Budget  

Sunak in, Javid out: What advisers want from the new chancellor

Sunak in, Javid out: What advisers want from the new chancellor

Sajid Javid was swiftly replaced in his position as Chancellor of the Exchequer today amid reports the MP refused to fire his team of advisers as requested by the prime minister..

His successor was quickly named. Rishi Sunak, MP for Richmond in Yorkshire, was chief secretary to the Treasury under Boris Johnson and will now serve as the new chancellor.

The upcoming Budget will go ahead as planned on March 11, leaving the chancellor with as little as 18 working days' time.

So what would the industry like to see from the new Chancellor, who is believed to be more willing to align with Number 10's wishes than his predecessor? 

1) Tapered annual allowance 

Not a new topic by any stretch of the imagination, the tapered annual allowance yet again featured on advisers' chopping board.

The taper, which was introduced in 2016, gradually reduces the annual allowance for those on high incomes and has been at the forefront of calls for reform in recent years.

It means high earners are more likely to suffer an annual tax charge on contributions and a lifetime allowance tax charge on their benefits, meaning for every £2 of adjusted income above £150,000 a year, £1 of annual allowance will be lost.

The BMA has been campaigning for the tapered annual allowance to be scrapped as due to this rule, many doctors have been forced to cut their hours, leave the pension scheme or retire early to avoid being caught out by significant tax bills.

In light of today's reshuffle specialist advice firm Wesleyan said now was the time to act.

Ian Macvie, pensions and retirement planning technical manager at Wesleyan, said: "In our view, the tapered annual allowance is not fit for purpose and has led to doctors receiving large and unpredictable tax bills for agreeing to work extra shifts to support patient needs.

"Abolishing it would simplify an overly-complicated system, save on administration costs and allow senior clinicians to do extra clinical work without fear of being over-taxed.

"Furthermore, and in light of recent rumours, we would not welcome any significant changes to the current system whereby higher and additional rate tax payers receive tax relief at their highest marginal rate on their own pension contributions."

The government in November committed to cover the tax bills that arise from the controversial annual allowance taper for doctors and consultants in England. But the measure will only apply to the 2019/20 tax year.

2) Pension contributions 

Another area of the pension industry which Mr Sunak is being urged to turn his attention towards is the lifetime limit for pension contributions. An issue which has also been criticised for affecting NHS doctors. 

Tim Holmes, managing director at advice firm Salisbury House Wealth, said the new chancellor needed to commit to reforming the "punitive pension charges" for people who inadvertently save too much in their pension pots. 

Mr Holmes said: "Lowering the lifetime limit for pension contributions has most notably affected NHS doctors but reforms should apply to everyone.