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Tony Wickenden: A Budget for advisers, platforms and asset managers


OK, I admit it: I am a bit biased and I tend to try to look for the good. But I think this Budget could be interpreted by the proactive and positive among us as one for advisers, platforms and asset managers.

Of course, a lot of the announcements were proposals for post-election change but the point is investors will want to know about them now, so advisers have the opportunity to demonstrate their financial currency and know-how.

Meanwhile, platforms, asset managers and other financial institutions providing products for advisers have opportunities to support their proactivity. Let’s take a look at the main events:

A secondary annuity market

Perhaps the biggest headline from the Budget, over five million people could be interested. There is still a lot of work to do, however. A lot of consumers to protect. A lot of institutions to figure out if they want to be involved and whether they can make a profit.

Interesting to see, though, that the tax implications of annuity sales have been relaxed: any lump sum or flexible drawdown payment received will be taxed at the seller’s marginal rate, not 55 per cent. Interestingly (for the Treasury), the income stream bought by the institution will also be taxable as trading income. Double bubble. Sorted.

Who should sell? Who should stick with what they have? It all depends and there is an awful lot more detail to emerge.

What does seem clear, however, is that buyers will be confined to institutions and purchase by the company that underwrote the annuity in the first place will not be possible. One other thing is for sure: advice will be essential.

Reduction of the lifetime allowance to £1m

As for previous reductions, in deciding whether to elect for “protection”, advice will be essential.

Tax-free personal savings allowance

Yet more tax free returns: £1,000 of savings income tax free for basic rate taxpayers and non-taxpayers, and £500 for higher rate taxpayers. Additional rate taxpayers are denied. This is in addition to the £5,000 zero starting rate band, which was introduced from 6 April.  So, up to £6,000 of savings income (i.e. interest and life policy gains but no dividends) tax free, aside from income that falls within the personal allowance. In 2016/17 we could be looking at up to £16,800 completely tax-free. There are conditions, of course, but “tax free income” is a subject many clients will be interested in.

Isa changes

Two big changes here. First, accessible Isas enabling savers to take money out and put it back in the same year without affecting input limits. The second is the new Help to Buy Isa for first-time buyers. Further details may emerge ahead of its proposed launch in the autumn but it looks like it will be a cash Isa with a government bonus of 25 per cent of the amount saved, with a maximum of £3,000 on £12,000 saved. The bonus will be paid when the purchase takes place.

Limited trust reform

The outcome of the trust consultation leaves most trust-based estate planning (including gift trusts, loan trusts and discounted gift trusts) still valid. Even the use of multiple trusts to maximise use of the nil-rate band remains possible, with the exception of strategies based on the use of multiple pilot trusts added to on the same day; for example, by will on death. The legislation will be included in a future Finance Bill.

Deeds of variation

Perhaps inspired by the leader of the opposition and his brother, the Chancellor announced there is to be a review of the use of deeds of variation for tax purposes. We expect more in the autumn, dependent on the outcome of the election. The message for clients must be to ensure that wills are kept up to date and reflect current wishes and tax planning, and then a deed of variation should not be needed.

Inheritance tax

Nothing in the Budget but an announcement that the Conservatives are planning an additional £175,000 nil-rate band for an owner’s principal private residence. This, together with the £325,000 standard nil-rate band would mean each person would have a total £500,000 nil-rate band.


This continues undiminished against aggressive tax planning carried out by companies and individuals. The market for aggressive avoidance has effectively been successfully killed. This is great news for financial planners whose clients will want to focus on the tried and tested. And there is plenty of that to go around. 

Together with last year’s revolutionary pension changes, this year’s Budget gives advisers even more reason to be at the heart of their client’s financial know-how and wellbeing. 

Tony Wickenden is joint managing director at Technical Connection 


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