Higher earners in the UK are increasingly reviewing and revising their tax planning strategies as the government is likely to raise taxes and slash perks due to the pandemic.
deVere Group, one of the world’s largest independent financial advisory and fintech organisations, says it has noted “a considerable upswing” in clients looking to mitigate the impact of potential tax changes in this year’s Budget.
The founder and CEO of deVere Group, Nigel Green, says: “There are still many uncertainties triggered by the global health emergency and the economic fallout from it.
“But one thing that does seem pretty certain is that taxes are going up to fund the Covid-19 blackhole in the government’s coffers.
“The government needs to urgently and sustainably boost the economy and protect jobs, so will not want to further burden businesses.
“Instead, it can be expected that it will be higher earners who take on this burden in the form of potentially higher personal taxes and/or the reduction of existing tax relief perks.”
He continues: “It is almost inevitable that pension tax relief will be a target as the government looks to plug gaps in November’s Budget. Many high earners are, as a result, considering their available options, including international ones.
“As it’s likely the pension contribution relief for those on higher incomes will be reduced, an increasing number of people are now mulling making a larger one-off contribution before the Budget, in order to benefit from the higher tax relief whilst they still can.”
Such a move would underscore how successive British governments consider “people’s retirement savings as easy, low-hanging fruit” to be raided.
“Governments – more than ever – need to be encouraging people to save. This is especially true as the burgeoning pensions crisis and the care crisis, the fact that governments are increasingly less likely to be able to support citizens moving forward, and as people are living longer, mean savings have to go further.”
He adds: “We need to urgently revitalise, promote and nurture a savings culture as a matter of priority.
“Successive governments’ constant shifting of the goalposts in this regard is going to have the opposite effect to this desired outcome.”
The deVere CEO concludes: “We’re in highly unusual times and many higher earners are now coming to the conclusion that it is likely they will be the ones burdened to fund the gap.”