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Preparing for PM plans

Simon Read

Simon Read

Last week the Financial Times ran a helpful feature entitled ‘Your money under a Boris Johnson government’.

It is the sort of article the FT’s excellent personal finance section runs regularly, but usually they are not so chilling.It pointed out that the new prime minister has hinted at policy shifts that “could dramatically affect tax, investments and housing”.

Is that just newspaper hyperbole? No it is not.

Mr Johnson has made some bold statements in recent times and if he does manage to put his plans into effect, that could have seismic repercussions for all our personal finances.

I am fascinated by how financial advisers are starting to prepare for the possible changes, if at all.

It does sound like an ideal time to get in touch with clients and take a good, hard look at their portfolios and plans.

It is never a good idea to panic and change things, but it is always a good idea to regularly review whether previous decisions still hold true.

I wonder how many advisers will simply sit back and do nothing on the basis of let’s wait and see what happens.

That is clearly a tempting position to take, especially as many of Mr Johnson’s bold claims may prove to be another ‘pyramid of piffle’ – a phrase the coiffured chief himself has enjoyed using.

He has been criticised a lot in the past for lying, but it is entirely possible that Mr Johnson will live up to the office he now holds and prove to be a person of integrity. Stop laughing at the back, there. Anything is possible.

So let us look at some of Mr Johnson’s promises and how they may hit people’s personal finances.

For starters, he has proposed raising the higher rate income tax threshold from the current level of £50,000 to £80,000.

If that happens, the top 10 per cent of earners will get an extra £2,500 a year.

That is a handy bit of extra cash, but what should they do with it?

Without advice, I would probably blow the lot on a couple of Chelsea season tickets, a move that could well end up leaving me feeling fed up.

But if a trusted adviser had got in touch with some ideas, then I may end up a happier client.

Advisers could suggest, for instance, that the potential windfall could be shoved into property ahead of a possible boost for house builders if Mr Johnson manages to confound the critics and hold true to his pledges.

But let us be honest, that scenario is unlikely to come to fruition.

Yet, there are plenty of financial talking points around Mr Johnson’s elevation that could prompt a useful discussion with a client.