Financial advisers have witnessed a surge in queries regarding pension taxation and wealth protection ahead of the much-anticipated Budget on 30 October, according to AJ Bell.

It found that almost all (99 per cent) advisers said that their clients had approached them with questions in preparation of potential changes in the Chancellor, Rachel Reeves’, Autumn Statement.

AJ Bell noted that uncertainty around what may or may not be included in the Budget had created a “flurry of speculation”, with rumours of a potential flat rate of pension tax relief and changes to the tax-free pension lump sum pushing people into making decisions.

A third (33 per cent) of advisers said that taking pension tax-free cash had become more common in response to Budget speculation, while 16 per cent reported a rise in increasing pension contributions.

There have also been rumours that Reeves could target capital gains tax (CGT) in the Budget, with more than a quarter (27 per cent) of advisers seeing a rise in CGT queries and 19 per cent reporting a corresponding increase in the number of clients looking to sell assets and realise gains before the Budget.

Inheritance tax (IHT) is also reportedly in the Chancellor’s crosshairs, with around 25 per cent of advisers observing an uptick in IHT queries.

Other wealth protection measures have also become more common, with gifting (10 per cent), moving assets to an ISA (8 per cent) or SIPP (5 per cent), increasing ISA subscriptions (4 per cent), and moving unwrapped assets into investment bonds (4 per cent) all being observed.

“The wait for Labour’s first Budget following July’s election has felt almost as long as the proceeding 14 years since the late Alistair Darling held the post of Chancellor when the party was last in government,” commented AJ Bell head of public policy, Rachel Vahey.

“Speculation and rumour have clouded any sense of optimism that Reeves and Starmer have tried to inject into the state of the country’s finances in recent weeks, and this has had a direct impact on the decisions savers and investors are making ahead of 30 October.

“Almost 100 per cent of advisers have said they’ve seen queries and requests generated off the back of Budget speculation, according to a survey conducted by AJ Bell. But it’s hardly surprising given the high number of stories circulating on various possible reforms, filling the policy vacuum leading up to the Budget.

“The fact that a third of clients have requested to take tax-free cash, a decision which in some cases could find people in a worse financial position longer-term, should be concerning to a government who are also committed to harnessing the investment power of UK pension funds to fuel its plans for economic growth.

“Aside from highlighting the importance of financial advice for making measured long-term financial decisions, this lack of clarity does not help savers or the government. Although recent reports suggest that Reeves has backed away from introducing a flat rate of pensions tax relief, a week and a half still feels a long time to keep people who’ve saved all their lives for a decent standard of living in retirement on the hook.

“What’s clear is that the level of uncertainty created ahead of the Budget has real-world consequences. Given one of the key promises made by the new government was to deliver economic stability to Brits, Reeves should use her Budget to nip this issue in the bud by pledging not to make major changes to either pension tax relief or tax-free cash.

“This ‘Pensions Tax Lock’ would send a clear signal to savers that the goalposts won’t be moved at a later date and should give people more confidence to take decisions based on their long-term interests, rather than a knee-jerk reaction to wild speculation.”

This article originally appeared in our sister publication Wealth Investment News.

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