View more on these topics

Give common-sense advice as we wait and see

This is the most surprising Budget that I can remember. On the face of it, it is give, give, give.

Say goodbye to ISA-friendly gimmicks in the Pep market. Flexibility and choice in Peps are paramount.

An example from the past is when people selected providers of retirement annuities and, following the introduction of personal pensions, had an excellent legal wrapper but poor fund performance and no chance of switching your fund manager. Your Pep manager may be flying high now but what if the performance dives in 10 years?

Fund management flexibility is essential for the future. With the onset of a limitation for de minimis funding and an increase in National Insurance contributions for the small business owner, his or her options for future retirement planning are becoming limited.

Reductions in levels of retirement relief prior to the full benefit of tapering capital gains tax will mean that the small business owner will not be able to depend on the sale of his or her business at retirement as an alternative to pension provision in the way that they could have done 24 hours ago.

The de minimis advantage ends on March 31, so beware.

CGT changes have considerably enhanced the appeal of unit trusts held for the longer term anyway, so growth stocks primarily invested in sma ller companies and held for 10 years with distribution reinvested should offer excellent returns.

Creating money for savers is a more effective means of encouraging saving than creating vehicles to save in.

Ironically, it may fall to traditional home-service companies, supermarkets and post offices to make the changes required.

In summary, this is a Budget that can only be judged over time and undoubtedly remains true to the three principles of making working pay, encouraging enterprise and helping families with children. There appears to be no major price paid by middle-income families.

Now, more than ever, the need for good, common-sense advice is paramount.

There should be plenty for the independent adviser and investor to consider over the coming months.


NCC attacks FSA over recruitment methods

The National Consumer Council has blasted the Government for its recruitment methods to the new Financial Services Authority. It believes there has been a blatant flouting of the Nolan principles on standards in public life, published in 1995. The Nolan report states that staff and board members should be recruited on merit using an open, […]

Barclays no-load Pep offer

Barclays Global Investors is looking to help IFAs kickstart Pep sales for the new tax year with a no-load Pep offer. It is aiming to get brokers to persuade clients to buy Peps as well as unit trusts early in the financial year rather than in a scramble at the end of the tax year. […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment