Talking Point 

Advisers say personal allowance rise is biggest Budget win

Advisers say personal allowance rise is biggest Budget win

Almost two-thirds of advisers believe a rise in the personal allowance to £12,500 will have the most positive impact on clients, according to the latest FTAdviser Talking Point poll.

The poll asked advisers to choose which of the four Budget 2018 announcements will have the most positive impact on their clients.

A total of 64 per cent said the £650 increase in the amount clients will need to earn before they have to start paying income tax from April 2019, while 21 per cent said the increase in the lifetime allowance (LTA) to £1.05m from April next year.

Only 15 per cent said the additional £5m in funding promised for the pensions dashboard over 2019 to 2020, and none said the extension to the Help to Buy scheme from 2021 to 2023 would have a positive impact on their clients.

Chancellor Philip Hammond delivered the Budget 2018 on October 29.

Jamie Smith, partner and financial adviser at Foster Denovo, agreed with the result.

But he said: "If we were to consider this question at an individual level, I would disagree as I believe the increase in LTA has the potential to have the biggest impact."

Rachael Griffin, chartered financial planner at Quilter, agreed the personal allowance rise will undoubtedly have an immediate positive impact, but pointed out National Insurance contributions have also moved, with higher earners losing half their newfound gains.

She explained: “Currently, people earning more than £46,350 pay 12 per cent on earnings, but only 2 per cent above that level."

From April next year, they will pay the full 12 per cent rate on everything up to £50,000. The 2 per cent rate then kicks in on earnings above £50,000.

Lynda Whitney, partner at Aon, added that the small rise in the personal allowance will catch out a new group of people who are in pension schemes with a net pay arrangement.  

She said: "The personal allowance rise makes this anomaly incrementally worse.”

victoria.ticha@ft.com

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