View more on these topics

Tax freeze puts CGT and pensions in the firing line


Experts believe changes to capital gains tax and pensions tax relief look increasingly likely after the Government committed to a five-year “tax lock” on income tax, VAT and national insurance.

In the Queen’s Speech last wmonth, the Government committed to its pre-election pledge not to increase the taxes during the term of the parliament.

The Treasury has since confirmed the Scottish Parliament will still control income tax bands and rates north of the border from next April. The personal allowance will be set in Westminster, while national insurance contributions for self-employed workers will sit outside of the tax lock following a Budget commitment to review contributions.

Yellowtail Financial Planning managing director Dennis Hall says the restriction on income tax, VAT and national insurance will drive the Chancellor to look elsewhere for tax changes ahead of the July Budget.

He says: “CGT and tax relief for entrepreneurs could be targets.”

Currently, CGT is paid at either 18 per cent or 28 per cent, depending on whether the total of gains and income exceeds the basic income tax band after the tax-free allowance has been deducted.

Entrepreneurs pay tax at 10 per cent when selling all, or part of, their business, rather than the normal rate.

Hall says:“It would not alienate too many people depending on how the changes are implemented, but I’m not sure how much it would raise, either.

“And if the Government does not play with tax rates, it might take another look at relief for pensions instead.”

Cicero director and chief corporate counsel Iain Anderson agrees. He says: “This Queen’s Speech opens up the question of what happens with CGT and wider pensions relief.

“All of that stuff is going to be up for grabs, depending on how hard and fast the Conservatives want to go in terms of spending cuts.”

Partnership director of corporate affairs Jim Boyd says capital gains hikes would fit with the Government’s attempt to brand itself as a champion for all of the country.

Boyd says: “At the heart of good government is the practical realisation that governments need to be re-elected. And it’s certainly possible that this could be used as an argument that the people most able to shoulder the burden are doing their fair share.

“But the Conservatives have got to get the balance right here, because turning to something like CGT could be seen as to be penalising entrepreneurs who take extreme risks on the hope of long-term equity gain.”

The Queen’s Speech also committed to an EU referendum by the end of 2017, as well as new provisions on devolution.

The speech also set out plans for the Government’s “Northern powerhouse” initiative to introduce legislation for new powers in Northern cities with elected mayors.

It also hinted at the Government’s commitment to a triple lock on pensions, which the Queen said “would secure the real value of the basic state pension”. Right to Buy plans to give housing association tenants the chance to buy their home were also confirmed.


Wells Street Journal: Reporter’s ride to fantasy land

As veteran advisers will know, award ceremonies are tranquil affairs where rooms of beautifully dressed financial services professionals sip fine wine and the silence is only broken by the polite clapping of others’ achievements. But for one unfortunate hack attending last month’s Headlinemoney awards, the illusion of graceful civility was shattered twice in the same […]

Pensions-savings-retirement-piggy bank

Ombudsman rules against providers over pension transfer delay

The Pensions Ombudsman has upheld a complaint against Axa Wealth and St James’ Place following a bungled pension transfer from 2012. Graham Burton complained that SJP took an unacceptable amount of time to send a £191,000 transfer cheque to Axa Wealth after it disinvested his drawdown pension. Burton says he suffered financial loss as an […]


LGIM replace Hodges on Dynamic Bond Trust

Legal & General Investment Management has hired a lead manager on its L&G Dynamic Bond Trust to replace Richard ‘Dickie’ Hodges. The asset manager has chosen Omar Saeed to run the trust, which has been run by senior fixed income fund manager Martin Reeves since Hodges left last year. The fund had £1.6bn of assets […]

China tech and Global Alpha: a new great leap forward

By Robin Geffen, Fund Manager and CEO

Internet giant Alibaba is exactly the type of entrepreneurial company that the high-conviction, top-performing Neptune Global Alpha Fund seeks to invest in. Established just 14 years ago in an apartment in Hangzhou, today Alibaba is larger than Amazon and eBay put together and is challenging some of the most powerful internet companies in the world…

Read more 

Important information

Investment risks

The value of an investment and any income from it can fall as well as rise and you may not get back the amount originally invested. Forecasts and past performance are not a guide to future performance. Some information and statistical data herein has been obtained from sources we believe to be reliable but in no way are warranted by us as to their accuracy or completeness. These are Neptune’s views and as such this document is deemed to be impartial research. We do not undertake to advise you of any change to our views.


News and expert analysis straight to your inbox

Sign up


There is one comment at the moment, we would love to hear your opinion too.

  1. “At the heart of good government is the practical realisation that governments need to be re-elected.”

    That’s true, it would therefore be pragmatic to concentrate the cuts on sections of the electorate that do not vote conservative in any significant numbers. The public sector. DC pensions are coming, it’s inevitable.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm