Latest / Adeptli's Podcast / Budget 2026: What Actually Matters for Financial Advisers?

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Budget 2026: What Actually Matters for Financial Advisers? · Adeptli's Podcast

• 0:10
  SPEAKER_02: Hi and welcome to the Adeptly Podcast.
• 0:12
  SPEAKER_02: At Adeptly, we work alongside advisors and advice firms, providing hands-on technical, operational, and strategic support to help them deliver good advice and run stronger businesses.
• 0:24
  SPEAKER_02: In this series, we explore the trends, challenges and questions impacting financial advisors and advice firms across the UK with practical insight from people working at the heart of the industry.
• 0:36
  SPEAKER_02: Clear thinking, real experience, and honest conversation.
• 0:40
  SPEAKER_02: Let's get into it.
• 0:42
  SPEAKER_02: Hello and welcome to another edition of the Adept Leave podcast.
• 0:46
  SPEAKER_02: Bland, dull, and ineffective.
• 0:49
  SPEAKER_02: And no, we're not talking about Dave.
• 0:52
  SPEAKER_02: They're just three of the words I picked up in this morning's industry commentary about yesterday's budget delivered by Chancellor John Healy.
• 1:00
  SPEAKER_02: As always, there's plenty of focus on the immediate headlines, but for financial advisors, the most important question is what are those announcements actually going to mean when they sit down with their clients over the coming weeks and months?
• 1:13
  SPEAKER_02: So today, welcome Julia and Dave.
• 1:16
  SPEAKER_02: We are going to look beyond the headlines and focus on the areas we think matter most for advice.
• 1:22
  SPEAKER_02: The aim isn't to read through the red book and give you a long list of technical changes.
• 1:27
  SPEAKER_02: Instead, we're going to try and ask a more useful question.
• 1:31
  SPEAKER_02: What does this budget actually change for advisors?
• 1:35
  SPEAKER_02: And what questions should they now be having with clients?
• 1:38
  SPEAKER_02: Let's get into it.
• 1:41
  SPEAKER_02: So, David Jaws, what do we think?
• 1:46
  SPEAKER_00: I think it was uh quite a subdued budget, um not too not so dramatic as budgets that we've seen in earlier years.
• 1:56
  SPEAKER_00: Just with a bit of tinkering around the edges, really.
• 2:00
  SPEAKER_01: Yeah, I think most people would be pleased that there were not any major shifts or changes to things that people have already started to have to uh adopt or adapt their processes and advice policies for.
• 2:12
  SPEAKER_01: No more major changes on pensions, no changes on IHT, no major changes in CGT.
• 2:19
  SPEAKER_01: Maybe a couple, but nothing that kind of has set the papers racing this morning, is it?
• 2:25
  SPEAKER_02: Yeah, I think yesterday there was definitely almost a sense of relief.
• 2:29
  SPEAKER_02: I think I think a lot of people were very much, what's going to happen, what's it gonna look like?
• 2:35
  SPEAKER_02: And actually, there wasn't much there.
• 2:38
  SPEAKER_02: There's some little bits, but there wasn't much.
• 2:40
  SPEAKER_02: But then reading some of the industry press this morning and some of the conversations we had on the way in, I'm feeling there's almost now the relief is already turned into a bit of irritation for advisors around there wasn't a lot of detail in some of the things.
• 2:56
  SPEAKER_01: Yeah, there seemed to be a lot of we'll have to go away and look at it, we're we're we're gonna, you know, consult on this, consider this, work with the industry on this.
• 3:05
  SPEAKER_01: There's a lot of we'll do some stuff, we're not entirely sure what that stuff is yet.
• 3:11
  SPEAKER_01: This is the headline of the stuff, and we'll give you the detail later, which is an advisor, it's almost worse, isn't it?
• 3:17
  SPEAKER_01: Like if if a big announcement gets made, you can start to understand the announcement, look at the rules, look at the stuff that's come out, start to think about it, what it means to your clients.
• 3:26
  SPEAKER_01: And then if your clients are asking questions, you can start to address the questions, can't you?
• 3:29
  SPEAKER_01: But at the moment, if your clients are like, what does it mean for me?
• 3:32
  SPEAKER_01: Well, might you might be impacted by this, but I don't really know what this is yet.
• 3:35
  SPEAKER_01: And so maybe it makes the conversation harder at the moment.
• 3:39
  SPEAKER_00: I think some of the irritation as well is on you know, on the U-turn on the cash ICEs, because that was announced last year, and now providers have started to work towards making changes.
• 3:48
  SPEAKER_00: Now we're backtracking on that because we're not doing it after all.
• 3:50
  SPEAKER_00: So there's irritation there as well.
• 3:53
  SPEAKER_02: I suppose that leads us nicely into one of the areas we could look at.
• 3:56
  SPEAKER_02: First of all, ICES.
• 3:58
  SPEAKER_02: So there were a few things knocking around ICES.
• 4:01
  SPEAKER_02: Jules, you've noted the first one there.
• 4:05
  SPEAKER_02: So we spoke a lot this time last year about changing cash ICE limits, and then yesterday that's been reversed.
• 4:13
  SPEAKER_02: So, what what is the actual change there we saw yesterday?
• 4:17
  SPEAKER_01: So the the the key change obviously last year the announcement was that anyone over or under 65 would cease to be able to save£20,000 into a cash ICER.
• 4:28
  SPEAKER_01: Um, so obviously, providers, clients, and advisors are all starting to think about what that means and what that means to place it into an investment ICE.
• 4:37
  SPEAKER_01: Does that force people to make investment into stocks and shares, etc.?
• 4:42
  SPEAKER_01: And then yesterday, well, I think I don't think I'd seen much on it.
• 4:45
  SPEAKER_01: It does feel a bit of a surprise.
• 4:46
  SPEAKER_01: The we're just gonna cancel that plan and we're gonna keep the 20 grand allowance for everybody, regardless of age.
• 4:55
  SPEAKER_02: And I suppose from an advisor's point of view, is this necessarily a good or a bad thing?
• 5:02
  SPEAKER_02: As as with a lot of things we talk about today, I'll probably imagine it depends on the client.
• 5:09
  SPEAKER_02: But one of the driving factors behind that change when it was announced by a different chancellor last year was we need to get people investing.
• 5:19
  SPEAKER_02: And there is logic to that, isn't there?
• 5:21
  SPEAKER_02: Around clients are used to doing 20,000, can afford to do 20,000, forcing them to consider a different alternative could be better from an advisor's perspective.
• 5:33
  SPEAKER_01: And from a long-term growth point of view for the client, there's a there's merit from from both sides, isn't it?
• 5:39
  SPEAKER_02: Providing attitude to risk and capacity for loss and all of those things.
• 5:44
  SPEAKER_02: And I imagine there's a lot of advisors who have spent a lot of time trying to educate clients over the last 12 months about the merits of investing and making their money work harder, and just because this has changed, that doesn't mean they need to change that approach, does it?
• 5:58
  SPEAKER_01: No, I think you wouldn't be for the client.
• 6:00
  SPEAKER_01: You may have some clients who felt that with the legislation changes that were coming, if they wanted to put that money aside and they couldn't use 20 grand in a cash ICE because they're under 65, were they starting to think about investing in stocks and shares?
• 6:15
  SPEAKER_01: And now will they not think about that anymore?
• 6:18
  SPEAKER_01: That's another conversation point, isn't it, for advisor and client.
• 6:21
  SPEAKER_01: I don't think I mean we commented on it before, didn't we?
• 6:25
  SPEAKER_01: I'm not sure that when you take away a 20 grand allowance for people, that makes them investors, and I'm not sure now if you now give it back that they won't become investors.
• 6:36
  SPEAKER_01: It has it really changed the landscape?
• 6:38
  SPEAKER_01: I'm not sure it hasn't.
• 6:39
  SPEAKER_00: I think if before last year's budget, an it an individual had an option to invest 20,000 in a cash ICE, 20,000 in stocks and shares ICE, or some sort of combination of those.
• 6:51
  SPEAKER_00: And I I wasn't convinced at the time that changing that would make anybody say, fair enough, then if I can't put the full 20 into cash, I'll put eight into stocks and shares.
• 7:01
  SPEAKER_00: Because they could have put eight into stocks and shares anyway.
• 7:04
  SPEAKER_02: Yeah.
• 7:05
  SPEAKER_00: So and if they'd wanted to, presumably they would have done, and their advisors would have advised them to do so.
• 7:10
  SPEAKER_00: So I'm not sure it was going to have much impact anyway.
• 7:14
  SPEAKER_02: Yeah, I suppose we're back to where we were.
• 7:17
  SPEAKER_02: We are, and I suppose the impact moving forward is because of the savings income tax change.
• 7:25
  SPEAKER_01: Back to where you were, but I think the Chancellor effectively going back on last year's announcements and opening back up the 20 grand ICER allowance will help more people potentially avoid what could be coming in terms of the higher rates on savings again.
• 7:40
  SPEAKER_02: Well, I think that's the the danger of the£12,000 limit was those people who want to stay in cash leave that£8,000 somewhere else still in cash.
• 7:51
  SPEAKER_01: Yes.
