Quilter has called upon the Government to include four key points in next month’s Budget, as it urged Rachel Reeves to take a “long-term strategic approach” to reform.
Firstly, Quilter said the Government should look to simplify and strengthen the ISA system to rebuild savings and investment confidence.
Rachael Griffin, tax and financial planning expert at Quilter, said: “Over time, constant tweaks have made it more complicated and harder for people to navigate. The priority now should be simplifying and strengthening the regime, not adding further layers of complexity.”
Recent speculation has suggested the Chancellor is exploring ways to boost investing in UK shares by overhauling the ISA system. However, Griffin warned that structural reform of this kind risks confusing savers and undermining confidence in ISAs.
Griffin said: “People value ISAs because they are straightforward and accessible, and introducing new restrictions could make them feel forced into a particular route, something that would likely prove unpopular and open to political attack.
“Beyond confusing consumers, such proposals would be extremely complex to implement in practice. Providers would need to adapt systems, products and client processes to accommodate new qualifying rules, diverting resource away from innovation. Instead of structural reform, the Government should focus on behavioural approach.”
She added: “There is still room for improvement and simplification within the current framework. Simplifying the ISA landscape, rather than fragmenting it further, remains the best way to rebuild savings and investment confidence across the UK.”
Additionally, Quilter has called on the Government to modernise gifting rules to promote intergenerational fairness.
The £3,000 annual gifting exemption hasn’t been updated for more than 40 years. However, if it had kept pace with inflation, it would now be £12,000.
Following the Government’s decision to include pensions in the scope of inheritance tax, Quilter believes now is the time to revisit current rules.
Griffin said: “Younger generations face mounting challenges with housing deposits and education costs, yet the current rules remain too restrictive and out of step with modern family needs.
“While a full uprating might be unrealistic in the current fiscal climate, a modest increase to, for example, £9,000, would better reflect modern financial realities and would make the system more equitable, simpler, and reflective of how families now share wealth.
“Modernising the gifting regime would not only help people pass on wealth more effectively and reduce future inheritance tax exposure, but it would also put capital to work, support consumer spending and align with Labour’s aim of creating a more financially mobile economy.”
Quilter also believes the Autumn Budget presents an opportunity for the Government to create a long-term tax policy commission. The firm said the Government should set out a clear plan for tax reform that fosters predictability, helping people plan with confidence.
Jon Greer, head of retirement policy at Quilter, said: “The tax system has become a web of complexity built on years of political short-termism. Each new budget tinkers around the edges, often creating unintended consequences that have to be unpicked later.
“To break that cycle, the Government should establish an independent Tax Policy Commission, a standing body to both assess areas of the tax code that are unnecessarily complex and could be removed without fiscal implication, and the longer-term impacts of proposed tax measures before they’re introduced.”
Finally, Quilter has called for the Chancellor to develop a sustainable alternative to the triple lock.
The Office for Budget Responsibility estimates that the triple lock could cost taxpayers £15.5 billion annually by 2030, more than three times higher than was initially expected.
Quilter said the triple lock also lacks a clear benchmark for what constitutes an adequate state pension, making long-term planning difficult.
Greer said: “The Government should bring forward a consultation to determine the most appropriate uprating mechanism, and a full appraisal of State Pension income levels should be conducted to set it at an appropriate level.”
Greer said as part of this, UK political parties should commit to a cross-party agreement on what the level of the State Pension should be relative to mean full time earnings, and what change is required to the uprating mechanism to ensure a minimum standard of living in retirement.
He added: “Too long has the uprating mechanism been used as a political football – the electorate deserves better. A more sustainable approach, and one that would help align pension increases with the economic prosperity of the country, would be to link the State Pension to a fixed proportion of average earnings, with an inflation safeguard in place for years when wage growth lags.
“This ‘earnings link with a temporary CPI trigger’ would protect retirees’ living standards while providing fiscal discipline and long-term stability.”
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