Expert: Karen Sullivan, Head of Strategic Partnerships, Puma Investments Facilitator: Rupert Neville, Consultant
Headlines:
- While certain budget announcements impact tax-efficient investments and estate planning, the final outcomes remain uncertain as some areas, such as inheritance tax (IHT) and business relief, are still under consultation
- Pensions remain IHT-efficient for now, but changes to the budget may affect this in the future
- New strategies for wealth transfer are discussed, especially in non-traditional family structures, with an emphasis on engaging younger generations early on
- The evolving financial planning landscape requires adaptation, particularly in response to the budget's impact on high-net-worth individuals (HNWIs) and entrepreneurs
- There’s an emphasis on increasing financial education, particularly for younger generations, and potential innovation in tax-efficient investment schemes like EIS and VCTs
Discussion points:
Budget announcements and IHT /business relief
IHT and business relief changes are still under consultation, with final decisions yet to be made. This leaves the financial planning community in a state of uncertainty, awaiting the outcome.
While residential property can still be part of estate planning, complexities arise when selling part of the property while remaining in it.
Pensions remain an IHT-efficient vehicle for now, but the potential for changes to this in the new budget remains a concern.
Impact on HNWIs and entrepreneurs
There’s concern that recent budget changes might disincentivise wealth creation, with a potential negative impact on entrepreneurs and high-net-worth individuals.
Delegates discussed the renewed relevance of insurance products to cover potential tax liabilities, which may have been underused in recent years.
Potential for tax migration
There were mixed opinions on whether these changes would lead to significant numbers of individuals leaving the UK for tax reasons. The conversation also touched on the complexities of international financial planning and political changes affecting financial strategies.
Intergenerational wealth transfer
The group highlighted the need for new strategies to transfer wealth earlier in life, not just at the point of death, especially for non-traditional family structures. This discussion was informed by a talk on engaging younger beneficiaries early, as covered in the afternoon session.
Financial education and innovation
The importance of improving financial literacy was stressed, particularly considering changing life cycles and societal structures. There’s growing interest in new-age financial planning and product innovation, with a focus on long-term investments in high-growth organisations.
Delegates speculated about potential new schemes to encourage long-term investment in high-growth businesses, such as expanding the target market for Venture Capital Trusts (VCTs) to younger, more innovative investors.
Pension-related speculation
Potential changes to pension tax-free lump sum with speculation that the government might introduce further pension-related announcements in the next budget, possibly affecting tax-free lump sums. This led to a discussion about the impact of clients crystallising pension gains or withdrawing lump sums early due to speculation driven by social media and press.
Key takeaways:
- The uncertainty around IHT and business relief changes, which are still under consultation, requires financial advisers to stay updated and adaptable
- Pensions remain IHT-efficient for now, but future changes could impact their attractiveness as an estate planning tool
- The growing need for strategies to transfer wealth earlier in life, particularly in non-traditional families, presents new opportunities for financial planning
- There's a significant opportunity to increase financial literacy, particularly with younger clients who are more open to innovative products and long-term investment strategies
- There is speculation that the government may introduce new schemes to promote long-term investments in high-growth companies, which could be attractive to younger investors
