The Tory leadership contest came to a close today (July 23) with Boris Johnson winning the race, meaning the former Mayor of London and foreign secretary is set to become the UK’s new prime minister tomorrow.
As Mr Johnson selects a new cabinet and sets out his agenda for the coming months, advisers have urged the new prime minister to tackle a range of financial issues from pensions problems and regulation.
1 Pensions tax relief changes
Advisers said the tapered annual allowance — which gradually reduces the allowance for those on high incomes — was most in need of reform.
Introduced in 2016, it hit the headlines when concerns about doctors’ and teachers’ pensions were raised and it emerged doctors were refusing shifts to avoid high tax bills.
The tapered annual allowance means that for every £2 of adjusted income above £150,000 a year, £1 of annual allowance will be lost, meaning high earners are likely to suffer tax charges.
Mr Johnson has previously vowed to make changes to overcome this problem and advisers now urged the new prime minister to follow through on the promises.
Darren Cooke, chartered financial planner at Red Circle Financial Planning, said: "Looking at the annual allowance and the tapered annual allowance should be a priority.
"The current system does not work and we need to scrap the tapered annual allowance which causes problems with teachers and doctors. The government should also reduce the annual allowance slightly."
Martin Bamford, managing director of Informed Choice, agreed, adding he would like to see Mr Johnson and his top team tackle the fallout from the pension freedoms and especially the rising levels of pension fraud.
He added: "It would also be positive to see the new Chancellor reform tax relief on pension contributions, to encourage greater levels of private pension provision."
Tom Selby, senior analyst at AJ Bell, thought there was a six out of 10 chance of Mr Johnson sorting the problems caused by the tapered annual allowance while Helen Morrissey, pension specialist at Royal London, called upon the new government to devote some time to the pensions bill.
2 Restrained regulation
Advisers also flagged that a slowdown on extensive regulation in the financial sector would be a good move for the new prime minister.
Paul Stocks, financial services director at Dobson & Hodge, said he has been an independent financial adviser for the past five years and in that time has seen “more and more regulation” but also “more and more consumer cost, detriment, fraud and losses”.
He said he would like to see regulation that is demonstrably in the consumer’s best interests, rather than “rafts of legislation that heap more and more costs on firms” with “no real consumer benefit”.
Such legislation should also have a focus on stamping out fraud, according to Mr Stocks.
Mr Cooke also thought regulation was an issue. He said: “I would like Mr Johnson to scrap Mifid II rules, especially some of the ways the reporting is done in regards to fees."