For several weeks, we’ve been hearing the government talk about “fixing the foundations” of the UK economy.
Speculation has been rife about how chancellor Rachel Reeves would address the £22bn “black hole” in public finances.
Now, with the Budget out of the way, we have a clearer view of the specific plans.
Billed as a Budget to rebuild Britain, there was a strong focus on making difficult decisions on tax and spending to support economic growth and stability.
The general consensus seems to be it could have been worse
As set out in the Labour election manifesto, Reeves maintained the current rates of income tax, employee National Insurance and VAT. However, while keeping core tax rates unchanged for the broader population, the chancellor brought in new measures aimed at “the wealthiest”, including immediate increases in the capital gains tax (CGT) rates and the removal of the inheritance tax (IHT) exemption on pension assets from April 2027.
From the details so far, the general consensus seems to be it could have been worse, even for many advised clients likely to fall within the chancellor’s fairly broad definition of wealthy.
Unfortunately, the problem with so much pre-Budget speculation is that it can undermine trust in the system and discourage long-term financial planning.
Many people are already worried about the size of their pension pot, with nearly three-fifths of UK adults concerned they won’t be able to fund the lifestyle they want in later life, according to research by Unbiased.
Interactive Investor saw a 58% increase in cash withdrawals from Sipps in the first half of September, compared to the same period last year
At the other end of the spectrum, rumours over the last few weeks of a possible reduction in pension tax-free lump sums drove some older consumers to try to pre-empt any reforms. Interactive Investor saw a 58% increase in cash withdrawals from Sipps in the first half of September, compared to the same period last year.
Although the anticipated changes to tax-free cash limits didn’t materialise, for most of those who have already acted, the decision will be irreversible, with lasting implications for the future taxation and investment growth of their pension.
One of the main benefits of taking advice is having professional support on hand to help with informed decision-making in times of uncertainty, whether it’s caused by pre-Budget speculation, market volatility or surging inflation.
Now there is greater clarity on the government’s approach, it’s an opportune time to re-engage clients with their financial plans and check their savings and investments continue to meet their long-term objectives. Technology can make this job much easier.
Giving clients access to a high-level view of their financial position can help them self-serve during times of uncertainty
A business management solution can help you quickly understand which clients are affected by any rule changes and prioritise who to contact. For instance, it should enable you to easily review clients’ portfolio details, tax wrappers, holdings, transaction history and performance, to understand whether CGT may apply, review estate planning and confirm the most tax-efficient income strategy.
It can also help you identify different segments to send more general information about relevant changes, to help inform clients about any future action they may need to consider.
Giving clients access to a high-level view of their financial position can also help them self-serve during times of uncertainty. Using a secure portal allows clients to get up-to-date valuations across their portfolios, see goal progression and amend selected fact-find data at a time that suits them and without needing to contact you.
Client portals can also provide a gateway into cashflow modelling, allowing clients to try out ‘what if’ scenarios, such as retiring earlier or later, or increasing pension contributions, to see how these changes might affect their future finances.
Now the speculation is over, the work begins on understanding the impact of the changes
This encourages deeper financial-planning discussions, which you can support with a detailed cashflow modelling exercise to create a personalised, visual projection of future wealth across various scenarios, including how Budget rule changes could affect the client’s current and future finances.
Linking not only valuations for pensions and investments but also bank accounts via an Open Banking integration to the client portal can give a more detailed view of the client’s entire wealth.
This could highlight additional financial-planning opportunities and make it easier to track income and expenditure for a more accurate picture of outgoings and potentially where savings could be made.
Such tools can help illustrate where small changes now can make a big difference to the size of their retirement funds for those building wealth or the sustainability of income for those in decumulation, calming anxiety about the future with a clear action plan.
Now the speculation is over, the work begins on understanding the impact of the changes. Advice will be central to reassuring clients and guiding them through any adjustments required to make sure their future goals remain on track. Technology can aid the process, helping you demonstrate the value that you’re adding to clients’ financial futures.
Nick Eatock is chief executive at Intelliflo
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