Budget Insights: A Practical Guide for Financial Planners

Rachel Reeves has delivered her long-awaited first budget, and with it come significant changes that will affect individuals and businesses alike. As financial planners, it’s crucial to guide your clients through these changes, helping them understand the implications and adjust their financial strategies accordingly. Below are the key budget announcements relevant to financial planning, along with practical tips to assist your clients.

Key Budget Changes and Practical Tips

1. Capital Gains Tax (CGT) Rate Increase

• Reassess Investment Portfolios: Encourage clients to review their investments and consider realising gains before the new rates take effect.
• Tax-Loss Harvesting: Suggest selling underperforming assets to offset gains and reduce overall CGT liability.

2. Inheritance Tax (IHT) Threshold Freeze

• Review Estate Plans: Regularly reassess estate plans to ensure tax efficiency. Explore strategies like gifting or using trusts to minimise IHT exposure.
• Gifting Strategies: Advise clients on utilising annual gifting allowances to reduce the value of their estates.

3. National Insurance (NI) Contributions Increase

• Reevaluate Salary Structures: For business owner clients, discuss the implications of increased NI contributions and recommend a re-evaluation of salary structures.
• Assess Employee Costs: Help clients factor in increased costs into their hiring and payroll budgets.

4. Minimum Wage Increase

• Update Compensation Plans: Assist clients in adjusting their salary and compensation plans to ensure compliance with new minimum wage laws.
• Budget for Increased Labour Costs: Encourage clients to incorporate increased labour costs into their financial projections.

5. VAT on Private School Fees

• Review Education Funding Plans: Encourage clients to reassess their savings and budgeting for private education, considering the new VAT.
• Explore Alternatives: Discuss alternative educational options that may help mitigate the impact of increased costs.

6. Abolition of the Non-Dom Tax Regime

• Reassess Tax Position: For clients previously benefiting from non-dom status, review their tax position and recommend restructuring of investments or income.
• Dual Tax Agreements: Discuss any relevant agreements that might still provide benefits for clients with international income streams.

7. Household Support Fund Extension

• Identify Eligibility for Support: Stay informed about the eligibility criteria for the Household Support Fund and proactively communicate these opportunities to clients in need.
• Budget Planning for Financial Hardship: Assist clients in creating a budget that considers available government support.

8. Freeze on Income Tax and NI Thresholds

• Adjust Tax Planning Strategies: Advise clients to adjust their income tax planning, such as increasing pension contributions to reduce taxable income.
• Utilise Tax Allowances: Encourage clients to maximise tax-free allowances, such as ISAs and pensions.

9. Windfall Tax Increase

• Assess Investments in Energy Sector: Keep clients updated on how increased windfall taxes may affect their energy-related investments.

10. Flat-Rate Duty on Vaping and Increased Tobacco Duty

• Investment Strategy Review: Advise clients in the tobacco or vaping sectors to reassess their investment strategies in light of increased duties.
• Educate on Compliance and Costs: Ensure clients operating in these industries are aware of compliance requirements and cost implications.

Your Trusted Partner

At We Complement, we understand the complexities that arise from budget changes and how they can impact your clients' financial plans. We’re here to support you in guiding your clients through these transitions, ensuring they remain aligned with their financial goals.

If you have any questions or need assistance in implementing these strategies for your clients, please don’t hesitate to reach out. Our team is always on hand to help you navigate these changes effectively.

Contact us today!