• 7:51
  SPEAKER_01: And then suffer higher income.
• 7:53
  SPEAKER_02: If you then add the two percent increase as being amended to a 4% increase, actually there could have been quite a negative outcome for those clients who really didn't want to invest when you put the two changes together.
• 8:10
  SPEAKER_02: Yeah, I think that's fair.
• 8:11
  SPEAKER_02: Yeah.
• 8:12
  SPEAKER_02: But then they are also trying to do something around still promoting investing in your stocks and shares ISO, but doing it a different way.
• 8:21
  SPEAKER_02: And I I thought this was a particularly useful update for advisors around the new stocks and shares ISO incentive, where the technical word, and then I'll quote this one the government will work with industry to explore a new ICER incentive for people investing in stocks and shares ICES for the first time.
• 8:38
  SPEAKER_02: The detailed design will be developed with the industry, and that's it.
• 8:43
  SPEAKER_02: So we're doing something, but we don't know what it is yet.
• 8:48
  SPEAKER_01: I think it's an interesting one that because you get to a point of thinking you can't make you can't make it any more tax-free.
• 8:58
  SPEAKER_01: So, what is the incentive?
• 9:00
  SPEAKER_01: And we discussed this a bit ourselves, didn't we, this morning on the way?
• 9:03
  SPEAKER_01: The incentive, when you start to think that through, it'll be interesting what what they come up with and discussing it with the industry.
• 9:10
  SPEAKER_01: But you get to a point of the principle is we'll go back to everyone having a 20 grand ICER allowance.
• 9:16
  SPEAKER_01: If your money is invested in property or savings, you're you're going to have higher interest rates for the on that income outside of your allowances.
• 9:23
  SPEAKER_01: So we still want people to invest for the longer term, you know, invest in in underlying companies, grow the economy.
• 9:30
  SPEAKER_01: So that's all positive.
• 9:32
  SPEAKER_01: So the new ICER incentive, the new stocks and shares ICE, the starter ICE or whatever we're calling it.
• 9:38
  SPEAKER_01: It talked a lot about uh for a first-time investor, didn't it?
• 9:42
  SPEAKER_01: I think in the in the content.
• 9:44
  SPEAKER_01: So that will be interesting as well, wouldn't it?
• 9:46
  SPEAKER_01: Like, what does a first-time investor look like?
• 9:49
  SPEAKER_01: How is that going to be managed?
• 9:52
  SPEAKER_01: And what is the thing that's going to incentivize you?
• 9:56
  SPEAKER_01: Tax isn't the thing.
• 9:57
  SPEAKER_02: There's and we spoke about it, didn't we, yesterday?
• 10:00
  SPEAKER_02: That there's almost only two things they can do.
• 10:02
  SPEAKER_02: It's a bonus akin to a LISA.
• 10:05
  SPEAKER_02: So if you go into this space, we'll give you some more, we give you an uplift.
• 10:11
  SPEAKER_02: Or there's some kind of trying to offset the potential downsides of investing, i.e., the market movements.
• 10:20
  SPEAKER_02: So is there something they may do around guaranteeing a certain percentage of loss over a certain period of time?
• 10:27
  SPEAKER_02: That though gets quite complex from both an explanation point of view and a management point of view.
• 10:33
  SPEAKER_02: We're just speculating here, right?
• 10:35
  SPEAKER_02: We we don't know.
• 10:36
  SPEAKER_02: So, as an advisor, what we're saying to advisors, how does this impact the advice you might give to your clients?
• 10:43
  SPEAKER_02: For me, it comes back to that age-old you advise on the legislation at the time.
• 10:48
  SPEAKER_02: So this is something might happen, but as far as it's not there now.
• 10:53
  SPEAKER_02: So don't stop people investing in a different way on the hope this incentive's going to be amazing in two years' time.
• 11:02
  SPEAKER_00: Who knows?
• 11:03
  SPEAKER_00: Next year's budget might reverse that decision anyway.
• 11:06
  SPEAKER_01: Yeah, yeah.
• 11:06
  SPEAKER_01: By the time it's been designed, somebody else takes a different view.
• 11:10
  SPEAKER_00: It will be um quite interesting to see if that goes ahead how it interacts with junior ICES, because you know, a a basically a newborn child can end up with a junior ICE fairly instantly invested in stocks and shares.
• 11:24
  SPEAKER_00: So then later in life, are they going to get any any incentive in a special?
• 11:29
  SPEAKER_01: But you touched on it yesterday with child trust fund, didn't you?
• 11:31
  SPEAKER_01: There'll be a lot of people who've got a stocks and shares child trust fund.
• 11:36
  SPEAKER_01: Are they new investors?
• 11:37
  SPEAKER_01: New another.
• 11:38
  SPEAKER_02: Well, I think the word the wording is specific around stocks and shares for the first time because when they announced it on TV, that was the first thing we said.
• 11:45
  SPEAKER_02: We said, well, lots of people are going to have employer pensions, so they'll have investments.
• 11:50
  SPEAKER_02: Well, I think they have clarified that it's stocks and shares relative to some investment.
• 11:55
  SPEAKER_00: Does that include the junior ICE or not?
• 11:56
  SPEAKER_00: It would be interesting to see.
• 11:58
  SPEAKER_01: But you're not going to want to see if you're an advisor at the moment, the the position of the 20 grand cash is just back to where it was or is because it never came in in the first place, did it?
• 12:07
  SPEAKER_01: So technically, it's probably not so bad for advisors, it's probably worse for firms that have started to invest in their offering and their proposition, isn't it?
• 12:16
  SPEAKER_01: Around how are we going to manage that change that now isn't going to come from an advice point of view?
• 12:21
  SPEAKER_01: If you're talking to clients about investing their money, if cash was the right thing for them, a cash ICE is a good thing.
• 12:27
  SPEAKER_01: If cash wasn't right, you'd have invested in it, and therefore it doesn't really matter anyway.
• 12:31
  SPEAKER_01: I think the incentive ICER is the interesting one because you don't know what that looks like, but you wouldn't necessarily want to get to a point where you're discouraging clients from becoming an Icer holder, chasing an incentive that you don't yet know about, do you?
• 12:45
  SPEAKER_01: So you're almost like, you've never invested in an ICE, and ICE's good for you.
• 12:48
  SPEAKER_01: Let's get an ICE done.
• 12:49
  SPEAKER_01: And then you find the rules were that for someone who hasn't had an ICE, you get this big incentive.
• 12:54
  SPEAKER_01: Oh, I wish I hadn't have done my ICE now.
• 12:56
  SPEAKER_01: But in the meantime, you could have got a really good growth out.
• 12:59
  SPEAKER_01: It's a it's the typical no man's land type outcome, isn't it?
• 13:04
  SPEAKER_01: It's I'm telling you something's coming.
• 13:06
  SPEAKER_01: I've got no details because we've got to design the details, so it's uh a promise of something without any context, which makes it impossible for an advisor to use in the short term and will unsettle clients when it comes to doing something at the moment because some clients will think, well, there's this thing coming, isn't there?
• 13:24
  SPEAKER_01: Should I wait for that?
• 13:25
  SPEAKER_01: Would I be better off waiting for that?
• 13:26
  SPEAKER_01: That's where it becomes a challenge for advisors.
• 13:29
  SPEAKER_02: But I do think personally, the combination of the two, the change in cash and this is a much better approach than just restricting cash.
• 13:38
  SPEAKER_02: This is more of a nudge into investments, which I think if you're trying to take people on that journey of becoming an investor, it's much better to do it by incentivizing them to invest rather than.
• 13:52
  SPEAKER_01: Yes, yeah, I'd agree with that.
• 13:54
  SPEAKER_02: Um, and then I suppose two other minor changes in the or not minor, one's minor, one's quite big, uh in the ICE arena is we've got a new new ICE and a new acronym, the FTB ISA, the first time buyer ISA.
• 14:10
  SPEAKER_02: So this seems to be the response to try and solve some of the problems with the LISA, the Lifetime ICE.
• 14:18
  SPEAKER_02: And with this one, what we're saying is from April 2029, the FTB ISA will replace the Lifetime ISA for new savers and provide a 25% government bonus, interestingly, paid on withdrawal rather than as you go through, because it's the LISA is paid on your contributions.
• 14:39
  SPEAKER_02: We're still keeping the same value of house, which is 450,000, but we're also introducing a limit on the maximum value of bonus, which will be capped at 20,000, whereas under your LISA there is no cap on the bonus.
• 14:57
  SPEAKER_01: Um but you don't have a withdrawal charge on the new first-time buyer, do you?
• 15:04
  SPEAKER_02: No, but presumably you just won't get your bonus if you try to do something.
• 15:10
  SPEAKER_02: So they're trying to overcome that issue with the Lysa around the 25 versus 20, aren't they?
• 15:16
  SPEAKER_02: Which is the other change, which is immediately, so as of today, the withdrawal charge on an existing Lysa where it's used to buy a property above 450,000 falls to 20,000.
• 15:32
  SPEAKER_02: But if you continue to use the license for any other unauthorised withdrawal charges, it's going to remain at 25%.
