While Boris Johnson has this week been triumphantly crowned prime minister, let’s not be lulled into a false sense of security about the future course of the country.
Namely, that everything is going to be hunky dory under the rein of blond bombshell Johnson.
Far from it. Make no mistake, hurdles galore face Mr Johnson as he beds down at Number 10 and puts up new net curtains.
There is Brexit – deal or no deal – to sort out.
And of course there is the possibility of a general election, either enforced by Tory renegades or even triggered by Mr Johnson himself as he possibly seeks to take advantage of internal squabbling within the Labour Party on matters both large and small.
What a gamble that would be by Mr Johnson – as big as the one Theresa May took in June 2017 and which backfired in spectacular fashion.
Although uncertainty is not good for the UK stock market – and by implication the clients of financial planners – and eats away at the value of sterling like a hungry slug, there is no doubt the political turmoil is fuelling personal finance interest among investors and holders of wealth.
Many want to know what they should be doing if, God forbid, Jeremy Corbyn boots Mr Johnson out of his Number 10 love nest.
According to a survey issued by financial mutual Royal London a couple of days ahead of Mr Johnson’s anointment as prime minister, nine in 10 pension advisers confirm that clients have approached them in the past two years to discuss the potential impact of a change of government on their finances.
Since the start of the year, more than half of advisers surveyed say the level of such enquiries has ramped up a notch or two. Estate planning, inheritance tax, tax relief on pensions and income tax are all now subjects of conversation between planners and clients.
It is not surprising to learn that the threat of a Labour administration is unsettling many people.
Last month, I spent some time reading a report from Labour entitled Land For The Many: Changing The Way Our Fundamental Asset Is Used, Owned and Governed. It left me feeling rather cold.
The report threatened a wicked assault on wealth ownership, and in particular homeowners. If acted upon, it would plunge us back in time some 50 to 60 years – to the dark days of the 1960s, when tax rates of 90 per cent plus were not uncommon.
On second homes, for example, the proposals are swingeing.
Rather than capital gains tax on profits from such sales being set as they are now at 18 per cent for basic rate taxpayers and 28 per cent for higher rate and additional rate taxpayers, it wants even higher rates – 20 per cent, 40 per cent and 45 per cent respectively.
Maybe even higher, it suggests, if these new CGT rates rise ‘at least’ in line with income tax. Who knows what higher and additional tax rates are going to be under a government with John McDonnell as Chancellor of the Exchequer.
Although George Osborne’s changes to the taxation of buy-to-let landlords in 2015 have been much criticised, such criticism will pale into insignificance against the wailing that would greet Mr McDonnell if he were to go ahead with the proposals outlined in Land For The Many.
He would kill the buy-to-let market – which is probably what he would like to do.
There is an even scarier suggestion discussed in the report with regards to home ownership.
It talks about the possibility of CGT being applied to all home sales (main homes as well as second homes) arguing it would “allow us [Labour] to limit the wealth inequality arising from the housing boom”.
A horrifying prospect that would probably bring the housing market to a shuddering halt – and cause a stiff correction in house prices.
As for inherited wealth and its taxation – the biggest concern among clients of advisers according to Royal London – Land For The Many recommends sweeping reform.
It believes a future Labour government should do away with the current IHT threshold, which stands at a maximum £475,000.
It would be replaced with a lifetime gifts tax, meaning anyone inheriting more than its suggested £125,000 maximum would pay income tax on the surplus.
The report states that this change would raise £9bn more in the tax year commencing April 6 2020 than under the current IHT regime.
Of course, IHT is not perfect. The Office of Tax Simplification has acknowledged this by recently making some sensible suggestions that would simplify exemptions (through an all-embracing personal gifts allowance) – and reduce the time that lifetime gifts are subject to IHT from seven to five years.
But the office’s good work will count for nothing if Corbyn gets into power and the recommendations in Land For The Many are introduced.
Frightening as some of this is, planners should do what they are always brilliant at.
Reassuring clients and protecting their best interests at all times – irrespective of whether the colour of government is blue or red. Plan, plan and plan some more.
Jeff Prestridge is personal finance editor of the Mail on Sunday
