The FT and Emma Dunkley (today) send me an email that occasionally hits the mark. I do not stand for wealth management, there are many who do and I am pleased they are being promoted by the Budget to invest more money in growth stocks for the long-term.
This is a very balanced summary of the situation for you as a client or you as a wealth manager. I suspect that some of the readers of this blog will find the news satisfying on this first date of advent.
It is not a headline that many wealth managers might have thought they would read from a Labour Government!
FT Subscribers can read this an much more from Emma’s newsletter here.
Mark FitzPatrick SJP’s CEO
Shares in St James’s Place, headed by Mark FitzPatrick, leapt after the chancellor’s Budget announcement
The UK’s Budget last week was certainly a boon for one part of the City: the wealth managers providing financial advice and guidance. They are likely to see greater demand from savers looking to put their cash to work in investments.
Chancellor Rachel Reeves announced a cut to the annual cash Isa allowance, first revealed by the Financial Times, to £12,000 a year from £20,000 from April 2027. The only cohort clinging on to the £20,000 allowance will be the over-65s.
Although this will come as a blow to savers and the building societies that use these products to fund their home loans, more money could flow into stocks and shares, leaving wealth managers poised to benefit.
Shares in St James’s Place, the UK’s largest wealth manager, leapt on the day after the chancellor’s announcement, followed by investment sites such as AJ Bell.
Alongside increased taxes on property income, the Isa changes should make “long-term market investments become more attractive than residential property”, said Arun Sai, a multi-asset strategist at Pictet Asset Management.
In addition, Reeves announced increases to taxes on dividends and savings income. From April next year, tax on dividends will increase by 2 percentage points to 10.75 per cent and 35.75 per cent for basic and higher-rate taxpayers respectively. This is expected to raise £1.2bn a year on average from 2027-28.
The government will also increase by 2 percentage points basic, higher and additional rates of income tax on savings from April 2027, in a move estimated to yield £500mn a year on average from 2028-29.
Jason Hollands, of wealth manager Evelyn Partners, said the moves “penalise people trying to do the right thing”.
Reeves also confirmed the government will cap the amount of money people can sacrifice from their pay cheques to put in their pension pots without paying national insurance at £2,000 per year. The measure will come into effect from April 2029.
