The Budget Is In....

Well, we have been waiting since August to find out what “pain” the Budget would bring and on Wednesday we found out.

I didn’t think that there was anything too unexpected there. The main areas impacting long-term personal financial planning for most people were Pensions and Capital Gain Tax.

Personal Pensions - from 2027 these will lose their Inheritance Tax free status. Until now, if you had any money left in your pension pot when you died, the value of the pension would not be included in the calculations for Inheritance Tax saving up to 40% in tax due. This made pensions a valuable tool for passing wealth through the generations without the impact of IHT. This will not be an option from 2027. A spouse/civil partner will still inherit the pension free of IHT but if it goes to anyone else (children/grandchildren) it will, depending on your estate value, be exposed to 40% tax. This will mean a re-plan for people who were expecting the pension to be safe from IHT.

Capital Gains Tax - as expected, the CGT rate was increased. If you are a Basic Rate Tax Payer and owe CGT this will now be at a rate of 18% rather than 10%. For Higher/Additional Rate Tax Payers, the rate increases from 20% to 24%. Making use of tax efficient wrappers like ISAs and Pensions will protect your investments from CGT. Landlords/2nd home owners were worried that the rates for them would be increased but they have stayed the same for property sales.

I won’t go into all of the areas covered but have included a couple of articles to read below for all the details on the different aspects of finance altered by the budget.

If any of the new rules have upset your financial planning or are causing any worry to people you know, why not book in for some financial coaching and we can figure out what your new plan should look like to stay aligned to your life goals. Free Discovery Chat Link.

Key Articles I Have Read This Week:

• The Guardian have an easy-to-read summary of the main points: Read it here

• Martin Lewis has also summarised the key changes in a way that lets you click directly to the areas that you are most interested in: Read it here

Investment Markets This Week:

Best Cash Savings Rates This Week

How Have The 🇬🇧 Public Reacted to The Budget?

It seems like a pretty even split on whether the budget was fair or not fair. Only 7% of people surveyed thinking that their family will be better off though. What do you think?