• 15:41
  SPEAKER_01: So what uh 20% down to 20%.
• 15:45
  SPEAKER_01: Yes.
• 15:46
  SPEAKER_02: Yes.
• 15:47
  SPEAKER_02: Um, what do we think from an advice point of view, either of those two things?
• 15:53
  SPEAKER_01: I'm sure it's better for the government to not give you your bonus on every concept of the state.
• 15:57
  SPEAKER_00: I'm sure there'll be plenty of advisors that would be confident that they could grow the investment while it was there to get you a bigger bonus or a bigger amount paid out at the end than just the net investment and then the bonus at the end.
• 16:12
  SPEAKER_02: Yeah.
• 16:12
  SPEAKER_02: But I think in either scenario, you're still getting a 25% bonus, aren't you?
• 16:18
  SPEAKER_02: Even on your you if you're getting it rich, so getting it and compounding it is going to be better than waiting until the end, one assumes.
• 16:27
  SPEAKER_02: Unless you're an investment, which could of course for I I suppose for me from an advice point of view, again, we're talking about April 2029 here.
• 16:36
  SPEAKER_00: So it's not available yet.
• 16:37
  SPEAKER_00: So if you've got people who wanting to save in an ISA for a property purchase, and not just property purchase, because obviously the LISA is available for retirement provision as well, which some people will be using it for.
• 16:49
  SPEAKER_01: Yeah.
• 16:49
  SPEAKER_01: Um but the new one is not.
• 16:51
  SPEAKER_00: The new one is not, but it's not it's not even available for three years anyway.
• 16:54
  SPEAKER_02: Well, two and a half years, so so yeah, if you're saving for a property at the moment, you're gonna the LISA, providing you're gonna go and buy a property under the full property cap, is still the best product because you get that immediate bonus on it, and they have confirmed we can still make contributions to the line.
• 17:14
  SPEAKER_02: If if you've got one and you're young enough and meet the qualifying criteria, which you tell me on the regular, yeah.
• 17:20
  SPEAKER_02: Um, so I think from an advice point of view, it's no change from that angle.
• 17:26
  SPEAKER_02: Um, there will be some interest in them.
• 17:29
  SPEAKER_02: We were talking about this late last night when we well, when it comes to April 2029, it's not very clear on if I can have both.
• 17:37
  SPEAKER_02: Can I can I hold both, but we contribute to the new one?
• 17:40
  SPEAKER_00: Like, so there's some detail to come out, especially for the people who are using it for the retirement provision rather than the property purchase.
• 17:48
  SPEAKER_02: Well, I think that's that's a whole different conversation, is yeah, what happens with those people, self-employed individuals or people who are looking for another home for some retirement savings?
• 18:01
  SPEAKER_02: The FTB ISA doesn't address that at all.
• 18:05
  SPEAKER_02: So is there going to be if the Lycer does disappear, is there going to be a replacement, or is it actually a reset on the policy where they've gone, we don't need a product for that?
• 18:18
  SPEAKER_02: I think we would disagree because we've seen it used quite effectively for retirement plan, but the focus very much seems to be on the Lycer is a property purchase vehicle rather than a retirement provision vehicle, doesn't it?
• 18:30
  SPEAKER_01: It's more likely to have been used by people for that purpose.
• 18:33
  SPEAKER_02: And I suppose the the final angle on the Lycer withdrawal slight changes, that could impact people, anyone who's going through a property purchase at the moment and getting some advice on their mortgage planning, that could change the figures in a good way.
• 18:49
  SPEAKER_02: Yes.
• 18:49
  SPEAKER_02: Yes.
• 18:50
  SPEAKER_01: Because they lose less.
• 18:51
  SPEAKER_01: Yeah, they in the withdrawal chart.
• 18:53
  SPEAKER_01: Exactly.
• 18:53
  SPEAKER_02: Yeah.
• 18:54
  SPEAKER_02: So they'll have they'll either have more money which they're willing to put towards a deposit, or leftover for spending carpets and sofas.
• 19:03
  SPEAKER_02: Exactly.
• 19:03
  SPEAKER_02: Which could then also or it could change the amount of mortgage you need.
• 19:08
  SPEAKER_02: If you're gonna put it into your deposit, all of a sudden Yeah, you're five percent up in essence, aren't you?
• 19:14
  SPEAKER_01: So does that.
• 19:15
  SPEAKER_01: Or the amount you're borrowing for the amount you're borrowing goes down, yeah.
• 19:18
  SPEAKER_00: For instance, which might mean parents then have money that they can consider doing something with instead.
• 19:24
  SPEAKER_02: Of course, yeah.
• 19:24
  SPEAKER_02: They have more flexibility with their own.
• 19:27
  SPEAKER_02: So they're that, although just a minor tweak for anyone in that property purchase at the moment, that could lead well.
• 19:36
  SPEAKER_01: If you think like if you're five percent up, they might spend the money, they might borrow less, therefore their outgoings are lower.
• 19:42
  SPEAKER_01: Now they have more income spare for protection.
• 19:45
  SPEAKER_01: So for those couples who buy their first house using that fund, and they don't necessarily have the capacity to afford the life cover, for example, to cover the mortgage debt, you might see advisors being able to have conversations with clients that now have a little bit more money in the bank to protect themselves accordingly, couldn't you?
• 20:03
  SPEAKER_01: So you could see that, and like you said, you talk about the parents.
• 20:06
  SPEAKER_01: Maybe mum and dad are helping child buy property.
• 20:10
  SPEAKER_01: Well, they're now five percent up in that scenario, so actually, maybe mum and dad doesn't do the gift they thought they were gonna do.
• 20:16
  SPEAKER_01: Well, now there's a different estate planning conversation with the parents, isn't there?
• 20:19
  SPEAKER_01: So there could be a number of angles just by that 25 to 20 percent change.
• 20:24
  SPEAKER_02: Feels like we've exhausted ISIS there.
• 20:26
  SPEAKER_02: I think so.
• 20:28
  SPEAKER_02: Um obvious next place to go then feels like state pension.
• 20:33
  SPEAKER_02: And yesterday we didn't put much onus on it because the triple lock announcement had come a while ago, but the commentators are still talking about this a lot.
• 20:45
  SPEAKER_02: So if we just focus on that, so triple lock is continuing until April 29, and then becomes a double lock, it becomes yeah, or as the as as the title it was given in the budget announcement, an adjusted triple lock.
• 21:01
  SPEAKER_00: Yeah, yeah, so we can't say it's triple lock minus one.
• 21:07
  SPEAKER_01: It's been an issue there, on error, an issue, right?
• 21:10
  SPEAKER_01: It's just it's it's just an adjusted triple.
• 21:13
  SPEAKER_02: So for and I think the confirmation it was around£488, wasn't it?
• 21:18
  SPEAKER_02: The uplifting for April this time.
• 21:22
  SPEAKER_02: So nearly a thousand pounds extra for couples who are both receiving the full state pension.
• 21:28
  SPEAKER_02: From an advice point of view, much to think about there.
• 21:35
  SPEAKER_01: I don't think there's a huge amount.
• 21:37
  SPEAKER_01: It I guess the difficulty is there will be people that gain from the normal increase, triple lock will be okay for a couple more years, then you start to see what's the impact.
• 21:49
  SPEAKER_01: Some of those clients are going to feel that more than others, aren't they?
• 21:51
  SPEAKER_01: Some people have a state pension.
• 21:53
  SPEAKER_01: It was never designed to cover all your outgoings.
• 21:55
  SPEAKER_01: It is a top up type facility, isn't it?
• 21:57
  SPEAKER_01: So for some people who have very little.
• 22:00
  SPEAKER_01: Other pension provision, those increases are going to be felt differently to someone who uses it as part of their broader um income strategy, isn't it?
• 22:09
  SPEAKER_03: Yeah.
• 22:09
  SPEAKER_02: And I suppose there's a point on cash flow modelling here.
• 22:13
  SPEAKER_02: It would be appropriate to reset your assumptions from April 2030 onwards.
• 22:20
  SPEAKER_01: Um I think you'd be careful at the moment for people who are decumulating with a large assumption on the projections for your state pensure, wouldn't it?
• 22:30
  SPEAKER_01: It'd be dangerous to be saying, well, you can afford to go and spend that much because the funds show that with all these uplifts you'll you'll be fine forever.
• 22:38
  SPEAKER_01: When you start to readjust those, that will it will impact quite a lot.
• 22:42
  SPEAKER_02: And I think the important thing is it's not like from April 2030 this is going to remain level.
• 22:47
  SPEAKER_02: Correct.
• 22:48
  SPEAKER_02: It is still increasing.
• 22:49
  SPEAKER_02: Yeah, and you know, the technical definition, as I've been liking to use some of these today, uh the pen state pension rises each year by the highest of 2.5% inflation or the amount required to maintain its value relative to earnings as reached in April 2029.
• 23:07
  SPEAKER_02: So that's how it's going to continue from April 2030.
• 23:10
  SPEAKER_02: So it's not even like it's a really bad inflation-proof income either.
• 23:15
  SPEAKER_02: Yeah.
• 23:15
  SPEAKER_02: Is it?
• 23:16
  unknown: Yeah.
