Financial Planners have mostly reacted with relief to the Budget but many have predicted the numerous taxation changes will fuel demand for advice.

Most were relieved that some of the bigger threatened changes, such as to the pensions tax free lump sum, did not materialise.

However many said the highly technical nature of some of the tax changes, including IHT and CGT, mean more demand for professional Financial Planning advice.

Daniel Swift, head of Financial Planning at Close Brothers Asset Management, said today’s Budget suggested the “need for financial advice has never been greater.”

He said: “The Chancellor met expectations with her commitment to increase taxes by £40bn, and measures to reduce tax avoidance.

“While most pensions rules were left alone, one decision the Chancellor did make was to bring pensions into the estate for inheritance tax purpose. While the details here still need to be properly explored, this could change an individual’s financial plans significantly. There were also changes to Business Property Relief and Agricultural Property Relief that again may cause people to rethink their Financial Planning.

“The implementation dates of these changes vary, some taking place immediately, others from next tax year and further beyond. Therefore, understanding the detail of when they take effect is crucial. By seeking financial advice, people will be able to ensure they are able to navigate the complexities of today’s announcement in a way that ensures the best outcome for their long-term finances.“

Andy Bolden, Financial Planning director at 7IM Private Clients, said: "A bumper speech running to nearly 100 minutes has revealed the largest tax-raising Budget in living memory, with nearly £41bn of tax rises announced. The largest slice apportioned to Employer National Insurance; up to 15% next year with a reduced threshold, meaning £25bn extra coming from larger firms. Business owners will have a lot to say on this, now that it’s confirmed; arguably a tax on working people, depending upon your definition.

“Slim pickings for good news. Better than anticipated news for CGT – up less than forecast - and no extension to frozen income tax thresholds beyond 2028/29. Unchanged Business Asset Disposal Relief at £1m, with only slight increases in rates beyond that figure, but reductions in Business Property Relief (BPR) & Agricultural Property Relief (APR) for those owning assets currently firmly excluded from IHT. Inherited pensions are also drawn into scope for IHT, leaving many families needing to review their planning.”

Shaun Moore, tax and financial planning expert at Quilter, said: “Labour’s recent confirmation of their plan to impose VAT on private school fees and remove charitable business rates relief for private schools marks a significant shift in the education funding landscape. Starting from January 2025, private school fees will incur a 20% VAT charge, with business rates relief set to end by April 2025.

“From a Financial Planning perspective, this change introduces new challenges for families relying on private education. Adding VAT could significantly increase school fees, with the average cost for a day pupil likely to rise by around £3,100 per year.

“For many parents, this added cost could make private education financially unfeasible, potentially leading to an influx of students moving from private to state schools. This shift could place additional pressure on the state system, which may struggle to accommodate the increase in student numbers in certain areas. Our calculations found that a couple would need to earn at least £102,000 a year to be able to send two children to a private day school, when fees go up 20 per cent in January.”

Rachael Griffin, tax and Financial Planning expert at Quilter, said: "Despite widespread speculation that Labour would break its pledge not to raise taxes for working people by extending the income tax threshold freeze beyond 2028, the Chancellor has confirmed the freeze will thaw as originally intended.

“Nonetheless, as wages grow in line with inflation, static tax thresholds will continue to drag more and more individuals into higher tax brackets until the end of the freeze and beyond, a phenomenon known as fiscal drag. For millions of middle-income earners, this means paying a higher proportion of their income in tax without seeing any real increase in their purchasing power.

"The OBR’s October 2024 economic and fiscal outlook suggests that from 2027-28 onwards, more than four million additional taxpayers will brought into tax due to the threshold freezes, resulting in the number of taxpayers surpassing 40 million for the first time. The OBR also suggests that the changes to income tax and NICs thresholds that have been announced since March 2021 onwards will mean the government’s yield will still increase by £48.0 billion in 2029-30 despite thresholds thawing from 2027/28.

"However, the decision not to extend the freeze will prevent approximately one million pensioners being dragged into paying income tax by 2030, according to our estimates."

Toby Tallon, tax partner at professional services group Evelyn Partners, said: “These tax changes will leave many business owners questioning whether they should  invest their time, energy, risk and money in starting and growing businesses. Many will face difficult dilemmas about whether it is worth taking on more staff, or indeed retaining the ones they currently have given that costs of employment will rise. 

“In the run up to today we saw numerous reports of entrepreneurs planning to move abroad if the Budget didn’t deliver for them, with our own research of 500 business owners revealing that almost half would consider leaving the UK if the tax changes were clearly unfavourable. But perhaps the greater risk is inactivity. If the business owners lose confidence in the Government's economic or fiscal plans, they might decide that striving for that extra growth is not worth it if the rewards are more heavily taxed.” 

Alex Cummings, wealth planner at Financial Planning firm Succession Wealth, said: "The impact of changes to the IHT/pension regime will potentially mean significant changes to wealthier clients’ retirement income strategies. At present, there has been a tendency to use alternative assets to fund retirement spending, with pensions being used for passing on wealth. This strategy could be turned on its head. A change to plans and cashflow forecasts may be necessary.

"I can see trust based whole-of-life and gifting strategies becoming a bigger focus going forward, particularly as the core IHT exemptions/allowances appear to remain untouched. It will be interesting to see how the changes effect Expression of Wishes going forward.”

Anna Murdock, head of wealth planning at JM Finn, said: "Key for the government today was to deliver the message that they would restore economic stability and respect financial institutions, and markets welcomed the OBR affirming the Budget. With the 2022 Budget fresh in investors’ minds, bond yields were being closely watched, and they are falling. This is good news - these are the main gauge of what the government has to pay to borrow in the debt markets."

“More good news for the markets is that the OBR forecasts that real GDP will be 1.1% this year, and this is expected to rise to 2% next year. This has already been demonstrated with the domestic focussed FTSE250 is in positive territory, while the overseas focussed FTSE100 is in negative territory. 

“One surprise is that defined contribution pensions will be liable for IHT. UK SIPPs are estimated to have a value of £750BN and so the tax receipts from these is significant, and a blow to investors who use them for tax planning. Consequently, as well as tax receipts from IHT, the Treasury is likely to see an increase in the tax on pension drawings as the IHT exempt attraction and discipline of passing on this asset ‘untouched’ has been removed. A welcome relief is that the tax-free cash that investors can draw remains available."