Sweeping changes for financial planning
As expected, today’s fiscal statement has brought sweeping changes designed to stimulate growth in the economy.
The cornerstone was to deal with rocketing energy bills for households and businesses, and the expectation is that this will reduce the inflation peak this winter.
In terms of more general taxation, much of it was labelled as reversal, cancellation and repeal, dealing with National Insurance rises, planned increases in Corporation Tax and IR35 legislation respectively. Although widely trailed, the Stamp Duty changes and cut to Basic Rate Income Tax were new or at least accelerated. The removal of the 45% Additional Rate income tax band was the only truly unexpected announcement, and arguably one of the most controversial.
Jamie Jenkins, Director of External Affairs at Royal London, said:
“Financial advisers will have clients who are affected by a multitude of changes, and they will be looking for help in navigating their way through them over the coming months. For the majority of working people, the news is fairly straightforward in that energy prices will be capped over the winter, albeit at a much higher level than last winter, tax on your income will start reducing from November, and the cost of moving house may be cheaper.”
“The more complex issues to work through will be those that are specifically designed to stimulate growth in the economy. One of those was the announcement that changes would be brought forward to encourage increased investment of pension funds in illiquid assets. While on the face of it the changes proposed sound progressive, it is only a small step on this journey and there are many complex issues to work through before we might see the material investments that the Government is looking for.”
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About Royal London
Royal London is the largest mutual life insurance, pensions and investment company in the UK, with assets under management of £150 billion, 8.8 million policies in force and 4,262 employees. Figures quoted are as at 30 June 2022. Learn more at royallondon.com
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