• 23:17
  SPEAKER_02: Um the other major thing around state pension is got another another three-letter acronym, the PTA, the pension tax allowance.
• 23:30
  SPEAKER_01: Isn't that something to do with children and parents and schools?
• 23:35
  SPEAKER_02: So this the value of the PTA is calculated by applying the basic rate of income tax, 20%, to the difference between the full new state pension and the personal allowance.
• 23:47
  SPEAKER_02: Individuals over state pension age are eligible for the automatic tax reduction if their income, regardless of source, is below or at the value of the full new state pension.
• 23:59
  SPEAKER_02: In English, please.
• 24:00
  SPEAKER_02: I think there's quite a big planning angle here.
• 24:02
  SPEAKER_02: Okay.
• 24:02
  SPEAKER_02: Which before we get into the planning, what what does this actually mean for people?
• 24:07
  SPEAKER_02: Because that's some lovely technical talk.
• 24:10
  SPEAKER_02: Well, if you've got the planning, what's it mean, Jules?
• 24:13
  SPEAKER_00: What it means basically is a person's personal allowance is going to be lifted so that if the if they've got you know income below a particular threshold, they're not going to pay income tax, despite it being above the normal standard personal allowance.
• 24:29
  SPEAKER_02: And this is about trying not to draw people whose only income is state pension into income taxes.
• 24:36
  SPEAKER_01: Those people are on that borderline, isn't it?
• 24:39
  SPEAKER_01: But I might the increases are good because you now get more state pension, but it would be really bad press for those people to then be paying tax on the extra we've given you, and everything that comes with that means that they're now taxpayers and the impact on their broader affairs.
• 24:53
  SPEAKER_00: I I think you know perhaps it's a good policy.
• 25:01
  SPEAKER_00: Um I think from the planning angle it builds on what advisers will already be doing with married couples, which is assessing where income should arise.
• 25:13
  SPEAKER_00: So if you've got savings um accounts or maybe bonds with chargeable events, it is possible to control whose name that income arises in.
• 25:24
  SPEAKER_00: So perhaps you can keep one spouse below the threshold and preserve their allowance and have the income building in the other one's estate, so there can be some balancing up of income between married couples.
• 25:37
  SPEAKER_00: If it's a single person, obviously there's not so much to do, but for married couples, there would definitely be a planning angle there.
• 25:43
  SPEAKER_02: So the scenario we're looking at there is one of the household maybe didn't work during their life as much as the other, so they haven't got as many qualifying years, so they haven't got full state pension.
• 25:53
  SPEAKER_02: And because this isn't limited to just because I think that is probably what most people were expecting was it's only if it's the state pension.
• 26:01
  SPEAKER_02: Your sole income is your state pension, but it isn't it includes so that does give you the opportunity to really but it's like or ultimately it's a new allowance, and so when you have allowances and reliefs, the cornerstone of good advice is to use those allowances and reliefs, isn't it?
• 26:19
  SPEAKER_01: So this is am I aware of it?
• 26:22
  SPEAKER_01: What does it do?
• 26:22
  SPEAKER_01: How does it work?
• 26:23
  SPEAKER_01: When is it in?
• 26:24
  SPEAKER_01: Which of my clients would it relate to?
• 26:26
  SPEAKER_01: Which of my clients could I help advise them to position themselves such that it could apply to them?
• 26:33
  SPEAKER_01: Because that's the other thing, isn't it?
• 26:35
  SPEAKER_01: Doesn't at the moment, but are there things you could do, like you're talking about?
• 26:38
  SPEAKER_01: Are there things you could do with the assets, the ownership, transferring assets, moving things around to get yourself in a position where you are able to utilize the allowances in a greater effect?
• 26:49
  SPEAKER_00: Yeah.
• 26:50
  SPEAKER_01: The more allowance, the less tax, the more in the pocket for the client, isn't it?
• 26:53
  SPEAKER_01: And that's what's gonna good advice, isn't it?
• 26:55
  SPEAKER_01: Yeah.
• 26:55
  SPEAKER_00: And also it doesn't come in until April 27, which leads me on to another of my favourite topics life assurance bonds.
• 27:02
  SPEAKER_00: If you've got charge of events that you can realise without paying income tax, perhaps it is worthwhile looking at whether that should be done this tax year before April, so that you're not affecting potentially that uh PTA next year.
• 27:16
  SPEAKER_02: Yeah, because it's important that the PTA also tapers as well, doesn't it?
• 27:22
  SPEAKER_02: So and I looked and looked, but I can't find any details at the moment.
• 27:27
  SPEAKER_01: Probably working on it with the industry.
• 27:28
  SPEAKER_02: Oh, of course, and we get told it the day before it's due to be implemented.
• 27:34
  SPEAKER_02: When everyone reads it and says, Why would you?
• 27:37
  SPEAKER_02: Yeah.
• 27:38
  SPEAKER_02: So I I think that's a important point here is around there when we're looking at taking withdrawals or advisors when a client is receiving this allowance or due to receive this allowance, it's another consideration you'll have to factor into your calculations when you're suggesting they take more income.
• 27:59
  SPEAKER_02: Isn't it?
• 27:59
  SPEAKER_02: Because there's a bit of a could be, we don't know the detail yet, but there's probably going to be some kind of tax trap here where the marginal rate becomes more impactful because you're going to start paying tax on both what you're taking and what you're losing.
• 28:14
  SPEAKER_01: Yeah, in a world where we want clients to engage with advice and whatnot, we do we do love a little taper trap, don't we, in this country?
• 28:21
  SPEAKER_01: So another one to have to understand, monitor, consider, like you said, it's income, isn't it?
• 28:28
  SPEAKER_01: So it's we would need to think very carefully about what is income, and remember there are things that you do that might be income in the client's tax affairs.
• 28:37
  SPEAKER_02: And probably the final thing to point on this is this has been introduced for a set period of time.
• 28:43
  SPEAKER_02: Yeah, that's an interesting one, isn't it?
• 28:45
  SPEAKER_02: Yeah, so only up till April 2030, and then we'll be reviewed.
• 28:50
  SPEAKER_02: So I think that's an important thing when you're planning with clients.
• 28:53
  SPEAKER_02: You sort of lose it.
• 28:55
  SPEAKER_02: At the at while anything can ever change, not many things have a definitive end date on, and at the moment, this is only being said it's until April 2030.
• 29:05
  SPEAKER_02: So cash flow planning, multiple planning across multiple years, being careful on when you factor this in and when you don't, I think is just trying to recall whether that's aligned to the bank levy increase that had a pre-limited piece, didn't it?
• 29:22
  SPEAKER_01: Yeah, the bank levy increase is going to help fund some of this so that we don't end up in a deficit and certain things being timed probably is relevant.
• 29:32
  SPEAKER_02: Um sort of touched a bit on taxation there and taxpays with income.
• 29:39
  SPEAKER_02: There's been some more changes to taxation of certain types of income.
• 29:43
  SPEAKER_02: A couple of percent here and there.
• 29:45
  SPEAKER_00: This one did come as a bit of a surprise, didn't it?
• 29:46
  SPEAKER_02: I think all three of us were like, oh uh yeah, I think so, because they were already so what we're talking about here is savings and property income.
• 29:55
  SPEAKER_02: They were already due from April to all go up two percent, and now we've doubled that.
• 30:01
  SPEAKER_02: So they're all gonna go up four percent.
• 30:05
  SPEAKER_02: Um so yeah.
• 30:06
  SPEAKER_01: That's the there's a careful bit in that detail, isn't it?
• 30:08
  SPEAKER_01: Because you could mislead clients quite easily when you talk about the two percent, because you assume they already know about the two percent, when in fact some clients won't know about the earlier two percent.
• 30:16
  SPEAKER_01: So you need to be really careful with the language that we're using, isn't it?
• 30:20
  SPEAKER_02: It's and I think for advisors as well, recognising there's difference based on where your clients are based in the UK on this one.
• 30:27
  SPEAKER_02: So the savings income rate increases, apply across all of the UK, the property income increases apply across England, Wales, and Northern Ireland.
• 30:39
  SPEAKER_02: So again, some more detail there um having to think about, and I suppose if I look at this as basic as it is, it means clients with these sources of income are going to have less income if they don't do anything else.
• 30:55
  SPEAKER_01: Yes, if you take no action, you will now pay more tax on the same income than you did before.
• 31:00
  SPEAKER_01: If you're paying more tax, you're getting less left over, aren't you?
• 31:03
  SPEAKER_01: So that impacts the people who are relying on that money.
• 31:06
  SPEAKER_01: But it some people have these income sources and they're not drawing on them to survive with, are they?
• 31:12
  SPEAKER_01: So it's affecting their tax outcomes, it's not affecting their daily living.
• 31:15
  SPEAKER_01: Yes.
• 31:15
  SPEAKER_01: Other people, it's affecting their daily living and therefore their long-term affordability and other things.
• 31:20
  SPEAKER_01: Um, you could see you could quickly see scenarios here where you know what we're talking about we're basically saying savings rate goes from 20 to 24 for a basic rate taxpayer, doesn't it?
