayers’ – and we couldn’t agree more. Social Outcomes Contracts are well-proven examples of mechanisms which can target prevention of social issues with a greater level of success and reduced public cost.”

“After a decade of evidence, they have been shown to combine impressive social impact with lower public spending, saving the taxpayer £3 for evert £1 spent by government according independent research published by Big Society Capital earlier this year. With the trailblazer devolution deals putting local people first, outcomes commissioning can allow government to focus on preventive services to unlock long-term prosperity.”

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