How do you plan for potential legislative changes?


With government legislation being subject to change, it could mean your financial plans are no longer as efficient as they could be. An Autumn Budget is expected in the next few months, although a date has yet to be confirmed, and with Brexit uncertainty, changes could be on the horizon. As a result, you may be concerned about the impact potential changes could have on your finances.

If you have worries, you’re certainly not alone. Research from Royal London indicates that financial advisers are finding clients are increasingly asking questions about potential changes in government. In fact, nine in ten pension advisers have been approached by clients that want to understand the impact a change in government could have on their finances.

The top three areas individuals have concerns about government changing are:

  • Estate planning and inheritance (64%)
  • Tax relief on pensions (65%)
  • Income Tax (57%)

Becky O’Connor, Personal Finance Specialist for Royal London, said: “Politicians are using big financial topics such as inheritance and pensions tax relief as policy footballs, so worried investors are wise to seek views from their advisers on whether this will affect their plans.”

It can seem impossible to keep your financial plan on track with government changes or speculation often featuring in the news. However, there are steps you can take to help maintain confidence in your financial plan.

Take a long-term view

As with all financial decisions, it’s important to keep your end goals in mind when adjusting. A knee-jerk reaction in response to proposed legislative changes may not be the best option for you when you look at the long term. For example, if tax relief on pensions were to become less generous, would you stop paying into your pension? It may mean that your pension doesn’t grow as quickly but you could also risk missing out on other benefits, such as employer contributions and investment returns.

Wait until the changes have happened

Speculation on what changes will be happening or what could be announced are common features in the news. The reality is that not many of these result in legislative changes. Responding to every recommendation that may lead to a change is likely to mean constant tinkering with your financial plan. Whilst it can be hard to tune out the noise and focus on the facts, waiting until changes have been officially announced or implemented is often the best approach.

This means you react only to the changes that will have an impact, as well as having an opportunity to consider how your position will be affected.

Ensure regular financial reviews

Ideally, you should review your financial plans on a regular basis. Often, we recommend this is annually or following big life events, such as getting married or starting a family. This allows you to ensure that your plans are on track and reflect priorities that may have changed.

It’s also the perfect opportunity to assess how changes to government may affect you. For instance, changes to ISAs (Individual Savings Account) may mean where and how you save should be altered to ensure it remains efficient. A regular financial review gives you an opportunity to bring up any concerns that you may have and give you confidence for the months ahead.

Make changes where necessary

When you look at legislative changes, with the bigger picture in mind, it may be necessary to make changes to continue getting the most out of your wealth. Changes should be carefully considered against what your goals are, rather than simply responding to the news. This means considering the short, medium and long-term impact before proceeding.

Finally, don’t panic. Whilst legislation does change, you typically have plenty of time to adjust your financial plan before changes are introduced. If you have any concerns about your finances, including how legislation and regulation may impact the decisions you’ve made, please contact us.