71% of clients fear the budget will leave them worse off

Ahead of this month’s Budget, we wanted to hear directly from our clients about how they’re feeling and what they’d like to see from the Chancellor.

So, in September, our quarterly client survey focused on the Budget. The results painted a fairly clear picture; people are approaching the Budget with considerable caution.

Some 71% of those who responded expect the Budget to worsen their own financial position, compared with just 2% who think they’ll be better off. More than half, 56%, also said they felt less optimistic about the Budget following the change in government leadership, while only 15% felt more optimistic.

There’s a similar sense of caution when people look beyond the Budget itself. Despite investment markets remaining strong, 30% told us they feel less positive about their own financial future than they did three months ago. Around two-thirds said their outlook had stayed broadly the same, while just 4% felt more positive.

When we asked which taxes clients thought were most likely to be affected by the Budget, Capital Gains Tax came out on top at 31%, closely followed by Inheritance Tax at 29%. Income Tax was identified by 22%, while 8% thought business taxes.

When asked what single measure in the Budget would make the biggest positive difference to them, again and again, people came back to personal tax allowances and thresholds.

Clients talked about increasing the personal allowance, raising the point at which people begin paying tax and addressing the effect of frozen thresholds as wages and pensions rise. Others raised inheritance tax, particularly the planned inclusion of unused pensions in estates, while fuel and energy costs, taxation on businesses and the wider cost of living also featured prominently.

There was also a strong message on government spending.

When we asked what the Chancellor should do to stimulate growth, 46% said the priority should be to cut government spending. 37% favoured reducing taxes, while just 9% thought higher taxes were the answer.

Karl Pemberton said: “I’ve used the survey results as the basis for a letter to the Chancellor, focusing on four areas: fiscal drag, inheritance tax and pensions, the cost of employing people and running businesses, and the need for greater control of public spending.

“The message from our clients is that they want more certainty. People are making long-term decisions about retirement, their businesses and their families, and constant changes to tax and pension rules make that harder.

“I’ve asked the Chancellor to look again at frozen tax thresholds and the inheritance tax treatment of unused pension funds, while recognising the pressure businesses are under and the clear preference among respondents for spending restraint over further tax rises.

“Whether he agrees is another matter altogether, but whatever comes in the Budget, we’re always here to help clients understand what it means for them.”