High earners are reviewing their tax strategies amid growing concern that the government will hike taxes to help the economy recover from the Covid19 pandemic.
Financial advice firm deVere Group said it had seen a “considerable upswing” in clients looking to mitigate the impact of potential tax changes in this year’s Budget.
Nigel Green, founder and CEO, deVere Group, said: “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 Covid19 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.”
Green believes the government will also look to reduce tax perks, particularly pension tax relief.
Green said: “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.”
However, Green warned that moving the goalposts could worsen the burgeoning pensions crisis, with the government viewing retirement savings as “easy, low-hanging fruit” to be raided.
He added: “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.”
“We need to urgently revitalise, promote and nurture a savings culture as a matter of priority.”
