financial outlook

How the Budget Affects Your 2021 Financial Outlook



Posted on: 17th March 2021

As Rishi Sunak presented March 3rd’s Budget, many of us foresaw what was going to be a very expensive year ahead when looking at the financial outlook.

What is evident is that we are faced with the biggest drop in GDP for over 300 years, shrinking by nearly 10% in 2020. The handout of £400 billion in free money played its part in keeping the economy from collapse, but what does that mean for us moving forward in taxes and its inevitable rises?

The Silent Increase

After hearing Sunak’s outlook many were surprised that taxes did not see an elevation for individuals.

If you were a taxpayer at 40% beforehand then you stand to be at the same amount now. On the surface everything is all tickety boo, right? Well not so fast there, as a closer inspection does reveal something different.

By sleight of hand, the Government actually increases how much tax we pay without increasing the rate. How it does that is by freezing our tax allowances – the amount we earn, save and invest before tax is paid. Usually, tax allowances are increasing each year in order to offset increases in general earnings, spending etc. This means we don’t pay any more or fewer taxes.

In freezing those tax allowances, many people will be highly prone to higher tax brackets in due course, meaning that the probability of pension tax charges, investment tax charges and inheritance tax is higher also.

The Cause for Concern

Naturally, this will see an increase of confusion on the financial front and the various forms of tax that will be affected.

Moving forward with your retirement planning in Cheshire plan and how your investments are affected by the outcome of the budget no doubt is the cause of many sleepless nights ahead, but it need not be that way by evaluating exactly what the layout is and planning around that. This is where independent financial advisers in Cheshire are able to hold a hand through the battleground laid out ahead.

Independent financial advisers, such as the team at Haven IFA, work with every client to help save tax by strategizing around various reliefs, allowances and exemptions that are available to implement. Getting second-hand guidance through parties that may not have the same set of situations as yourself could prove to be a fateful move, so be sure to get guidance from a service set to your requirements and situation.

Contact Haven IFA today to get the best independent financial advisers in UK on your side when looking at your financial outlook for this year.