With the summer almost behind us, we have seen increasing media speculation around the upcoming October Budget. Keir Starmer has been very vocal in stating there will be ‘significant tax rises to fix our foundations’. The Budget will represent a crucial moment for the party to define its economic legacy.
As the date approaches, the country watches with a mixture of anticipation and concern. Our objectives at Imperial Chartered are to manage tax efficiency, preserve wealth and generate wealth for further generations.
Recent government announcements and media interpretation have started which naturally leads to concerned clients, so we want to provide some reassurances around a lot of the speculation.
Adding some comfort to the panic
‘Significant legislative changes require parliamentary approval’. So, should there be any significant change to legislation, it is highly unlikely to be implemented on the 31st of October i.e. the day after! In the UK we have a robust system that legally prevents introducing rules today and implementing them tomorrow.
An example of this was in the Budget on the 19th of March 2014, when the then coalition government announced the most prominent piece of legislation for generations in ‘Pension freedoms‘. This then required a bill to Parliament, was passed as the ‘Pension Schemes Act 2015‘ and was only implemented on 6/4/2015 – over 12 months later.
More recently we saw the Lifetime Allowance Tax being removed by the then conservative government, it took again over 12 months to pass through parliament and implement. The practicalities and issues with UK insurance providers passing these changes on to clients then saw Labour retract on their statement of re-instatement.
In the UK we have the most sophisticated (yet by far the most complicated) pension and tax systems in the world. This therefore means only limited taxation changes can happen overnight.
Summary
We need to be careful how our emotional bias is affected by the way we receive news in current times. ‘Bad news sells newspapers’ may be an old statement, but it certainly affects the way we think.
At Imperial Chartered we are here to support clients with any changes to legislation that may arise, however we strongly advise against making irrevocable decisions made on speculation as to what the budget might hold.
We need to trust our systems and controls and know that any changes will have to go through a rigorous, timely process. We are certainly not advising any clients to act on speculation.
We will, as always be reviewing the Budget very closely and advise clients that may be affected accordingly.
