Autumn Budget 2024: An opportunity for the advice industry to shine
Businesses and the wealthy are the main target of Chancellor Rachel Reeves, in a Budget that aims to increase spending through tax rises.
The good news is that the months-long speculation is over after Rachel Reeves unveiled a “£22bn black hole” in the public finances. Keeping their cards to their chest only fuelled speculation.
The comprehensive package that Reeves presents significant challenges and opportunities for the advice industry.
As the dust settles, clients will be looking for expertise on the changes, and the advice industry is in the privileged position to be able to provide guidance and comfort to those who might have been affected by the new measures.
But the industry once again will be relied upon to solve some of the problems that the new Budget might have created for clients. And for their needs to be fulfilled, the industry needs the resources to do so.
The changes announced in the Budget, and particularly those the government made around the treatment of pensions as part of an individual’s estate, is likely to cause a significant shift in how individuals approach financial planning.
Weathering these changes requires the flexibility and the nimbleness to adapt to new circumstances. At 7IM, we have developed a range of solutions that can be tailored to different clients. Talk to us to discuss how we can collaborate in delivering the best outcomes for clients.
Thinking ahead
Of all measures announced in the Budget, the inclusion of a pension pot in an individual’s estate for inheritance tax purposes is likely to create the biggest challenges for advisers.
While the industry works to dissect the consequences of these measures, collaboration between service providers and advisers has become more relevant than ever.
Over time, there will be plenty of opportunity for advisers to help clients achieve their financial goals – but achieving that is likely to include a rethink of the way the industry operates. A ‘three-wrapper’ approach to retirement might lose its appeal to some individuals, and perhaps some of these changes will see an increase in spending via pension pots. Will the industry also see increased use of annuities (or annuity-like products) and term assurance on first death?
Even though these changes come into effect in 2027, it’s essential to start planning for change now.
Summary of changes
| Pre-Budget | Post-Budget | |
|---|---|---|
| Inheritance tax | Charged at 40% on all estates worth more than £325,000, increasing to £500,000 where a residence is passed on to direct descendants; or £1m where the estate is passed to a surviving spouse or civil partner | IHT thresholds remain frozen by an extra two years until 2030. Pensions are included in the estate and therefore subject to inheritance tax from 2027. Reforms to agricultural property relief and business property relief from 2026. |
| Income tax | Income tax threshold frozen until 2028 | Unchanged |
| Capital gains tax | Lower rate at 10% and higher rate at 20% | Lower rate of CGT will go up to 18%, and the higher rate to 24%. The rate for business asset disposal relief will rise to 14% for 2025/26 and 18% from 2026/27. |
| Tax-free dividend allowance | £500 | Unchanged |
| Pensions | Triple lock | State pension increasing £470 per person in line with the triple lock. |
| Private schools | Eligible for tax breaks | VAT and business rates on schools from January 2025 |
| Stamp duty on second homes | 3% | Increase to 5% from 31 October 2024 |
At the end of this page you will find a pdf with a comprehensive overview of the changes, produced by Taxbriefs for 7IM.
Talk to us
The next few years present exciting opportunities for the industry to prove its value, and 7IM has never been more committed to working alongside advisers to deliver the best outcomes for their clients.
Get in touch with us to discuss how you could leverage the best technology, products and services to support your clients achieve their financial goals.
View and download a copy of our Autumn Budget 2024 Summary document produced by Taxbriefs for 7IM.
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