The wealth management and financial advice industries have expressed their relief at the clarity and certainty that the Autumn Budget has provided, but warned the changes outlined could bring negative consequences.

Chancellor, Rachel Reeves, delivered her Budget speech yesterday (30 October), which included several tax and relief reforms to help raise £40bn to plug the ‘black hole’ in public finances.

Capital gains tax (CGT) rates were increased, while changes to inheritance tax (IHT) reliefs saw pensions and AIM shares being brought into scope and business reliefs being restricted, and the government confirmed it was scrapping the non-dom regime.

While many were concerned about how extreme the changes may be in the lead-up to the Budget, some expressed their relief that Reeves did not go as far as people feared.

"Overall, there is a sense of relief the Budget is out of the way, uncertainty is removed, and we can move on with clarity over rules and tax rates,” said Charles Stanley chief investment analyst, Rob Morgan.

“There are several issues to consider for clients, notably revisiting IHT planning in light of bringing pensions into the equation. That will mean a very busy period for financial planners.

"A small blow to AIM and relief there’s not a knockout punch. We need a vibrant AIM market with a varied range of participants to help support these important businesses with growth capital, and a cap on relief will affect the market to a degree."

Commenting on the CGT rate increases, Morgan said the tax hikes were “unwelcome news” for investors, and while Reeves would have “done her sums” in terms of getting the balance right, he warned it may backfire in the medium term if people choose to hold on to their assets for longer.

Evelyn Partners tax partner, Toby Tallon, added that while the increases in CGT rates were not as extreme as some feared, the hikes could still put off entrepreneurs from starting businesses in the UK.

“The introduction of restrictions to IHT business reliefs will make it more costly to pass family firms on to the next generation,” he added.

“This could put the viability of many long-standing companies – and the ability to continue employing loyal workforces and growth in local communities - at risk, particularly if family members of business owners have sizeable IHT bills they need to settle.”

Wealth Club investment manager, Nicholas Hyett, said it was “good news” that the business relief changes were “less draconian than feared”.

“The decision not to add a hard cap to Business Relief avoids the worst-case scenario for those invested in specialist products that aim to qualify for business relief by investing in things like solar farms, property development lending and care homes,” he added.

“Nonetheless for larger businesses up and down the country, this reform will be a source of considerable concern.”

Meanwhile, Charles Stanley senior personal finance commentator, Russell Miles, highlighted that bringing inherited pensions into the estate for IHT calculations will change how IHT is planned for, as the advice has often been to “touch your pensions as the last source of income in retirement”.

"Turning pension savings into an income stream and giving gifts out of surplus income preserves the IHT benefits,” he continued.

“Taking uncrystallised pension lump sums and gifting these to the next generation also has the potential to lift them out of the IHT trap provided you live for another seven years. But taking financial advice is essential before making any decisions."

While some expressed their relief that the Budget did not go as far as many feared, DeVere Group CEO, Nigel Green, warned that the measures introduced were a “clear disincentive” to live, work, and invest in the UK.

“We’re already seeing a surge in interest as individuals and families look to secure their financial futures elsewhere,” he stated.

“This is not a time to wait. Now, more than ever, proactive wealth management is essential. Strategies such as leveraging tax-efficient vehicles, rebalancing portfolios, and planning inheritance early can help mitigate the impact of these changes.

“The potential exodus of top talent and wealth could leave lasting scars on Britain’s economy, deterring future investors and undermining our global reputation as a hub for business and prosperity.

“Furthermore, the UK has long benefited from the economic contributions of non-doms, whose direct and indirect investments and business activities have been integral to the nation’s prosperity.

“Additionally, the potential decline in the UK’s reputation as a tax-friendly hub may dissuade future investors and entrepreneurs from considering the country as their base of operations.

“The allure of the non-dom tax status has been a pivotal factor in attracting international talent and creating a dynamic business environment.

“Its removal is likely to signal a shift in the global perception of the UK as a favourable destination for wealth creation and business development.”

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