• Almost a third (31%) of investors are worried about tax changes that could affect their savings and pensions, AJ Bell research reveals
• Reduction in the ISA allowance, changes to inheritance tax rules and the removal of higher-rate pension tax relief are top concerns for savers
• Cuts to pensions annual allowance, lifetime allowance and death benefits also feature highly in 2020 fears
Tom Selby, senior analyst at AJ Bell, comments: “After a decade of incessant Government tinkering, almost a third of investors are approaching 2020 with understandable trepidation about the future of savings incentives.
“With around 11 million people paying £70 billion a year into ISAs, fears about a cut in the £20,000 annual allowance are right at the top of the agenda.
“While nothing can be guaranteed when it comes to Government policy, the ISA allowance has been moving in the right direction over the past decade or so, steadily rising from £10,200 in 2010/11. Investors will be eagerly looking to February’s Budget for confirmation this positive trend is not about to end.
“Given the near constant rumours that the sword of Damocles is dangling precariously over pension tax relief, it is no surprise to see a significant number of people worried about the future of both higher-rate relief and the existing allowances.
“Boris Johnson’s election manifesto was studiously threadbare on most issues, although he did pledge to address the impact the annual allowance taper is having on senior staff within the NHS. As well as addressing this crisis, our new Prime Minister should make clear his vision for pension tax more broadly so more people can save for retirement with confidence.
“Savers are also concerned about passing money on after they die, with both changes to inheritance tax rules and the removal of generous pensions death benefits among their top worries for 2020. Any stability the new administration can provide in these areas would be hugely beneficial as savers plan not just for their futures but those of their loved ones too.”
Research conducted online with 1,427 AJ Bell Youinvest customers during November 2019
Are you worried about any tax charges that might affect your savings products next year?
Yes: 30.9%
No: 69.1%
If yes, please explain why:
|
Reasons |
% |
|
Reduction in the ISA annual allowance |
22.10% |
|
Changes to IHT rules |
22.10% |
|
Removal of higher rate tax relief on pensions |
14.70% |
|
Reduction in the pension annual allowance |
7.40% |
|
Removal of pension death benefits |
6.90% |
|
Reduction in the pension's lifetime allowance |
6.20% |