• 31:31
  SPEAKER_01: Yeah, so we're at 44 for higher rate and 49 for additional rate in that scenario.
• 31:38
  SPEAKER_01: In in that scenario, those clients have less money.
• 31:42
  SPEAKER_01: Where does that impact them?
• 31:43
  SPEAKER_01: Is it their daily living?
• 31:45
  SPEAKER_01: But is it your planning?
• 31:46
  SPEAKER_01: Is it that they're currently using that income to fund gifting?
• 31:51
  SPEAKER_01: Well, now the gifting's gonna fall, isn't it?
• 31:53
  SPEAKER_01: Maybe they're using it to fund life cover.
• 31:56
  SPEAKER_01: Well, is it still affordable to maintain the premiums if you've lost 4% of your your net income?
• 32:02
  SPEAKER_01: So I think it will impact a lot of people.
• 32:04
  SPEAKER_01: But the obvious thing from an advice point of view is that's only an impact if you're still holding those investments in that way, earning income in that way, isn't it?
• 32:12
  SPEAKER_02: Yeah.
• 32:12
  SPEAKER_02: So it the people it feels is gonna hit most are those who don't have much disposable income and have planning around that.
• 32:19
  SPEAKER_02: And that may be active decisions for no disposable income.
• 32:22
  SPEAKER_02: So I'm gifting away all my excess income, so it's gonna impact them, I think, quite significantly.
• 32:30
  SPEAKER_02: And then the other angle from an advice point of view is if people are making regular contributions or paying life insurance premiums and all of a sudden their income's going down, what they can afford to contribute or pay on those activities may need um or even if they're using it to invest the money, isn't it?
• 32:46
  SPEAKER_01: But they can't invest as much anymore.
• 32:48
  SPEAKER_01: So, you know.
• 32:49
  SPEAKER_01: I think the property one is an interesting one, isn't it?
• 32:52
  SPEAKER_02: Because you I was gonna say, as a landlord, Julian.
• 32:54
  SPEAKER_02: Oh well, former landlord.
• 32:57
  SPEAKER_00: Former I um we talked before about measures to try and encourage um investment.
• 33:05
  SPEAKER_00: It's interesting to note that the the rates on dividends are not increasing, rates of tax on dividends are not increasing, and uh capital gains tax isn't increasing either.
• 33:17
  SPEAKER_00: So that from a tax perspective alone starts to make investing look slightly more attractive than saving.
• 33:23
  SPEAKER_01: But again purely on the tax on the tax.
• 33:26
  SPEAKER_00: But as we said before, if people were going to invest, they were going to invest regardless of the tax, I think.
• 33:32
  SPEAKER_00: But it is interesting to notice.
• 33:33
  SPEAKER_02: It's another we talked about nudges earlier, isn't it?
• 33:37
  SPEAKER_01: This is another nudge to it's another influencer for some people who are not yet acting, not yet ready to act.
• 33:44
  SPEAKER_01: It might make them feel a different way about if I don't invest, I'm earning, but I'm only earning interest.
• 33:51
  SPEAKER_01: Interest looks like this, but now I pay more tax on it.
• 33:54
  SPEAKER_01: Would I be better off if I invested the money?
• 33:57
  SPEAKER_01: Oh well, if I invested the money, what do I put it in?
• 33:59
  SPEAKER_01: How would that be taxed?
• 34:00
  SPEAKER_01: But again, we'd like to remember this is going to apply to gains from investment bonds.
• 34:06
  SPEAKER_01: This is not just this this is going to apply.
• 34:09
  SPEAKER_01: Well, there's been nothing that says it doesn't.
• 34:11
  SPEAKER_00: So savings rates for the when the rates were going up by 2%, it was applying to gains up.
• 34:18
  SPEAKER_00: But the credit in an onshore um life insurance bond was going to be equivalent to the 22%, but it's not been confirmed that it's going to be equivalent to the 24% at the moment.
• 34:27
  SPEAKER_00: Some missing detail, you're joking.
• 34:29
  SPEAKER_01: Consulting with industry.
• 34:32
  SPEAKER_01: And it is difficult for those with property because that is your income, right?
• 34:36
  SPEAKER_01: So the only way you change that is you've got to sell the property.
• 34:40
  SPEAKER_02: Which isn't the easiest asset to sell.
• 34:42
  SPEAKER_01: It's not that easy, is it?
• 34:43
  SPEAKER_01: It's illiquid.
• 34:44
  SPEAKER_01: The the rules are the rules are not against you, but obviously you're in a position now where the allowances are a lot lower.
• 34:50
  SPEAKER_01: But luckily, we haven't increased CGT, have we?
• 34:53
  SPEAKER_02: So, as you said, there's a bit of a play on what if I didn't want to be taxed high on property income, I need to get rid of property income, I need to sell property, I've got to come out, I've got to manage CGT, and then I need an investment that's gonna and my CGT isn't increasing at the moment, so is it it it very much feels this is all the drive towards fewer landlords, isn't it?
• 35:13
  SPEAKER_02: Which we know is uh make it look as favourable again, isn't it?
• 35:18
  SPEAKER_01: This is this is about making other asset classes more favourable from a tax perspective, yeah.
• 35:25
  SPEAKER_02: It looks like that.
• 35:26
  SPEAKER_02: So it could be so if we run that through and there are landlords, as a former landlord, disinvesting and selling properties.
• 35:33
  SPEAKER_02: There's an potentially an advice opportunity for advisors here who have never been able to get to a share of clients' wealth because they've always wanted to have an element of their portfolio in bricks and mortar in landlords.
• 35:45
  SPEAKER_02: If the number of landlords are decreasing and they are selling properties, that does mean, in theory, there's some funds there which an advisor can have a conversation about potentially investing and bringing into their more mainstream type of investments, doesn't it?
• 36:04
  SPEAKER_02: Um we mentioned a little bit about CGT there, and largely felt good for not just the industry but for all individuals out there that income tax and CGT weren't changed.
• 36:18
  SPEAKER_02: But there were some bits around business owners and specifically business asset disposal relief and a new founders um relief as well.
• 36:29
  SPEAKER_02: So some changes for business owners here, which will no doubt have an impact for advisors with clients who have businesses and maybe exiting at the moment.
• 36:39
  SPEAKER_02: Um shall I give you the de specific detail of these changes and then we can we talk about is it subject to industry consultation or is it a definite?
• 36:48
  SPEAKER_02: Um so in in respect to business asset disposal relief, the government will reduce the lifetime limit on gains eligible for BADR, which offers a reduced 18% rate of capital gains tax on qualifying disposals from one million to five hundred thousand.
• 37:12
  SPEAKER_02: The new lifetime limit will apply to disposals made from the 6th of April 2027.
• 37:20
  SPEAKER_02: Cue the rush.
• 37:24
  SPEAKER_02: And then the gov there was actually a note on this one where it said the government believes three-quarters of claimants are still expected to receive relief on the entire qualificate qualifying gain.
• 37:35
  SPEAKER_02: If I flip that the other way, that means one in four are gonna pay a lot more.
• 37:40
  SPEAKER_02: Um but we don't talk about the negatives to me.
• 37:43
  SPEAKER_02: But we also know selling a business isn't much like a house, probably even more so than a house, is not quick.
• 37:50
  SPEAKER_02: So or easy.
• 37:52
  SPEAKER_02: Or easy.
• 37:53
  SPEAKER_02: So for those people who are currently in the process of selling their business, this could have a real impact, couldn't it?
• 38:02
  SPEAKER_02: Because if you think effectively, if I'm not looking at this too basically, if you lose the relief, you're going to now be paying more tax on that extra half on the half million, you're going to be paying them more tax.
• 38:14
  SPEAKER_02: About 30 grand cost.
• 38:15
  SPEAKER_02: So if someone has been selling a business and working with an advisor because they're now going to enter retirement because the business was their source of income, and they had a retirement plan which used that capital in a way to withdraw the capital they've now got available to enact that plan would be lower after.
• 38:34
  SPEAKER_02: It's lower.
• 38:35
  SPEAKER_02: Yeah.
• 38:35
  SPEAKER_02: So there's a definite need here for advisors who are working with clients who are selling businesses who aren't going to get them sold before April of having to relook at the planning and modelling they were doing.
• 38:47
  SPEAKER_01: Yeah, and like you said, if the numbers in terms of the government announcement, you know, if one in one in four are going to still have a problem above the allowance, whatever.
• 38:56
  SPEAKER_01: So it's really of the people that aren't going to be affected by this, how many were already in the process of selling anyway, and how many are going to get that over the line before April?
• 39:06
  SPEAKER_00: There is a different angle to consider though, which is not people who are selling their business, but people who are gifting shares in their business.
• 39:12
  SPEAKER_00: It's much swifter to be able to gift shares.
• 39:16
  SPEAKER_00: So for instance, if you're gifting them to the next generation or you're gifting them into trust, that is not as time consuming as going to the market and trying to find a buyer going through due diligence.
• 39:26
  SPEAKER_00: So a disposal.
• 39:27
  SPEAKER_00: So if there are clients who are who were minded to be making a gift, then they might well want to consider doing that before.
