It’s impossible to count the number of headlines written over the last few months declaring the 25% tax-free pension lump sum was in danger of being scrapped in last week’s Budget to boost clicks and comments.
Anyone with a working brain and the slightest bit of political nous could see there was no way the chancellor would do something so politically suicidal, especially after the Winter Fuel Allowance fiasco. Shame on those claiming it was ever likely.
There was also a glut of poorly-researched pieces on how the lump sum allowance might come down to £100,000.
The headlines were nothing more than clickbait and our journalists and so-called experts should know better
It took me less than a minute to ask whether such a reduction would require secondary or primary legislation in a recent CPD webinar, and the answer was primary. This means, even if the chancellor had taken this step, it would not have taken effect immediately, so there was no need for investors to crystallise quickly.
How many articles about this featured this fact? None that I saw.
The headlines were nothing more than clickbait and our journalists and so-called experts should know better.
There were many stories on the raising of capital gains tax (CGT) to income tax rates, but how many of them recalled we used to have that model but with an inflation deduction? Not many. Any adviser writing about it should have seen that angle. I don’t know anyone who thinks taxing investors on the effect of inflation is reasonable.
It turned out the chancellor simply brought shares and other assets into line with property investments and didn’t punish all those landlords with that 45% income tax I kept reading about.
Do better research and think more deeply about these issues before you start scaring my clients for clickbait
The new government (and the last one) wants landlords to sell because more supply reduces prices or keeps them steady while wages rise. It would not have matched this plan to have introduced tax at 40% and 45% on gains. Any expert in the property market should know that but how many wrote about it?
And what of those investors who have pulled out their pension commencement lump sum to hold it in an unwrapped investment, now subject to 6% or 14% more CGT?
Do I think any journalist will accept responsibility for whipping up the furore? Will any be investigated because an investor acted on what they thought was good advice?
No – and nor should they. But I do implore all the experts, commentators and journalists to do better research and think more deeply about these issues before you start scaring my clients for clickbait.
Greg Neall is chartered financial planner at Wake Up Your Wealth
Gregg, Well said! Sadly, I suspect that it will not change and your value as an adviser will always be compared to the click bait as opposed to facts and empirical evidence.
THere, there….
Errm… I know a lot of landlords and they are DEEPLY unhappy with the ‘Budget’…. all it has done is to more speed the exit… especially to Local Authorities’ social housing pools… all this BEFORE Angrier Raynor has her 2p worth!
Notwithstanding the tax free cash deal – around £40Bn+ WAS brought into a 40% tax situation re unvested pensions… at 75… with NO sliding scale of amount or time…
Elsewhere… IHT imposed at 20% on hitherto UNTAXED sirutations, with no sliding scale, or real detail (as yet)… down ‘ere in Cornwaaal… farmers ‘ave land, house – main one exempt up to £1M – + camping sites, holiday let structures…
As to jounalists… well… MM has the great and the good… (MM… have I earned my luncheon)??
UPDATE!!
I wondered after posting the above comment about Reeves’ comment regarding the new 20% IHT etc.
She said they still have the £1M main residence NRB stuff, + first £1M of land/shares exempt…. only anything above this would be subject to the new 20%.
Yet, as normal, you lose £1 of NRB for every £1 an estate is IHT taxable above £2M – Deloitte confirmed to me that nothing they had seen contradicted the status quo – thus, No. 11 is being rather disingenuous.
If your overall is house at £1M, + 200 acres at £10k, you pay 40% on removed BRB, + 20% on ‘second’ million of assets etc. This gives a total of £600k to find!!
No doubt the sharper Dudes had already worked this out… ;-+
BTW… BoE cut rates yesterday, two days ago KMRC increased their arrears interest rates to 1.5% to 9%. This, even upon Probate, and, EVEN where HMRC have taked 2 years to OK estates…
Thanks for the comments. We definitely did see some tax rises, and my phone has been ringing as a result! I just think a bit more scepticism and questioning could’ve given rise to some alternative and better quality opinion.
Yes, there was a great deal of conjecture in the lead up to the budget. It also appears that there were leaks. Whatever, the government knew it was going to cause ructions and the rest of us suspected it. As it turned out I have yet to read a favourable review. The budget certainly seemed to have class war overtones. Targeting the better off doesn’t seem to be the way to encourage entrepreneurship or growth. I guess time will tell, but I for one will not hold my breath.