Advisers have been urged to prepare for the potential impact of changes introduced by the upcoming Autumn Budget, with St. James’s Place (SJP) outlining key advice and planning actions to consider.

While the specifics of any potential changes from the Budget on 30 October remain uncertain, SJP highlighted the importance of being aware of speculation and the context behind it.

Despite a lack of detail on future reforms, SJP noted that that the allowances and exemptions available today were known and it therefore may be wise to consider advancing any planning ahead of the Budget.

Among the key advice and planning actions to consider were maximising allowances sooner rather than later in the current tax year, and potentially ahead of any Budget changes, as well as inheritance tax (IHT) planning if this was a priority.

Advisers who had clients considering crystallising pensions due to speculation around the pension commencement lump sum (PCLS) or the minimum pension age were urged to consider ensuring that all implications and client needs were considered based on current legislation.

Furthermore, for clients considering crystallising capital gains tax (CGT) liabilities in 2024/25, advisers were urged to assess whether a disposal was in their best interest and consider if action should be taken.

“Where relevant, for clients considering Business Assets Disposal Relief, the theme of acting sooner rather than later may also apply,” SJP stated.

“Consider the role of investment bonds in terms of diversification of tax regimes and the potential impact of changes to CGT and tax on dividend income, although it's important to recognise there is no certainty regarding potential changes.”

SJP divisional director for retirement and holistic planning, Claire Trott, commented: “Labour’s manifesto committed them to ‘undertake a review of the pension landscape’ and the Terms of Reference for Phase 1 have been published.

“This suggests that there will be no immediate changes to the annual allowance or the availability of tax relief. But we know that pensions are always seen as low hanging fruit by think tanks and commentators so speculation will continue to be rife.

“Taking tax free cash ‘just in case’ isn’t something that we actively suggest clients do, because of wider impacts on their estate and later life planning, including but not limited to IHT.”

Trott noted that there was increasing speculation about potential rises in CGT, particularly as the government looks for additional revenue.

“There is historical precedent for mid-year CGT changes, as seen in 2010 when rates were increased the day after the announcement,” she continued.

“However, it remains unclear whether the government would potentially implement changes immediately or defer them to the next financial year.

“For those planning to make disposals in 2024/25, it might be prudent to act before the Budget is announced. ‘Don’t let the tax tail wag the investment dog’ is advice often applied when considering tax-incentivised investments. It is equally for tax-incentivised dis-investments.

“Nonetheless, this decision should be carefully considered with professional advice, taking into account the potential risks and benefits.

“One of the major sources of CGT is the sale of business assets. Currently, up to £1m of gains from the disposal of an interest in a qualifying business would be taxed at the lower rate of 10 per cent.

“While this could be in the firing line, this is not thought to be a major target given the generally accepted importance of encouraging small business.

“Having said that, as for investments generally, if a sale is going to take place anyway to ensure that the sale is executed sooner rather than later.

“Bringing forward such a sale of a private trading business will, however, in most cases be materially harder than disposing of an 'arm's length' investment.”

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