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Budget hopes and fears

Leaving Capital Gains Tax alone and increasing the stamp duty threshold are dominant themes as advisers express their hopes and fears in anticipation of this Wednesday’s Budget.

Baronworth (Investment Services) Ltd director Colin Jackson

Hopes: “Top of my wish list would be for the Isa allowance to go up again.  I would like them to bring up the allowance to the same level as if it had been index linked. It is very tough nowadays for people to accumulate any money and the way to encourage them is to offer tax-free incentives.”

“I would like to see the £50,000 FSCS limit increased. I would like to see the compensation limit raised by more than £50,000 and also I would like to see it cover each individual investor for each individual provider.  From the public’s point of view it would provide a larger degree of safety.”

Fears:

“We just cannot carry on as we are and you cannot keep increasing taxation and expect people to live a reasonably comfortable life. I just hope the Budget will not be too draconian.”

Churchill Investments director Chris Gilchrist

Hopes:

“The wish list would be things that are not going to happen. The replacement of the 50 per cent higher rate of tax with taxes that raise money in more sensible ways and do not encourage tax evasion. The 50 per cent tax will not raise the money the Chancellor wants  and will just create lots of tax planning.”

“The stamp duty holiday for the first-time buyers obviously did work so let’s get rid of it completely and have the starting threshold of £200,000. I think then we would definitely see a good effect on the first-time buyer property market.”

Fears

“My wish list includes him not doing anything with Capital Gains Tax, which I don’t think he will and I hope he won’t.  We’ve had so many changes to CGT as a result of Brown and Darling messing it up between them. We do just need to leave it alone for a bit”

Evolve Financial Planning director Jason Witcombe

Hopes

“My wish list which isn’t going to happen is that someone would simplify pensions again given that we have had some crazy changes over the last few years.  In fact I wish we could go back to the rules before 2006 which most people understood.  It has now got far too complicated.”

“One of my wishes, partly from a personal but also from a countrywide perspective, is that we need to go back to a situation where entrepreneurs relief for CGT was more generous to try to inspire people to setup businesses and grow the economy.”

Fears

“I would rather they didn’t tamper with CGT just because it only changed a few years ago anyway – but I suspect that CGT will get tampered with and I suspect the 18 per cent will go up to your marginal rate of tax.”

“In general another wish is to try to not have pointless minor changes that are clearly for political and not for practical means.  For example this stupid idea that for part of the last tax year the over 50s can get a slightly higher Isa allowance, which if you think of all the changes to websites, literature and government briefings has got to have lost more money than it actually made.”

Yours Financially IFA John Donaldson

Hopes

“We would like to see some way of simplifying the pensions relief system because that seems to be getting more and more complicated.  The simplest way might be just to say there is an annual limit on which you get tax relief. Some simple contribution limit or a percentage of the lifetime allowance or something that is more straight forward than what we’ve got with these anti-forestalling rules”

“Things we expect to see are further restrictions on income tax relief in some way and possibly even further restrictions on pensions relief. Venture capital trusts and Enterprise Investment schemes may come under scrutiny” 

“Capital gains tax might well be increased.  The government has got to get some tax back from somewhere and I suppose that is an easy way to increase revenue.”

Clayden Associates Ltd director Daniel Clayden

Hopes:

“Realistically my hope is that the tax burden isn’t going to increase by too much but I don’t think that’s going to happen.  I think this is going to be the start of filling the gaping hole there is in the deficit. 

“They are looking to tax people who are deemed higher earners.  We’ve got a new super rate of income tax and I wonder if we will see effectively an extra strand with regards to CGT which would obviously go against the flat simplified regime.”

“I think what they did with regard to the stamp duty having the higher threshold was a success and I think if they introduce something like that again it would be good news for first time buyers which would obviously help to stimulate the property market.”

Fears:

“In my opinion there is going to be an increase in CGT as there is a huge differential between the higher rate of income tax and what you’ve got in CGT with the flat 18 per cent.  I suppose my fear is this is a Government which has set its stall out as trying to simplify taxation and pensions, then because of the fact the cupboard is bare they’ve had to bring in new layers of legislation and complicate things because they have needed to increase revenue”

“The fear is going to be that when you look there is so much opportunity for increases in taxation.  I think a big trend that we’ve seen in all the previous Budgets has been anti-avoidance so there are bound to some measures there and the one slightly annoying trend we’ve seen from this government is that that sort of legislation only seems to come out in the finer detail.”

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