• 39:34
  SPEAKER_01: CGT disposal of doing so would be m better between now and April.
• 39:46
  SPEAKER_00: So you had the donor still has to have some money to pay the CGT unless they're gifting it into trust and claiming holdover relief.
• 39:56
  SPEAKER_02: So I think that's BADR covered, and then we all got excited as business owners of a new founder's relief and thought, oh, what's what's this?
• 40:04
  SPEAKER_02: Is this something we'll be able to benefit?
• 40:06
  SPEAKER_02: Focus from that point until I read the details.
• 40:08
  SPEAKER_02: Eyes down locking.
• 40:10
  SPEAKER_02: Um so this is the government will introduce a new founder's relief, providing a 10% CGT rate on up to 10 million pounds of lifetime gains for qualifying founders of high growth innovative companies from the 6th of April 2027.
• 40:27
  SPEAKER_02: So we ticked the first box.
• 40:30
  SPEAKER_02: Founder, ticked the second, innovative.
• 40:37
  SPEAKER_02: Then I moved on to some of the details.
• 40:42
  SPEAKER_02: We were less relieved.
• 40:45
  SPEAKER_02: And I was doing some reading on this late last night, and also looking on LinkedIn and seeing what people were saying about this, and this has gone down like a really damp squid, hasn't it?
• 40:56
  SPEAKER_02: I think the phrase I saw all the time was we're off in a relief which we know no one's gonna be able to benefit from, but at least we can look like we're doing something to do.
• 41:05
  SPEAKER_00: It's interesting because we've just confirmed that three out of four business sales are for£500,000 or less gain.
• 41:13
  SPEAKER_01: Yeah.
• 41:13
  SPEAKER_01: So therefore, yeah.
• 41:15
  SPEAKER_01: And the and the other one in four could potentially meet this until you start looking at the numbers that you need to they're a bit eye watering, aren't they?
• 41:24
  SPEAKER_02: Yeah, but it's so there's so many different qualifying aspects to this, and I think this is still proposals, not definitive.
• 41:31
  SPEAKER_02: But if you look, so you've got to hold a minimum of 25% of the company's ordinary share capital, which probably is if it's a founder business, is gonna, in a lot of cases, gonna have been that's from the outset, though.
• 41:43
  SPEAKER_00: Yeah, to have twenty five from the outset.
• 41:46
  SPEAKER_02: Um yeah, will need to have held.
• 41:49
  SPEAKER_02: Yeah, um, then you get into things like the turnover test, which requires turnover of at least 10 million in the accounting period before the first of the three periods where you need annual average compound growth in turnover of at least 25% in consecutive years.
• 42:05
  SPEAKER_01: Now long time.
• 42:07
  SPEAKER_01: I think that's what that means.
• 42:08
  SPEAKER_02: I'm like 25% growth when you're a small company is achievable and doable.
• 42:13
  SPEAKER_02: If you're up at 10 million pound turnover to then hit 25% average compound growth for three years, these are big numbers.
• 42:21
  SPEAKER_00: These aren't even large scale.
• 42:23
  SPEAKER_00: Yeah, these aren't your family businesses, really, are they?
• 42:26
  SPEAKER_02: And then there's more there's more around the headcount test, very similar, needs to be increasing to the innovation test where you need to head count 15 full-time employees, yeah.
• 42:37
  SPEAKER_02: 15 full-time, but again, at least 25% average compound growth in qualifying full-time equivalent employees over three consecutive accounting periods.
• 42:46
  SPEAKER_02: So you can't just get a load of people in the final year, no, and then the innovation test, you've got to have spent 1.5 million on research, which meets all the conditions to make an RD tax relief claim.
• 43:01
  SPEAKER_02: And it's it's like this was pitched, or I very much felt this was pitched in the budget speech is we're trying to do stuff for small, medium sized.
• 43:10
  SPEAKER_01: Yeah, the timing wasn't accidental, was it?
• 43:12
  SPEAKER_01: We're gonna reduce the business asset disposal relief.
• 43:14
  SPEAKER_02: But it's okay because it's okay with this founder's relief.
• 43:17
  SPEAKER_01: Uh but there was nothing announced about founders' relief other other than uh the 10 million mark point, wasn't it?
• 43:25
  SPEAKER_02: But but that uh for me, this isn't going to help for a lot of the people who might not benefit from BADR, they're probably not not going to jump in and go, it's okay because I'm gonna get this founders.
• 43:40
  SPEAKER_01: But you know, joking aside, it it is a big beneficial relief for those that can apply for it.
• 43:46
  SPEAKER_01: That would have but you're gonna have to evidence a hell of a lot in that sequencing, aren't you?
• 43:52
  SPEAKER_02: Yeah, yeah.
• 43:53
  SPEAKER_02: The the accounting cost of evidence in it might weigh out weigh the C G T it will be interesting to see at the end of
• 44:01
  SPEAKER_00: How many um individuals have actually been able to claim it?
• 44:05
  SPEAKER_00: Yeah.
• 44:05
  SPEAKER_00: Someone will do a freedom of information request, and I don't think anyone will be surprised by the low number.
• 44:12
  SPEAKER_02: Yeah.
• 44:14
  SPEAKER_02: You would imagine that the tax savings on reducing the BADR will far outweigh the tax costs of the founders' relief for the government.
• 44:25
  SPEAKER_02: Most likely.
• 44:28
  SPEAKER_02: And then I think probably just to wrap up, we're have a look a bit at a couple of pensions and IHT related changes, which may not have got as much airtime as some of the other things we spoke of.
• 44:44
  SPEAKER_02: So firstly, there's the removal of the two-year rule in respect of death benefits from pensions and lump sum.
• 44:55
  SPEAKER_02: So the government will remove the two-year rule so that beneficiaries will no longer be taxable solely because tax-free pension and lump sum death benefits are paid more than two years after the member's death.
• 45:06
  SPEAKER_02: This isn't when we're waiting for industry consultation on Julia because this is effective for payments made on or after the 28th of October.
• 45:16
  SPEAKER_02: So this is in full.
• 45:17
  SPEAKER_01: So that is a that is a good thing.
• 45:20
  SPEAKER_01: I mean, I don't know how many people would be impacted by it on the numbers.
• 45:23
  SPEAKER_00: Well, I wonder if it's a reaction to the fact that pensions, in case you didn't know, are going to be subject to IHT from next April, which is going to clog up the whole system.
• 45:34
  SPEAKER_00: At the moment, the pension can be isolated from the rest of the estate, and pension trustees can pay out any pension death benefits quite swiftly to whoever's been nominated on the expression of wishes from next April actually.
• 45:48
  SPEAKER_00: It is going to be held up because you kind of have to wait for probate on the estate to work out what IHT's due over here versus what's due on the pension.
• 45:57
  SPEAKER_00: So you're having to kind of tread water with the pension pending the estate decision before being allowed to pay out.
• 46:03
  SPEAKER_00: And definitely, you know, I've seen some really long probate delays, which could mean that the pension couldn't be paid out within the two years.
• 46:12
  SPEAKER_01: It's good for the beneficiaries, isn't it?
• 46:13
  SPEAKER_01: Ultimately, if you were gonna you're gonna end up paying tax if it hadn't been paid out in the two years, and now you're not gonna end up paying tax.
• 46:19
  SPEAKER_01: That's a better outcome for beneficiaries at a pretty crap time in life when you might not have been able to even control the outcome.
• 46:26
  SPEAKER_01: You're getting taxed purely because it took too long.
• 46:28
  SPEAKER_01: Yeah.
• 46:29
  SPEAKER_01: Didn't feel like a great rule in the first place, didn't it?
• 46:31
  SPEAKER_02: I agree, and I think there's probably you've touched on it very lightly there, but there's something here about the emotional state and supporting clients after a death and now not having to try and really push and rush things to avoid a cliff edge of where something becomes taxable.
• 46:49
  SPEAKER_02: So there is, from an advisor point of view, being a it should become easier, not just because of the tax benefits of dealing with this, but you're not against clients under pressure to get them a good outcome at a time where Yeah, you're either rushing them through in a stressful environment when they're vulnerable to for their benefit, right?
• 47:09
  SPEAKER_01: If you can get it sorted, they wouldn't have paid the tax, but there would have been a load of stress to get to that point in this scenario.
• 47:15
  SPEAKER_01: That's a good thing for people already going through a bad time, and therefore they gain by not losing tax, don't they?
• 47:22
  SPEAKER_01: Right?
• 47:22
  SPEAKER_01: So the end result is a better fund in their hands, which will obviously generate advice opportunities, wouldn't it?
• 47:30
  SPEAKER_00: I think it just allows time to consider the holistic position as well, because at the moment, people you get to that two-year cliff edge point with the pension, like we'll have to pay the pay the benefits to somebody.
• 47:41
  SPEAKER_00: We haven't quite sorted out what's happening with the rest of the estate, and what the decision made here might not work very well with then what happens later with the estate.
• 47:50
  SPEAKER_02: And then as we're talking IHT here, um we've also got introduction of preventing unintended deductions for liabilities in trust arrangements.
