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Last wishes

As the Chancellor polished up the details of this week’s Budget, Hannah Stodell asked IFAs for their lastminute hopes


Pension simplification was high on Bestinvest senior investment adviser Adrian Lowcock’s hopes for the Budget.

He wanted to see less complexity and red tape for investors and said: “It has been four years since A-Day was introduced to make pensions simpler. However, if anything, in the last year, pensions have become more complicated than ever.

“The introduction of anti-forestalling rules confused savers and forced high-earners to seek advice to determine whether they should or could make contributions and whether they would be taxed on these.

“It would be good to review this and look at making pensions easier to understand for investors – cutting a bit of red tape at the same time.”

The contentious issue of the dividend tax credit which was was abolished by Gordon Brown was also a point raised by Lowcock.

He believes the decision should be reversed. “This is very much a wish and unlikely to happen but it is something we would like to see.

“Not only does the scrapping of dividend tax credit make pensions and Isas less tax-efficient but it also confuses the power of tax efficiency for the average saver.

“For the revenue they generate through the dividends taken out of pensions, it is effectively a short-term gain that will have a big impact on the long-term costs of pensions in the future.”

Chelsea Financial Services head of investments Matthew Woodbridge was also looking to see dividend tax credit restored for Isas, as well as a boost in the current allowance.

He said: “I would like Isa allowances to rise year on year with the rate of inflation or similar. The allowance for stakeholder pensions should also be increased as it has not changed since they started it at £3,600 gross.

“The capital gains tax rate should be left alone. Forty per cent tax relief for venture capital trusts would be nice but that is not going to happen.
Still, you can but wish.”

Alan Steel Asset Management consultant Alan Adam conceded that increased tax breaks were unlikely but that more flexibility on Isas would
help savers.

He said: “The flexibility to move money between cash Isas and stocks and shares Isas would be good. People can currently move from cash to
stocks and shares but cannot go the other way.

“There will be times, – although not now, obviously – when it would be in savers’ interests to be able to do that and keep the tax breaks they have enjoyed. This is unlikely to happen because it would cost the Exchequer money.”

Whitechurch Securities managing director Gavin Haynes was calling for Alistair Darling to remove VAT from annual fees for investors who seek active management through a fee-based investment portfolio.

He said: “I believe the management expenses of a discretionary IFA should be exempt from VAT in the same way as unit trusts and Oeics.”

He added: “In their attempts to make a healthier Britain, the Government should be looking to increase incentives to stay fit by offering tax relief on gym memberships and increasing tax on junk food.”

Baronworth Investment Services director Colin Jackson wanted to see a focus on consumer protection, given the events of the last two years.

He said: “The compensation limit for savings has gone up to £50,000 recently. In an ideal world, I would like to see it doubled to £100,000 and better individual protection for each provider – not just the umbrella institution.

“The FSA is banging on about consumer protection but so far has not mentioned this.

“I would also like to see the Financial Ombudsman Service work in the same way as the Furniture Ombudsman Service and charge a fee.

“At the moment, anyone can go to the FOS for the most petty matter and it does not cost them a bean but it can cost the IFA quite a lot of money.”


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