Clients worried about IHT impact on pensions planning

The majority (95%) of financial advisers believe that the incoming inheritance tax liability on pensions is their clients’ greatest current financial concern, according to a new report. Flagstone’s monthly survey of IFAs found that the changes within the Budget dominated concerns held by clients as 2024 draws to an end. Higher taxes on businesses (such as increases to employers’ NICs) and the immediate increase to Capital Gains Tax on investments were also key concerns, according to 63% and 40% of the poll’s respondents respectively. Two thirds (69%) of advisers expected most clients to hold investments longer to defer higher CGT. A third of savers surveyed by Flagstone (34%) said they expected to invest less now or in the future as a result of the CGT change. Simon Merchant, CEO of Flagstone, said the IHT and CGT changes within the Budget offer an opportunity for advisers to prove their worth to clients. He said: “While tax changes were signposted before the Budget, the impact is now hitting home. Many are reconsidering their financial plans - both personal and business. A troubling trend risks emerging here where savers raid their pensions to reduce their tax exposure, but lack a clear plan to maximise those new lump sums. Here lies an invigorating opportunity for advisers to help their clients explore a wider range of asset classes with more favourable tax conditions.” Four in five (83%) of IFAs said they expect a base rate hold when the MPS meets on Thursday. While this proportion is high, there is greater uncertainty over the direction of the base rate than previously. The vast majority (88%) of poll respondents correctly predicted a cut ahead of the last base rate vote in early November. Flagstone surveyed 80 UK financial advisers and wealth managers between the 2 and 8 December.

Clients worried about IHT impact on pensions planning

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