Independent financial advisers (IFA) are reporting significant concerns and changes to financial behaviour among their clients amid speculation about which policies the government may alter at the Budget later this month.

Research from Opinium found that 77 per cent of IFAs said clients had raised concerns about changes to pension tax relief and 58 per cent reported that their clients had made withdrawals from pension lump sums due to the speculation.

These actions may have been premature, as reports suggested the government recently confirmed that the Chancellor will not make any changes to the tax-free pension lump sum allowance in the Budget.

More than one in 10 (11 per cent) IFAs said Budget rumours had also led to some clients making plans to delay their retirement.

Rumours of rental income becoming subject to national insurance had led to 26 per cent of IFAs seeing clients sell rental properties, with 55 per cent reporting client concern relating to rental income changes.

Over half (54 per cent) of IFAs said their clients were concerned about capital gains tax (CGT) potentially being imposed on sales of primary residences.

Nearly one in five (18 per cent) reported their clients delaying transactions, such as house purchases, while 24 per cent said clients had brought forward disposals and 22 per cent had clients who have been crystallising unrealised gains or losses.

Almost two thirds (64 per cent) said clients had raised enquiries due to speculation about a wealth tax, 17 per cent reported clients increasing their cash holdings, and 9 per cent said clients had moved assets offshore or abroad.

“Our research highlights the degree to which Budget speculation is already influencing financial behaviour,” commented Opinium CEO, James Endersby.

“With rumours of major tax changes growing, many IFAs are seeing clients act pre-emptively, from drawing down pension lump sums to offloading rental properties.

“This level of activity underscores the deep uncertainty about what the Chancellor may announce in the Budget. While we don’t yet know how much of the speculation will be borne out, the impact is already being felt in people’s financial behaviour.”

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