Confidence in personal finances falls following Budget

People’s confidence in their personal finances was more likely to have fallen than increased following the Autumn Budget, a study from Rathbones has shown.

Its snap poll found that just 4 per cent felt the Budget had left them feeling more confident about their finances, while 25 per cent felt less confident.

For most adults in the UK, the Budget had left little impact, with 58 per cent saying they felt no more or less confident following the announcements, while 13 per cent remained unsure.

Rathbones chartered financial planner, Malvee Vaja, argued that the Budget had delivered fresh blows that will only reinforce the sense among many of the firm’s clients that they are being increasingly boxed in as the tax burden tightens around them.

“Higher tax rates on savings and property income may look like tinkering around the edges in isolation, but taken together they add to a much broader squeeze on people trying to save, invest and build wealth for the future,” Vaja continued.

“What we hear from clients is that the biggest concern is the direction of travel. One measure on its own might be manageable, but there is a danger of death by a thousand cuts as successive tax changes chip away at wealth and make long-term planning harder.

“The risk is not simply the amount of tax raised today, but the behaviour it encourages tomorrow. Tax policy should be careful not to make saving, investing and building financial independence feel like something that will ultimately be penalised.”

The Budget has prompted some to take a look at their finances, with 18 per cent reviewing their investments and savings, 8 per cent assessing their pension or retirement plans, and 6 per cent looking at their tax or estate planning.

However, 39 per cent were not planning to take any action and 23 per cent were unsure if they would do anything.

Rathbones senior investment director, Nehal Desai, said it was telling that almost one in five respondents were reviewing their savings and investments.

“The renewed focus on the taxation of savings income, alongside the U-turn over plans to cut the cash ISA allowance, may well have concentrated minds,” Desai added.

“Savers increasingly need to consider not only the headline return on their money, but how much of that return they ultimately get to keep.

“That doesn’t mean ripping up your financial plans because of a Budget announcement. Instead, it is a useful opportunity to look under the bonnet and make sure you are making sensible use of the allowances and tax-efficient wrappers available to you, including ISAs and pensions where appropriate.

“Ultimately, tax shouldn’t be the tail that wags the investment dog. Good financial planning starts with your goals, but as the tax burden grows, making sure your money is held as efficiently as possible matters more than ever.”

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