Certainty around pension taxation was the number one priority (59%) for next week’s Budget for financial advisers, according to new research.
Over half (53%) of the advisers surveyed by Royal London would also like to see simplification of the tax system included in the Budget.
Clients were also concerned about potential changes to taxation in the Budget. Over four in five advisers (84%) said the planned pension IHT changes have already affected conversations with clients to some or a great extent.
Two thirds (64%) of advisers said that clients were raising the planned changes to the inheritance tax treatment of pensions, making it the most discussed issue. This was followed by estate planning (51%), general inheritance tax (49%) and pension tax-free cash (47%).
Advisers were also seeing clients take action ahead of the Budget. Half (51%) reported increased gifting of lump sums, while the same proportion have seen an increase in earlier-than-planned pension withdrawals. Almost half report increased gifting through the normal expenditure from income exemption (49%) and increased reviews of estate plans (48%), while 45% have seen greater demand for financial advice.
News that the Chancellor appears to have ruled out an increase in Capital Gains Tax in next week’s Budget will be welcome news for the advisers surveyed. Half (50%) of advisers had said a CGT increase from April 2027 could prompt clients to bring forward investment disposals, while 48% expected clients to restructure investments to improve tax efficiency.
After certainty on pension taxation and tax simplification, advisers' Budget priorities included greater incentives for UK investment (38%), more detail on social care reform (35%), inheritance tax reform (34%) and measures to encourage long-term saving (27%).
The findings also revealed a pessimistic outlook among advisers ahead of the Budget. Almost two-thirds (62%) of advisers expected it to have a negative impact on their clients' long-term financial security, including 20% who expect a significant negative impact. Just 9% anticipated a positive impact.
Jamie Jenkins, head of policy at Royal London, said: "The bigger message coming through from advisers is that people need certainty and simplicity if they are going to plan confidently for the long term. Changes to the inheritance tax treatment of pensions are already influencing conversations and, in some cases, changing behaviour.”
• Royal London surveyed 85 advisers between 12 and 16 October.