Taking stock of a shifting wealth landscape
Any change of government inevitably brings change – and this time is no different. And of course, it has come at a time of global uncertainty.
But this has distracted from many of the changes that the new government has enacted domestically.
Some of these policies have already been implemented, while others remain scheduled for implementation further down the line. All this change – be it short, medium or long term – poses opportunities for advisers as they look to demonstrate their expertise and mitigate potentially significant upheaval.
A mandate for change
Domestically, Sir Keir Starmer’s Government made waves early on. Elected on a mandate of change and renewal. And little time was wasted. At the Government’s first budget, the Employment Rights Bill was introduced, designed to help more people to stay in work, support workers’ productivity and improve living standards.
And even more recently, the Government announced significant immigration changes - introducing a new ‘contributor model’ aimed at boosting economic growth and explicitly targeting the improvement in training and recruitment of local workers.
Wealth in the spotlight
It was also evident from the outset that higher earners and those with greater wealth would feel notable changes.
One such early shift was the decision to remove the VAT exemption from Private School Fees. Taking effect from 1st Jan 2025, this saw parents with children in the private school system encounter a 20% increase in fees. Furthermore, as of April 2025, the Government also replaced non-dom status with a residence-based regime, which also now brings foreign earnings into the UK inheritance tax system.
The Pension Scheme Bill would continue the direction of travel under the last several governments, with the aim of allowing surplus withdrawals from defined benefit (DB) pension schemes to support economic growth, with agreements between trustees and employers to balance member benefits and reinvestment opportunities.
But the most notable change that has been announced, is another change to pensions - that from 6th April 2027 they will be included in inheritance tax calculations. While a simple change, its impact will be huge.
For advisers, there’s no time to waste when it comes to talking through the implications of these and other policy changes on their and their families financial planning. They will likely require a shifting of long-term strategy, re-organisation of plans, gifting, spending, as well as the consideration of whether and how to manage pensions wealth.
The levers of mitigation
When it comes to many of the issues and worries facing families looking to build and maintain a robust financial plan, the role of protection will be significant.
The scale of the NHS challenge means that for individuals and their families, products such as income protection and health insurance can ensure that there’s a financial safety net should something unexpected happen, as well as providing ready access to healthcare when needed - removing some of that worry about NHS waiting times and resourcing.
But the opportunities offered by life policies mustn’t be overlooked - giving families the flexibility to significantly mitigate the potential changes to their pension wealth and ensure that they are still able to leave a tangible wealth legacy for future generations.
A refreshing change
It is not an exaggeration that the last 12 months offer the biggest advice opportunity in the pensions and protection space. And all indicators point to more change to come - both known and unknown.
It is welcome news that the frequency of changes should reduce; the Government has stated that its ‘fiscal events’ will move to annually, thereby giving more time for advisers to adjust to what may be big changes.
But advisers need to ready themselves for the months and years ahead. For advisers not regularly involved in the protection space, this period likely will bring them back in to focus. So refreshing their understanding of the landscape, and getting to grips with perhaps unfamiliar technology, product changes, and options for their clients will be critical.