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Adviser hopes and fears for pre-Budget report

Money Marketing asks advisers what measures they would like to see in today’s PBR, and what they fear might be in store.

Churchill Investments director Chris Gilchrist says:

I think we have got to be realistic. I just hope that all the tax increases Darling proposes will be so complicated that we’ll make lots of money out of selling tax avoidance to our clients. 

“We are sure to get tax increases, so you might as well have them complicated because then we can do something useful for our clients.”

Gilchrist adds: “I think capital gains tax is the most obvious concern. It is a bit of a no-brainer in terms of raising money. I suspect pension tax relief is going to be capped. Again that will present us with great opportunities to divert people into alternative things that are probably actually better than pensions.

“People just get hooked on the tax relief and forget about all the disadvantages of pension funds. Venture capital trusts with some tax relief and Isas, avoid all tiresome restrictions on your money that you get with pension funds.”

Baronworth director Colin Jackson says:

“I would like them to announce that there will be an election tomorrow. Other than that I am not sure. Of course we are worried about most things nowadays. I mean first of all VAT is going back up to 17.5 per cent on January 1. That would be pretty disastrous for spending, would it not? 

“If they are going to put VAT back up, do so by all means, but maybe in February or March. I hope the pre-Budget can give an assurance that it will not go up to 20 per cent which is what everybody is worried about.”

He adds: “If CGT is going up, that would be very, very bad news. It would be bad news for both investors, people that take advantage of their exemption, and also the product providers because products taxed as a capital gain are very unattractive.

“If they say they are going to put the rates much higher it takes away the edge. Bear in mind, most people do not use their CGT exemption in this country, so it will not have a big effect on those people, but it will have an effect on the more wealthy.”

Facts & Figures Financial Planners managing director Simon Webster says:

“There are no simple answers. What I am worried about is that the country’s broke, so Darling’s going to put tax up – it is just a question of how much. I am hoping he’s not going to put it up at all, but that is not realistic.

“It is a difficult path that the Chancellor needs to tread.”

Webster adds: “We are expecting some anti-avoidance measures to be increased.

“I have heard from colleagues in the tax avoidance trade that a number of routes are potentially under threat.

“The biggest single issue is tax relief available on pensions. I think there is a real concern that higher rate tax relief on pensions could be hurt even further than it has been already, because Darling had a go at it last time around.”

Equity Partners UK director Kevin Tooze says:

“I hope the Government use the pre-Budget as an opportunity to continue to simplify pensions, though probably not. My worry is that they will continue to complicate them, particularly with the restrictions they face on what can be brought in over the next year or two.

“They may put restrictions on certain tax brackets while they say they want people to save and look after their future. It is contradictory.

Tooze adds: “Another concern is new tax tiers, 45 per cent and maybe 60 per cent.

“What I would really like to see is for them to do something to encourage savings, and not just through tax relief, like an increase in child trust fund allowance.”

Consilium Financial Planning managing director Kevin Morgan says: “

I would like to see an extension on the VAT holiday and more stimulus to the economy, I do not think we are out of the woods yet.

“I am concerned however about inflation in the system. The cynic in me says perhaps it suits the powers that be to have inflation to lower the outstanding debt, so maybe they are managing inflation in quite a canny way to erode the indebtedness of UK Plc.”

“I am a bit worried about the credit rating of the UK Plc retaining AAA status. Any dimunition of that would be catastrophic. They have to be mindful of that.”

Morgan adds: “I hope there won’t be knee-jerk reactions to appease certain sectors of the great British voting public to tax unnecessarily the wealth creators in this country

“There is clearly going to be a higher tax take, but as long as is proportionate, people seem prepared to accept it. If it is disproportionate and perceived to be unfair it will make a lot of people mad.

Morgan says: “All in all, through a torrid torrid time, I think the Government has managed the economy pretty well. If they have got any hope of being re-elected they have got to be very careful in this pre-Budget report. 

“Let’s hope common sense prevails and they do not go down the road of appealing to base instincts in people for perceived justice to crucify bankers and the like, bearing in mind nearly 10 per cent GDP is generated in the city. ”

For full coverage of the pre-Budget report stay tuned to the Money Marketing website from 12.30 and follow us on twitter. Also look out for our special 12-page supplement free with this week’s issue.

 

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Just hope The CGT allowance remains at £10,200.
    For a normal husband and wife this makes paying CGT on UT and OEIC as basically voluntary so I hope he opts for CGT at the marginal rate.

    would like to see employee NI without limit but wonder if he will have the nerve.

  2. There is nothing more important to an IFA than the continuation of his/her business post RDR 2012. Nothing!

    Every thing else is mere commentary. Independent advice is facing a financial abyss and no other financial issue or event carry’s any weight.

  3. You mean ‘carries’ Simon?

    No idea what makes J B tick, never have….

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