The Personal Investment Management & Financial Advice Association (PIMFA) has called on the UK Government to prioritise stability, fairness, and long-term planning in its Autumn Budget, concerned by renewed speculation around potential tax changes.
Alongside a personal taxation roadmap, PIMFA is advocating for the introduction of a pension tax lock to remove uncertainty for investors.
This is a commitment to maintain the amount people can withdraw from their pension tax-free or the amount of tax relief given on pension contributions.
Despite welcoming efforts to foster a greater culture of retail investment in the UK, PIMFA believes changes introduced at the last Budget have had the opposite effect.
In 2024, business relief on Alternative Investment Market (AIM) shares was limited to 50% of the usual inheritance tax (IHT) rate, while unlisted portfolios and business relief schemes were left untouched – retaining 100% business relief to the value of £1m, which falls to 50% thereafter.
The association has since witnessed a spike in outflows from the AIM market for members running IHT portfolios.
Simon Harrington, head of public affairs at PIMFA, said, “We recognise the difficult decisions that the Chancellor needs to make ahead of the forthcoming Budget. But, in delivering sound, public finances, the Government needs to be aware of its wider mission to deliver economic growth through the welcome reforms it has introduced over the past year to encourage further investment.”
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PIMFA urges the Government to apply the same level of relief to business relief schemes to stem outflows from the AIM market and to reconsider its proposals to levy IHT on unused pensions.
Furthermore, the association has reiterated its view that capping cash individual savings accounts (ISAs) and restricting tax relief eligibility to wrappers with exposure to ‘UK companies’ will create significant operational challenges for firms requiring system overhauls, asset reclassification, and consumer communication.
Instead, PIMFA suggests the Government should focus on simplifying and modernising the ISA regime by rationalising product variations and further promoting accessibility and awareness of investing.
“Speculative debate about future tax changes – particularly those affecting pensions – has a measurable, lasting, and negative impact,” he added.
“To address negative speculation and encourage investor confidence, the Government needs to provide a commitment and long-term roadmap to its approach to pensions and investment taxation at the Budget.”
