Haunted halls at 11 Downing Street: Our Halloween Friday Focus considers what advisers should be watching out for in the upcoming Budget

As Halloween casts its shadow today, this week’s IFA Magazine Friday Focus Feature turns to the Chancellor’s Autumn Budget, due on 26 November.

Throughout the morning, we’ will be sharing the views of experts from across the financial services industry, giving us their thoughts on what might be about to spook investors, clients and advisers as we approach one of the most important budgets in many a year.

But will the budget be trick or treat for investors and clients’ long-term financial plans? The Budget is already taking on a ghost story aura in City circles, with whispers of black holes in the public finances, stealth taxes creeping in unnoticed, and skeletons lurking in cupboards. For financial advisers, this isn’t just political theatre; it’s a call to vigilance. The choices made by the government next month could ripple through clients’ financial planning strategies, from pensions and allowances to estate and investment planning.

Rachel Reeves faces a triple challenge: a widening fiscal shortfall, subdued economic growth, and the constraints of her own manifesto commitments. Against that backdrop, advisers need to keep a close eye on three main areas: taxes, pensions, ISAs and allowances, and market confidence. And while leaks or ‘pre-Budget briefings’ as they are often called, are likely to surface in the coming weeks, one thing is certain: advisers who are prepared for surprises will be best positioned to guide clients through the potential twists and turns of the Budget.

Advisers should expect taxes to be under the microscope

There has much much debate aired in recent days that Chancellor could be considering a budget hike to income tax, perhaps accompanied by a cut in employee NICs in order to minimise the impact on working people.

Even if Labour maintains its manifesto pledge not to raise headline rates of income tax, VAT or National Insurance, advisers will know only too well that freezing thresholds can act as a stealth tax. As wages and incomes rise, more people can creep into higher bands even without a change in headline rates. Pension tax-free cash might be reduced or capped, particularly for higher net worth clients, while capital gains tax or inheritance tax changes remain possibilities. There may also be new targets, such as taxing income from limited liability partnerships or introducing adjustments to property taxation, allowing the Treasury to raise revenue without affecting large groups of working people directly. For advisers, understanding which groups are most likely to be affected will be critical to proactive planning and risk management.

Advisers need to consider how pensions, allowances, and client behaviour may be affected

If the Chancellor adjusts the 25% tax-free cash or its caps, the timing and transitional protections will be important for clients. Changes in relief or allowance structures may favour lower and middle earners, while tapering higher income reliefs. Advisers should be aware of potential last-minute pension withdrawals or lump sums taken ahead of the Budget and help clients avoid knee-jerk decisions based on rumours. Talking of rumours, we’ve heard a lot about the possibility of changes to cash ISAs. Whether this materialises or not we shall have to wait and see.  We saw a lot of that happening last year, when many of those who made such moves (usually without the advice of a financial professional of course!) and then lived to regret their moves afterwards.

Advisers should be alert to how credibility, fiscal rules, and market confidence could shape the Budget

From what we’re hearing so far, the shortfall between intended government spending and expected revenues could be significant, and downward revisions to productivity forecasts such have been muted this week, could further weaken the tax base as well as the outlook for growth. Spending cuts will be politically sensitive, heavier taxes may stifle growth, and the signals sent to markets will be closely scrutinised, especially by the all-important bond market. As Liz Truss proved in 2022, it’s important not to spook the bond market! The Chancellor may also need to refine or adjust her self-imposed fiscal rules to maintain credibility and balance.

Advisers should focus on preparing clients while remaining flexible

Advisers should focus on reading between the lines, positioning clients defensively around tax and pension allowances, and maintaining flexibility in planning – as always. The November Budget may bring sharp choices and surprises, so portfolios and strategies should be alert to the potential challenges ahead. Will there be the usual ‘rabbit out of the hat’ moment? Yes, probably, but we won’t know that until the 26^th. Being prepared for a range of possible outcomes will ensure clients are not caught off guard by measures that could affect their financial planning into 2026 and beyond.

Will it be trick or treat? In our opinion, it’s unlikely that Reeves will have many treats in store for us – so you might as well make the most of any you can get your hands on as part of today’s Halloween celebrations!

In the meantime, be sure to check out all the rest of our pre-budget coverage here today on IFA Magazine. After all, it just might help you avoid getting too spooked on the 26th!