FIRMS URGED NOT TO ACT ON BUDGET RUMOURS

We are reminding advisory firms not to make client recommendations based purely on speculation about the forthcoming budget.

Since the government confirmed the autumn budget will take place on November 26, rumours have been rife about possible changes to the tax landscape.

Our director, Vicky Pearce, said: “We feel it is worth reminding firms that no strategic decisions should be made based on assumptions or media commentary about how the budget may affect financial planning. We saw a similar flurry of speculation ahead of last year’s budget, particularly around pension commencement lump sums, which ultimately led to confusion and unnecessary concern for some clients.”

Chancellor, Rachel Reeves, is set to deliver what many expect to be a tax-focused statement, aimed at addressing the estimated £40 billion gap in public finances. Whilst she and prime minister, Keir Starmer, have reiterated Labour’s commitment not to raise taxes on ‘working people,’ there is no shortage of conjecture about other possible changes. For example, a £100,000 cap on tax free cash from pensions.

Vicky added: “The suitability of advice cannot be challenged if recommendations are right for a client and there is no detriment if the budget doesn’t play out as expected. However, any advisers basing recommendations entirely on possible tax changes risk opening the door to complaints, particularly if it leads to a financial loss.

“The bottom line is, the advice firms provide must be based on current tax legislation and be suitable. We will be keeping a close eye on developments and will provide our clients with a summary of any key regulatory or financial planning implications following the November 26 announcement.”

If you would like us to review any potential recommendations in advance of the budget, don’t hesitate to contact us.