Following on from yesterday’s Budget, Quilter financial planning expert Rachael Griffin noted that the government “reaffirmed its commitment to tackling tax avoidance and evasion”.
“The government is right to take these steps and ensure that people pay the right amount of tax at the right time,” Griffin said.
However, the financial planning expert reiterated that those saving for their future and building their wealth, should not be put off planning because “others choose to abuse the system”.
“There is a worrying lack of aptitude in the UK when it comes to planning finances tax efficiently. 61% of people say they don’t have a good understanding of tax rules when investing money and nearly half (49%) say they do not contribute to an ISA,” Griffin highlighted.
However, Salisbury House Wealth managing director Tim Holmes added that “this has not been a Budget for savers” and described the increase in the lifetime pension allowance as not going “far enough by a long stretch”.
“Many ‘ordinary’ public sector professionals such as GPs and teachers will be facing substantial tax charges as regular contributions from their salaries may exceed the limit, which is just far too low,” Holmes said.
“In previous years the lifetime allowance has been chopped back too aggressively, dropping from £1.8m in 2011-12 to a low of £1m in 2017-18, and has just started to recover. The damage done by this is only just beginning to show – with thousands being hit by the punitive tax charges.”
Prudential retirement expert Vince-Smith-Hughes, on the other hand, stated that confirmation of the increase in the lifetime allowance is “welcomed”.
“Confirmation of the increase in lifetime allowance is welcomed. More individuals will need lifetime allowance advice as some DB transfers have put people over the limit,” he said.
Subscribe to our newsletter to receive breaking news by email.