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Looming tax threat could boost savings

In the most important speech of his life, the Chancellor has ignited significant political debate on the UK economy.

While introducing an immediate fiscal stimulus by cutting taxes in the current financial year, he has nevertheless also announced very substantial tax increases for the future. However, it is uncertain whether a reduction of about 2 per cent in high-street prices will have the desired effect of increasing consumer spending. When conjoined with other economic developments, it is unclear whether instead it will, in fact, encourage medium to long-term savings as clients bolster their financial security as a defence against future personal financial difficulties.

Alistair Darling has also continued his predecessor’s approach to the UK tax system by adding significantly to its complexity.

He has announced the future creation of two new income tax rates of 37.5 per cent and 45 per cent for dividend and other income. In yet another attack on trusts, these rates will also apply to accumulated trust income. He has also announced the future introduction of the highest marginal tax/NIC rates seen for 20 years of as much as 61.5 per cent. These high marginal rates are created by the partial or complete withdrawal of personal allowances for those whose income exceeds 100,000 a year.

This increased complexity in the market for retail financial services will undoubtedly continue to drive consumers’ need for advice. This will in turn be good news for financial advisers. Financial advisers have a crucial role to play in helping their clients make the most of the opportunities that arise from a changing tax regime.


Disappointment at lack of distinction

Whitechurch network managing director Ian McIver says the QCA level four benchmark set for all investment advisers regardless of whether they fall under independent or sales advice is disappointing. He says: “If they are saying that the starting point for both those circles is the same, then that is disappointing because what ‘independent’ needs is something to distinguish itself.”

Seeking quality in uncertain markets

By Ewan McAlpine, Senior Client Portfolio Manager In uncertain times, investors naturally seek safety. But in fixed income markets, what does that really mean? Ewan McAlpine outlines the approach RLAM’s Fixed Income Team will be adopting across its credit funds in response to potentially volatile markets this year. Click here for full article


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