• 48:02
  SPEAKER_02: The government will amend the inheritance tax rules to clarify when liabilities relating to trust property may reduce the value of assets for inheritance tax purposes, align the treatment of liabilities affecting trust property with personal liabilities, and strengthen anti-avoidance provisions.
• 48:18
  SPEAKER_02: This will take its effect for deaths and other chargeable events occurring on or after the 28th of October 2026.
• 48:27
  SPEAKER_02: Immediately live.
• 48:28
  SPEAKER_02: But we don't have to are the IHT gurus here.
• 48:33
  SPEAKER_02: Well that was the thing which struck me.
• 48:36
  SPEAKER_02: So this is something which people are gonna have to make decisions on without potentially knowing the impacts of the decisions.
• 48:45
  SPEAKER_01: It's really difficult, and yeah, thanks for calling me a guru.
• 48:49
  SPEAKER_01: Um, given you're opener.
• 48:51
  SPEAKER_01: Um that's why I'm boring, obviously.
• 48:54
  SPEAKER_01: Um, I think it's difficult because we don't know the detail, and your brain goes into what exactly is that referring to.
• 49:02
  SPEAKER_01: There's been other anti-avoidance rules before about effectively borrowing against trusts and then investing that money and trying to claim double relief against the same asset.
• 49:12
  SPEAKER_01: In this space, the interesting thing is that it applies to other events immediately.
• 49:18
  SPEAKER_01: The other events and the use of that language, the only thing I can get to is it's relating to discretionary trusts, periodic charges, exit charges.
• 49:28
  SPEAKER_01: Those events are gonna be taking place before this is clarified.
• 49:33
  SPEAKER_01: So there is a likelihood of whatever this rule is, however it is worked out, is gonna have an impact on what people have had to pay in terms of their anniversaries that are happening from today, is my gun.
• 49:46
  SPEAKER_00: I I couldn't find very much on it at all at the moment.
• 49:48
  SPEAKER_00: No one seems to have any meaningful detail at all.
• 49:52
  SPEAKER_01: We'd like, I mean, initially yesterday it was like, what does that affect loan trusts?
• 49:57
  SPEAKER_01: That's a trust where there's a liability.
• 49:59
  SPEAKER_01: Yeah.
• 49:59
  SPEAKER_01: Now on paper, you'd like to think it would have no effect at all because in a loan trust it's a very clear separation, isn't it?
• 50:08
  SPEAKER_01: The clo the trust does not own that asset because it is the set law's money.
• 50:12
  SPEAKER_01: They've lent the trustees the money and they're investing it, but it doesn't belong to the trust.
• 50:16
  SPEAKER_01: It's not a deduction against the trust.
• 50:18
  SPEAKER_01: But in a periodic charge assessment, it is, right?
• 50:21
  SPEAKER_01: You'd look at the value of the trust and you'd the value for relevant property excludes that owned by the set law.
• 50:27
  SPEAKER_01: That doesn't feel there's no anti-avoidance in that.
• 50:31
  SPEAKER_01: That's a long accepted structure.
• 50:33
  SPEAKER_01: I don't think it relates to that, but again, because there's very little detail at the moment, what exactly does this do?
• 50:41
  SPEAKER_02: So what should advisors be doing in this scenario where they're advising trustees where there are liabilities within a trust?
• 50:51
  SPEAKER_01: Well, I think you've got to the first I mean the obvious thing at the moment is for, I mean, this is always difficult anyway, but if you're looking at, if you assume this relates to discretionary trusts, you're gonna have clients who've got trusts that are hitting their anniversaries and or aren't hitting a 10-year anniversary, but are distributing assets out of the trust, aren't you?
• 51:10
  SPEAKER_01: And therefore you're starting to think about exit charges.
• 51:12
  SPEAKER_01: The reporting requirements for that are longstanding.
• 51:15
  SPEAKER_01: Most trustees don't manage it themselves, have some sort of agent or support to do that reporting.
• 51:21
  SPEAKER_01: The issue for the advisors is do I understand the clients I've got who are trustees, and do I understand the assets of those trusts?
• 51:29
  SPEAKER_01: The only bit that you need to worry about is have you got a trust where there is some form of debt instrument linked to that trust, somebody is owed something, the trust asset includes a debt.
• 51:40
  SPEAKER_01: That might be, I mean, you would in lots of cases there would be scenarios where the trustees might not want to distribute the asset.
• 51:49
  SPEAKER_01: So they lend and they just want to lend capital.
• 51:52
  SPEAKER_01: So you might have had a scenario where the trustees had cash or created a scenario where they had cash, and then instead of distributing the asset, they lent it to a beneficiary.
• 52:01
  SPEAKER_01: In theory, beneficiary has the money, trust has a debt.
• 52:04
  SPEAKER_01: Is that caught by this?
• 52:06
  SPEAKER_01: Because the trust asset is very clear, it's an IOU, effectively.
• 52:09
  SPEAKER_01: Is that caught by this?
• 52:11
  SPEAKER_01: I think if you're an advisor, we don't know what the rules are yet.
• 52:14
  SPEAKER_01: So the watching brief is I need to be aware that there's something happening with trusts that have got liabilities.
• 52:21
  SPEAKER_01: I just need to have a really good handle on my fact finding and what I understand my trust assets to be.
• 52:27
  SPEAKER_01: So my trust clients, what is their trust type?
• 52:30
  SPEAKER_01: What is it made up of?
• 52:31
  SPEAKER_01: What assets does it have?
• 52:33
  SPEAKER_01: And I probably need to make sure I'm aware of any of those things.
• 52:36
  SPEAKER_01: It's really easy to ask a trust or a trustee in that scenario.
• 52:40
  SPEAKER_01: What does the trust hold?
• 52:41
  SPEAKER_01: And they they tend to think about the obvious things, you know, it's got this property, it's got this investment.
• 52:46
  SPEAKER_01: They kind of forget some of the peripheral stuff, like see.
• 52:49
  SPEAKER_00: I just wrote about this the other day, which is one of the most overlooked things when collecting details of a trust asset, is is money owed back from a beneficiary.
• 52:58
  SPEAKER_00: Yeah, distribution.
• 52:58
  SPEAKER_00: Once it's gone out the bank account, it gets overlooked.
• 53:01
  SPEAKER_00: But if it's been lent to a beneficiary, it's still an asset of the trust.
• 53:04
  SPEAKER_00: Yeah.
• 53:04
  SPEAKER_01: So I think it's it's the fact-finder bit at the moment, to be absolutely sure.
• 53:08
  SPEAKER_01: I'm really on top of the trust client's ideal one.
• 53:11
  SPEAKER_02: And I suppose at the end of the day, if you need to do something with that trust or the liability, you need to do it, and you're just gonna have to then work with the client post the event to make sure when you do know what this legislation is to address anything which you need to address.
• 53:31
  SPEAKER_01: The risk is you've you've had some sort of charge event and you've paid a charge, and there's a greater charge later as a result of the rules.
• 53:38
  SPEAKER_01: That's gonna be the risk, isn't it?
• 53:40
  SPEAKER_02: So there's definitely a thought about liquidity and uses of allowances and how using the trust assets and but I think the the main thing is if the trustees need to do something, you need to do something, but you need to make them aware that this could end up having an effect later down the line, which we can't yet at least.
• 53:58
  SPEAKER_01: I think it'd be some really niche, really specialist type scenario where you know the government has data or information, and obviously, trust registration service means the the regulator and HMRC have a lot higher understanding of the sorts of trusts and assets that exist.
• 54:17
  SPEAKER_01: And they are starting to use that data.
• 54:19
  SPEAKER_01: And they are starting to use that data in a greater way.
• 54:21
  SPEAKER_01: So you do wonder if there's something that having had TRS in place now for a number of years, is that information starting to help HMRC quite understand where there may be loopholes or or things being done, not in the manner it was intended.
• 54:36
  SPEAKER_02: And the final thing I was just going to note from an advisor point of view was the guided retirement and retirement collective defined contribution pension schemes.
• 54:45
  SPEAKER_02: The government will make changes.
• 54:48
  SPEAKER_02: The government will make changes to enable the consolidation of defined contribution schemes and the introduction of guided retirement framework and retirement only collective defined contribution pension schemes.
• 54:58
  SPEAKER_02: This will include expanding the circumstances where members may keep certain protections following a transfer and allowing members to transfer from an RCDC pension to a drawdown arrangement within a set time frame.
• 55:12
  SPEAKER_01: So wasn't he a character in Star Wars?
• 55:15
  SPEAKER_00: Um I don't attribute act to ACDC.
• 55:20
  SPEAKER_01: Yeah, like somebody sat somewhere in the treasury thinking, now let's think about all the things we could come up with.
• 55:26
  SPEAKER_01: We haven't used those letters very much recently.
• 55:28
  SPEAKER_01: Yeah, we haven't used one of those.
• 55:29
  SPEAKER_01: Let's do one of those.
• 55:30
  SPEAKER_01: RCDC.
• 55:31
  SPEAKER_02: So I think from my point of view, I can't remember the Chancellor mentioning this at all.
• 55:37
  SPEAKER_02: But I think I don't think it made the it was one of those hidden ones, yeah, and it was, but I think for a change it's something hidden, which is good.
