This Budget will potentially have more direct impact on wealth managers and financial advisers than most because it is expected to be heavy on pension legislation change and tax law affecting the wealthy.
On the plus side, political briefings from Osborne and others have indicated a flood of new money looking for a home with a friendly wealth manager could be on the horizon.
Wealth firms are already looking forward to a new law coming in this April allowing those currently working to draw down from pension pots upon retirement rather than having to buy an annuity.
All signs now point to the approximately five million people already drawing pensions being given similar licence to swap the annual payments their annuity provides for a fixed lump sum.
While there will certainly be some who see this as the ideal opportunity to splash out on a round the world trip, sports car or a rose gold Apple watch, the vast majority of those who cash out under the expected new laws will be doing so with a view to investing the money.
True, property may hoover up a lot of this money with people improving their home or snapping up a bargain place in the sun abroad, but at least some portion will find its way into wealth manager’s portfolios.
The taxation elements of the Budget are where the danger lies from a wealth manager or adviser perspective this time around, particularly those which have offshore operations or offer tax efficiency advice as well as investment services.
There is a clear public opinion bandwagon in full motion against any kind of tax reduction efforts by companies or wealthy individuals.
The recent HSBC Swiss private bank scandal as well as a number of high profile tax avoidance cases involving celebrities has hardened public opinion against any practice designed to reduce tax bills.
Given this, not to mention the small matter of the upcoming general election in May, Osborne may find it hard to resist some grandstanding on the matter of taxing the rich, which could create headaches for wealth management firms.
Although he undoubtedly has low tax instincts, the political capital to be made from clamping down on wealthy people perceived to be exploiting loopholes is likely to be hard to pass up.
Another driver in this direction is that Osborne has little scope for outright giveaways, given the United Kingdom’s public finances remain far from ideal. He therefore will need to push harder in other directions to generate voter-friendly headlines, which may put wealth managment firms in his crosshairs.
One other thing which puts the tax arrangements of the wealthy in the firing line is that appearing tough on the rich will pull the rug from under Labour’s feet, who set their stall out as the party which reins in the excesses of big business and rich individuals. If Osborne can carry this off it is likely to reap rewards at polling stations in May.
The devil will be the detail of course, and everyone will have to wait for Wednesday to know for sure whether any new laws will be manageable tweaks for wealth managers to contend with, or a serious issue for their businesses.
