With the Autumn Budget fast approaching, new polling by Opinium reveals independent financial advisers (IFAs) are seeing significant concerns and changes to financial behaviour from their clients due to speculation around which policies the Chancellor may announce.
Budget speculation drives financial behaviour
Nearly three in five (58%) IFAs surveyed report that their clients have made withdrawals from pension lump sums due to speculation about changes to pension tax relief ahead of the Budget. One in ten (11%) say that Budget speculation has also led to some clients making plans to delay their retirement.
A quarter (26%) of IFAs say they have seen clients sell private rental properties, as rumours swirl that the Chancellor intends to make rental income subject to National Insurance. A quarter (24%) also report that clients have brought forward disposals, with 22% saying their clients have been crystallising unrealised gains or losses ahead of the Budget, as uncertainty mounts around potential changes to the tax system.
Nearly one in five (18%) say that their clients have delayed transactions, such as house purchases, reflecting concerns around rumoured new property taxes. A similar proportion (17%) report clients increasing their cash holdings, and one in ten (9%) say they have clients who have moved their assets offshore or abroad due to concerns around the Budget.
Budget fears
In a sign of further financial ripples to come once the Chancellor makes her Autumn Statement, over three quarters (77%) of IFAs report that some of their clients have raised concerns about changes to pension tax relief in the upcoming Budget, while two thirds (64%) say clients have raised enquiries due to speculation around a wealth tax.
Over half (54%) of IFAs also say their clients have raised concerns around the Chancellor introducing Capital Gains Tax (CGT) on sales of primary residences, which would have a major impact on homeowners. A similar number report client concerns around making private rental income subject to National Insurance (55%) and increasing the basic rate of income tax (53%).
James Endersby, CEO of Opinium, comments:
“Our research highlights the degree to which Budget speculation is already influencing financial behaviour. With rumours of major tax changes growing, many IFAs are seeing clients act pre-emptively, from drawing down pension lump sums to offloading rental properties. This level of activity underscores the deep uncertainty about what the Chancellor may announce in the Budget. While we don’t yet know how much of the speculation will be borne out, the impact is already being felt in people’s financial behaviour.”
