Budget comment: “…broadly positive for advisers…”

by | Oct 29, 2018

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Autumn Budget 2017

Vince Smith-Hughes, retirement expert at Prudential, said:

“There may be some devil in the detail but it seemed a broadly positive Budget for financial planners. The announcement on IR35 could represent a tax increase for some contractors, necessitating advisers and accountants to review remuneration structures for the people affected.

 “The additional funding for the housing infrastructure fund could lead to a boost for mortgage advisers, which is to be welcomed. Confirmation of the raising of the personal allowance and the higher rate thresholds next year is also to be welcomed – hopefully enabling many of the 32 million people that were quoted to consider further saving for retirement and other life events.


 “The apparent lack of change in relation to pension rules is to be welcomed. Many of the rules such as the tapered annual allowance and lifetime allowance rules are already fiendishly complicated. Advisers should ensure that they are maximising the opportunities that exist for some clients here – this lack of tampering is unlikely to last forever.”

Increasing personal allowances will hit high earners

Les Cameron, tax expert at Prudential, said:


“The bringing forward of the £12,500 personal allowance and £50,000 higher rate threshold will be welcome to those on lower incomes but we mustn’t forget that increasing personal allowances are bad news for higher earners. Those with incomes over £100,000 will see an effective tax rate of 60% on £25,000 of their incomes.”

Increase in high-rate tax thresholds means more people qualify for higher rate tax relief on pensions

Les Cameron, tax expert at Prudential, said:


“The acceleration of the higher rate threshold means more people qualifying for higher rate tax relief on pensions – £100 of pension will be costing them £60 instead of £80.”


Pensions Lifetime allowance increase welcome


Vince-Smith-Hughes, retirement expert at Prudential, said:

“Confirmation of the increase in lifetime allowance is welcomed. More individuals will need lifetime allowance advice as some DB transfers have put people over the limit.”



£5.5bn inheritance tax bill to boost demand for financial advice

Budget figures show revenue from inheritance tax has hit £5.5bn this tax year and forecasts are showing a continuation of the trend of continuing receipts.

Les Cameron, tax expert at Prudential, said:


 “Given the OTS report into IHT commissioned by the chancellor it’s a little surprising we didn’t hear anything in this area – although the Red Book has indicated that we are still going to see the long awaited consultation on the taxation of trusts.

 “What’s not surprising is the figures are predicting further increases to just under £7bn in 2023/24.  Inheritance Tax (IHT) planning should continue to be a booming area of financial advice. Government estimates show the trend of rising IHT receipts has continued.  We’ve breached £5bn for the first time and they will hit £6.9bn in 2023 and this should only increase consumers’ demand for inheritance tax planning.   We should also remember the £3,000 gifting allowance has been frozen for over three decades so the earlier you start using it the more wealth you can pass on to your family.

 “One of the key things when IHT planning and gifting is ensuring the right blend of access and control you need on the money. If you’re happy that you’ll never need the money again, and you’re happy the person your gifting to can spend it as and when they wish, then it’s a simple as a bank transfer or cheque.  But if you may need access or want to control how and when the money is spent then you may want to look at some specialist investments or using different types of trust arrangement.”

 Trust planning needs to be simpler

Les Cameron, tax expert at Prudential, said:

 “The Red Book” confirms that the government will issue a consultation on trusts with the intent on making the use of trusts simpler, fairer and more transparent.

 “Simplicity would be welcome as it can be a fiendishly difficult area and has been looked at before. It will be interesting to hear the Government’s thoughts. In the meantime, people considering trust planning may think about bringing their planning forward as these changes don’t tend to be retrospective.”

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