Six expert UK budget predictions
By International Adviser, 13 Oct 17
Experts from Old Mutual Wealth and Quilter Cheviot give their budget predictions ahead of 22 November.
A Budget for younger voters
Rachael Griffin, tax and financial planning expert at Old Mutual Wealth says:
“Philip Hammond is expected to restack the deck in favour of millennials that face unpredictable housing costs and employment patterns. But we shouldn’t forget those in their 30s and 40s, many of whom will also be in a precarious financial position.
“They are uniquely sandwiched between an older generation receiving gold-plated final salary pension schemes and a younger generation that has benefited from pensions auto-enrolment from an earlier age. As a result, they face a pension saving crisis.
“The pension system is already hugely complicated and an age-linked system of tax relief would not make things any simpler. Any such reform requires long-term thinking and a period of consultation, and must not be a knee-jerk reaction to a general election.
“It remains to be seen whether the Chancellor has the appetite for major reforms.
“If the Chancellor wants to deliver a Budget to help younger people, he should ensure that normal people are able to pass on accumulated wealth to their children and grandchildren without feeling stigmatised or pressured to pay more tax than is necessary.
Gifting allowance / Main residence nil rate band
“If Hammond wants to make things better for younger generations without drastic reforms then he can make simple tweaks so parents and grandparents can pass on wealth to help their loved ones onto the housing ladder.
“The annual IHT gifting allowance of £3,000 per child is unchanged since 1981. It would be worth over £10,000 if it had increased with inflation. An increase would allow parents and grandparents to pass on money as a tax-free gift while they are alive to see it benefit their family.
The new main residence nil rate band came into force this year and helps money filter down through generations. But it is intensely complex and our research this year shows that an astounding 70% of people did not understand the intricacies of the new allowance. The government should either drastically simplify the policy, or better yet ditch the idea and simply increase the nil rate band.
“The Green Paper will probably look for a two-pronged approach to help the baby-boomer generation who don’t have time to accumulate the wealth needed to pay for care, and the younger generations, who can steadily build that wealth over time – perhaps through some kind of auto-enrolment system.”