There is 'a high degree of nervousness' ahead of Chancellor John Healey's first Budget next week.
In a new survey, Active Chartered Financial Planners found that 71 per cent of clients believe the Budget will negatively impact their finances, while only 2 per cent expect to be better off.
Meanwhile, a survey by business advisory firm BDO says 'almost 90% of businesses believe devolving more spending decisions to local mayors will benefit their growth'.
Active has already written to Chancellor John Healey, raising concerns about frozen tax thresholds, inheritance tax, pensions, and the cost of employing staff.
Karl Pemberton, managing director of Active Chartered Financial Planners, said: “There’s clearly a high degree of nervousness ahead of this Budget.
“Seven in ten of the people we surveyed expect to be worse off afterwards and only a very small proportion believe their position will improve.”
The survey, conducted among a sample of the firm’s 4,000 clients, also revealed that 56 per cent feel less optimistic about the upcoming Budget, and 30 per cent have become less positive about their overall financial outlook.
When asked which taxes were most likely to affect them, 31 per cent cited capital gains tax, 29 per cent pointed to inheritance tax, and 22 per cent identified income tax.
The survey also showed limited support for further tax increases, with just 9 per cent backing the idea.
Instead, 46 per cent favoured reducing government spending to promote growth, while 37 per cent supported lower taxes.
In his letter to the Chancellor, Mr Pemberton raised concerns about the imminent inclusion of pension funds within estates for inheritance tax purposes.
He argued that frequent changes to pension and estate planning rules are creating uncertainty for people making long-term financial decisions.
He also called on the Government to reconsider the ongoing freeze on personal tax thresholds, which is pushing more individuals into higher tax brackets as their incomes rise.
Mr Pemberton said: “What comes through strongly is that people don’t simply want another round of tax increases.
“They need a degree of certainty if they’re going to make sensible long-term decisions about saving, investing, pensions, and their businesses.”
Dan Brookes of BDO (Image: JAY CAIN)
Dan Brookes, partner at BDO in Yorkshire and the North East, said: “Given that businesses have been forced to swallow significant tax, national insurance and minimum wage rises in previous Budgets, it’s likely that most will be spared another round of hefty revenue raising – with the possible exception of the banking and energy industries.
“Addressing the cost of living is understandably a major focus for the Government but businesses will want to see practical and meaningful support to help with the cost of doing business.
Read more
£8.4m Newton Aycliffe factory project 'paused over inheritance tax changes'
Nearly 69,000 want maternity pay changed – now the Government has responded
Huge UK inheritance tax break could allow parents to pass on extra £1m
“One area of focus should be reducing tax complexity. Anomalies in the tax system create cliff edges which can distort investment, hiring and expansion decisions.
“Almost 90% of businesses we surveyed believe devolving spending decisions to local mayors will benefit their growth so we’ll be keen to see how the Prime Minister’s goal will be achieved in practice. Another decentralising measure would be to boost funding for local authorities to build council housing, although the economic impact may be relatively small before the next election.
“There is also a strong chance that we will see banks face significant tax increases, or even some form of windfall tax – the markets appear to be factoring this into banks’ share prices already.
“It’s also possible that oil companies - against the backdrop of current high prices at the pumps – may face a specific windfall tax on their profits for the current year.”