• 55:44
  SPEAKER_02: Normally they hide the things they don't want people.
• 55:46
  SPEAKER_02: Yeah, but I think this is really good for the industry because my gut again, there's no detail in this, but my gut from this, and there's it sort of links hopefully to things like pension dashboard, making clients more aware, hopefully, when it eventually relies, may making clients more aware of the pension provisions they have, where that sits, who it's with, the values of them, and then this almost hopefully might be looking at following on from that and going once clients are more aware of their pension, we're gonna make it easier for them to move those around the reduce charges, which is a great advice opportunity for advisors.
• 56:25
  SPEAKER_02: And also, we don't know the detail, but keeping certain protections can be one of the reasons why it's really hard for advisors to consolidate and move pensions and make life easier for clients.
• 56:36
  SPEAKER_02: So, depending on the detail of that, that may open up avenues for pensions, old pensions, which advisors have never been able to move and bring it to the code.
• 56:45
  SPEAKER_01: It wouldn't be good advice to move it at the moment because you'd lose this.
• 56:48
  SPEAKER_00: Yeah, where they've been previously constrained, but now like all the signals where it would be a good idea to move it, but we can't because of the elusive protection.
• 56:56
  SPEAKER_00: That was the only thing holding it back.
• 56:59
  SPEAKER_00: It feels like a really good client outcome.
• 57:01
  SPEAKER_01: Yeah.
• 57:02
  SPEAKER_01: Advisor outcome, no-brainer, but from a client point of view, I might have a series of pensions that are not suiting my needs, not performing well, don't offer me flexibility.
• 57:13
  SPEAKER_01: I want out, but I've got special benefits on them.
• 57:16
  SPEAKER_01: No advisor in their right mind are going to transfer those and risk losing those benefits if they're key or really valuable.
• 57:22
  SPEAKER_01: What does this really mean?
• 57:24
  SPEAKER_01: If it feels good for clients, but the good will depend on the detail.
• 57:30
  SPEAKER_02: So I think that takes us to about an hour of talking about the budget and summarising what happens.
• 57:36
  SPEAKER_02: Just to wrap up, then what are both the yours key takeaways from yesterday from an advisor point of view?
• 57:46
  SPEAKER_02: So if you were going into a client can't if you've got an annual review book for tomorrow with a client who's got a fairly typical portfolio of pensions and investments, what what would the key thing you'd be picking up and making sure you're talking about?
• 58:06
  SPEAKER_00: I would be doing my normal financial housekeeping approach, which is focusing on what you've got today with the legislation that applies today with one eye on the future.
• 58:18
  SPEAKER_00: Um, like we said earlier, looking at whether from a tax perspective you've got life insurance bonds that potentially you could deal with some gains.
• 58:27
  SPEAKER_00: Um and then my other key point, I'm looking at it.
• 58:32
  SPEAKER_01: It's a fair one, but yeah.
• 58:33
  SPEAKER_01: I might as well said it before you say Imagine if Imagine if you said yesterday, no more tax on bonds, jewels would have nothing to say.
• 58:40
  SPEAKER_00: I would, because I'm also gonna say my other key point at the moment is making sure that um expression of wishes for pensions are up to date and that potentially clients have got spousal bypass trusts in place that can be used if necessary.
• 58:59
  SPEAKER_00: If they're not there, they can't be used.
• 59:01
  SPEAKER_02: So And what is it in the budget which drives you to think they are the conversations advisors should be having?
• 59:08
  SPEAKER_00: Because they were the conversations that people should have been having this time last week.
• 59:12
  SPEAKER_00: Um not much in the budget from my perspective, I think, that needs to ch change what you're doing at the moment.
• 59:21
  SPEAKER_01: Yeah, I think it's it's slightly difficult because the budget is bland.
• 59:27
  SPEAKER_01: Uh the things that are announced aren't gonna be hugely beneficial to many people, right?
• 59:32
  SPEAKER_01: I think if you're if you're having a review meeting tomorrow with a client, the issue is it depends on the client makeup and their objectives and their estate, doesn't it?
• 59:40
  SPEAKER_01: If you've got a client who's got a load of money invested in or held in cash, that's a really big ticket item.
• 59:47
  SPEAKER_01: If you've got a business owner in the middle of a sale, that's a big ticket item.
• 59:50
  SPEAKER_01: This budget feels very similar to where you were a week ago, which is good fact-finding, consider the objectives, put the client in the most tax-efficient position, that's always going to improve your outcomes.
• 1:00:01
  SPEAKER_01: Make sure you're utilising all the allowances and reliefs.
• 1:00:04
  SPEAKER_01: We've got a load of things coming between now and 2029, 2030.
• 1:00:09
  SPEAKER_01: A good advisor is going to be monitoring where you're at now with an eye on the changes that are coming and not trip themselves up with, well, let's do this because that's a good play at the moment.
• 1:00:18
  SPEAKER_01: But I forgot that that change is going to take place.
• 1:00:21
  SPEAKER_01: This budget doesn't feel like there's lots and lots of things that are going to drive out um a fundamental change in advice for me.
• 1:00:30
  SPEAKER_02: Yeah, no, I don't.
• 1:00:33
  SPEAKER_02: I I think if if I was an advisor, I'd be worrying less about the annual reviews I've got booked in because I think, as you know, your answers both say, feels relatively business as usual.
• 1:00:46
  SPEAKER_02: I would be spending some time thinking.
• 1:00:48
  SPEAKER_02: It has been a quite a bland budget, but there are still a couple of bits in there which will impact specific groups.
• 1:00:53
  SPEAKER_02: So I would be reviewing my client bank to say, have I got any first-time buyers currently in the process of I'm recommending a mortgage for because and they're using their license because that may affect, we may be able to get a slightly reduced mortgage, which will mean lower monthly repayments.
• 1:01:13
  SPEAKER_02: Yes.
• 1:01:14
  SPEAKER_02: Be looking at if I've got anyone selling a business where we thought BADR was, or anyone with longer-term plans to gift the business to Julia's earlier point.
• 1:01:25
  SPEAKER_02: And then I'd also be thinking about anyone whose income profile, where we've got an income strategy where we're using savings and/or property income to rely on where I know I'm gonna have to refresh what's going on there.
• 1:01:41
  SPEAKER_02: But with some of those things, we've got a bit of a lead in even till April next year.
• 1:01:45
  SPEAKER_02: So it's not a not a panic, I need to go out and do all these things tomorrow.
• 1:01:50
  SPEAKER_02: But they're the areas I think I and of course anyone you've been talking about we can't do£20,000 into a cash ISA from next year, we've got to do something different, because I still think the change doesn't mean that they shouldn't consider investing.
• 1:02:06
  SPEAKER_02: Correct.
• 1:02:07
  SPEAKER_02: But it's another aspect now because it's not a few.
• 1:02:09
  SPEAKER_01: So now they might just want to secure their cash ISA and then you can carry on the discussions.
• 1:02:14
  SPEAKER_01: I think, like you said, what what you're fundamentally talking about there is segmentation, isn't it?
• 1:02:18
  SPEAKER_01: And and or as an element of that.
• 1:02:21
  SPEAKER_01: So there are pockets of people that have certain elements of this budget that would mean if your data is really good on your client bank, you will be able to target.
• 1:02:29
  SPEAKER_02: Yeah, but I don't think in reality, I'd say yes, data is always important, but I think with these advisors will know that they will know if they're currently mortgage planning with someone, they should know with the middle of making to sell a business.
• 1:02:42
  SPEAKER_02: Yes.
• 1:02:42
  SPEAKER_02: And it's just giving yourself some time to focus on those and make sure you're having a conversation with those people, even if you weren't due to have a conversation soon.
• 1:02:52
  SPEAKER_02: They are the ones who will likely have heard a snippet from the budget and gone.
• 1:02:56
  SPEAKER_02: That's going to impact me.
• 1:02:57
  SPEAKER_02: So I'd like to understand how that affects the planning we've got.
• 1:03:00
  SPEAKER_00: Actually, if you are a mortgage advisor specialising in first-time buyers, you could be the busiest advisors going at the moment.
• 1:03:05
  SPEAKER_02: Yeah.
• 1:03:06
  SPEAKER_02: Yeah.
• 1:03:07
  SPEAKER_00: Right, brilliant.
• 1:03:08
  SPEAKER_02: Well, thank you both as ever for your thoughts and opinions on the budget.
• 1:03:12
  SPEAKER_02: No doubt there will be more to come when we actually do finally get some detail.
• 1:03:16
  SPEAKER_02: A bit more reading as it starts to come out.
• 1:03:17
  SPEAKER_02: Yeah.
• 1:03:18
  SPEAKER_02: So uh thank you all for listening uh today.
• 1:03:22
  SPEAKER_02: Hopefully you found it useful and it will help you with some of your client conversations over the coming weeks.
• 1:03:27
  SPEAKER_02: And we will see you again next time.
• 1:03:29
  SPEAKER_02: As well as the podcast, we've also produced a series of material analysing some of the main impacts of the budget and some of the lesser known parts.
• 1:03:38
  SPEAKER_02: Visit our website to go and have a look at what we think about each of these areas.