Sorting Budget rumours from reality in the lead-up to the Autumn Budget

As the Autumn Budget approaches, the financial press is awash with speculation. Will inheritance tax rules tighten further? Could pension allowances change? Are property owners in the firing line? For individuals, families and business owners, these headlines can feel unsettling, especially when they hint at changes that could affect long-term plans.

But how much of this speculation is grounded in reality? And how should you respond? In our recent webinar with former Chancellor George Osborne, we got the inside word on when Autumn Budget rumours are likely to have some element of truth, and when they’re probably best ignored.

Osborne, speaking at our Autumn Budget in focus event, offered a candid view saying, “At this point, even the Chancellor doesn’t know what’s in the Budget for certain.”

That means most of what you read in the weeks leading up to the announcement is guesswork. Osborne explained that the process is fluid,

“There are generally about four thousand decisions in any one Budget, but only a handful make the headlines.”

So why do rumours persist? Osborne pointed to two drivers:

• Political signalling. Governments rule out certain measures under pressure, leaving commentators to speculate about what’s left
• Media appetite. Headlines about wealth taxes or pension reforms attract attention, even if they’re based on little more than educated guesses
• Party speculation. Figures within government offer speculation, with their position lending credibility even if the rumour isn’t based on direct information from the Chancellor

Osborne also spoke of the change in tone from around seven to ten days before the Budget date. At this point, there’s potential to see some more truth in the speculation, as the government looks to get the negative news into the press ahead of the day itself. As Osborne put it, "You want the headlines on the day to be a positive surprise, not a wash of negative news.”

While rumours may be harmless in the press, they can lead to harmful decisions in practice.

We’ve had many clients email us looking to take pre-emptive actions because they’ve read about possible inheritance tax or pension changes. We have to be very clear that acting on speculation can create unnecessary tax bills and derail carefully built plans.

For example, withdrawing pension funds early could trigger income tax charges, reduce future growth potential, and even increase exposure to inheritance tax if the funds move into your estate. If rumoured pension changes, then don’t make it into the final Budget announcement, clients could find themselves significantly worse off with a potentially higher tax bill.

Financial planning is about long-term goals, not short-term noise. For example, if you’re concerned about changes to pension tax free cash, and taking tax-free cash was already part of your retirement plan, then it might make sense to proceed under the current rules. But if you’re doing it because of a headline, that’s when you need to pause and seek advice.

The same principle applies to gifting strategies, investment decisions and estate planning. Knee-jerk reactions can lock in disadvantages that outweigh any perceived benefit of ‘beating the Budget.’

While many of the rumours circulating at the moment will prove to be just that, it’s not to say there won’t be some truths amongst them. Osborne provided some fascinating context on the government’s current predicament, with a tough fiscal backdrop and sensitive market sentiment. Osborne spoke of some specific areas to watch, including:

• Frozen thresholds, which will continue to pull more people into higher tax bands in a phenomenon known as fiscal drag
• Targeted measures on pensions, property, or inheritance tax could appear, but the details will remain uncertain until the final days
• Market sensitivity will limit radical moves, as the government seeks to maintain credibility with investors

Rather than trying to second-guess the Chancellor, focus on what you can control.

Review your allowances

Make full use of pension contributions, ISAs, and gifting exemptions, as long as it’s part of your long-term financial plan.

Stress-test your plan

Consider how potential changes, such as lower pension allowances or higher income tax, might affect your ability to meet your objectives.

Stay diversified

Market volatility often accompanies fiscal events. A diversified portfolio can help manage risk.

Seek expert advice

A financial planner can help you distinguish between noise and actionable insight. Whether you already have a financial planner or not, consulting one before making drastic changes can provide a ‘sense check’ on the moves you’re considering making.

Budget speculation is inevitable, but it shouldn’t dictate your decisions when there’s such little concrete information on what’s to come in November.

Want to stay informed? Sign up for the rest of our three-part Budget webinar series, with a preview event on 28 October and a post-Budget event on 27 November. Evelyn Partners’ experts will break down the key announcements and what they mean for you.