Commentary on any budget very much depends on the organisation conveying their views on it; the government of the day really only wants to get over the good bits, the press want bite-sized pieces that make good headlines and the Opposition will have their own agenda.
As advisers, we want to understand the potential impact on our clients and help inform them how it is likely to affect their own financial situation.
At a superficial level, most of our clients ought to be better off as the personal allowance is due to be raised to £12,500 from April 2019, but there are some less positive changes to National Insurance Contributions, where the thresholds for payment are being raised and surprisingly there was little coverage of this change in the press.
The biggest impact will be felt by taxpayers earning between £46,834 and £50,024 a year - who will pay an additional 10% in National Insurance Contributions from April 2019 – a £294 rise.
The best explanation of the impact of the Budget on take home pay we have found was MoneySavingExpert, which isolates out the various elements in more detail than can be given here. As an alternative, the BBC have provided a budget ready-reckoner here.
As for the rest of the Budget, most of this appears to be “business as usual”, the radical changes to pension tax relief, investment reliefs or Inheritance tax have not happened or are even mentioned. (A summary of the rest of the Budget, written in plain-english is here).
Not in the Budget, but a potential minefield are the changes to probate fees likely from April 2019, which will move from around £215 per estate to a sliding scale between £250 and £6,000, depending on the size of the estate. The Ministry of Justice would argue that this was not a tax, as the money is ring-fenced within the courts and tribunal service, but the person signing the cheque is unlikely to appreciate the difference.
So, what should a client do to make the best of the opportunities available;
Take up your full allowances wherever possible. The personal allowance has risen, but the ISA allowance has not. The Child ISA limit has gone up by inflation only.
If you have access to a workplace pension, join it. Think about using salary sacrifice to maximise your effective contributions, (rumours of the abolition of National Insurance were greatly exaggerated).
Consider additional pension contributions up to the annual allowance, (rumours of capping tax relief at a lower level were unfounded).
If you are a 40% or 45% tax payer, can you make enough pension contributions to reduce your marginal tax rates? (Further caps on tax relief were not imposed).
Think carefully about your attitude to investment risk; do you feel the need to take less risk, as things feel more uncertain? Talk to your adviser about your objectives in the short, medium and long term.
Think about your likely Inheritance Tax position; more estates are well above £1Million these days, so 40% tax and the higher probate charges will bite. Consider making gifts and establishing trusts long before your likely demise to avoid making the Exchequer your biggest single beneficiary.
How do I get professional advice on my financial situation?
Please contact us at email@example.com or call us on 01223 792 196 to arrange an initial appointment, at no cost to yourself, with one of our Independent Financial Advisers.
About Martin-Redman Partners
We are a team of experienced Financial Advisers who can advise on your personal or business financial arrangements. We have been building trusted relationships with clients for many years by articulating clear and tailored recommendations in areas ranging from investments to retirement planning, to complex estate planning advice.
The information contained is for guidance only and does not constitute financial advice. It is based on our understanding of UK legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Martin-Redman Partners its officers or employees, for any loss in connection with the content hereof and any such action or inaction.