In truth, now the dust is settling after yesterday’s Budget, he was a bit of both.
I expected much worse in the way of tax rises although the increase in Corporation Tax to 25% from 2023 will hurt, particularly profitable and growing Financial Planning and Wealth Management firms who have scaled up over the last few years and seen profits roll in.
But we must give him lots of credit for extending the furlough scheme, helping homebuyers and introducing some useful incentives for traineeships and apprenticeships, ones I hope many Financial Planning firms will take up.
His Budget, in essence, walked a tightrope between raising taxes and boosting recovery prospects. He is, in essence, banking on two things to help pay for the cost of supporting the economy during the pandemic: a swift recovery in GDP and low interest rates. He is taking a gamble that things will turn out alright. I share his view but it’s not a universal one.
Forecasts from the economists suggest GDP may bounce back fairly quickly over the next two years. The outlook on interest rates is less certain.
For Financial Planners the prospects look more promising and even the decision to freeze the lifetime allowance at just over £1m (it should be £2m+ by now) will have had some planners seeing a silver lining in this cloud.
With the freezing of LTA and other tax allowances until 2026 more and more people will be caught in the tax trap. They will need good advice on mitigating their tax bill. Who to turn to for help? You get my drift.
Financial Planners should expect more enquiries from new clients wanting to avoid Mr Sunak’s tax grab. To this extent, the Budget looks broadly positive for many planners, at least in terms of client demand.
Of course, it is too early to judge the impact of all his measures but I will give him a cautious 7.5 out of 10. So far there do not appear to be any hidden nasties and at least for the Financial Planning profession the results seem broadly helpful.
A number commentators have mentioned that a lot was missing from the Budget, no mention of IHT for example. With the IHT take rising rapidly he perhaps had little need to damage a golden goose. We’ll see whether he needs to pop back in the Autumn for another look at taxes. Don’t rule it out.
Kevin O’Donnell is editor of Financial Planning Today and a financial journalist with 30 years experience. This topical comment on the Financial Planning news appears most weeks. Follow @FPT_Kevin