Financial Planners have expressed disappointment that frozen income tax and inheritance tax thresholds were not addressed in yesterday’s Budget.

Many said the new measures would have little impact.

Rachael Griffin, tax and Financial Planning expert at Quilter, said that the Government should have re-thought the length of the freeze on income tax thresholds instead of the 2p cut to National Insurance.

She accused Chancellor Hunt of acting like a magician with a “trick” and being “all smoke and mirrors."

She said: “The Government should re-think the length of the freeze on income tax bands as, while it is understandable it is keen to refill public coffers, this should be balanced with a fair tax system that is not dragging more and more people into higher taxes. The National Insurance cut should also not be dressed up as a giveaway when the reality is many millions of people will be paying more income tax in the years to come under current rules.”

Andrew Dixon, head of wealth planning at SG Kleinwort Hambros, described the Spring Budget as one of stealth taxes.

He said: “Regardless of the reduction in National Insurance, we once again saw the Chancellor favouring the so called ‘stealth taxes’ to try and balance the books. As the Institute for Fiscal Studies states, there has been a ‘seismic shift’ in higher rate taxpayers and it is a trend which shows no signs of abating. Despite the media hype around stealth taxes, the population seems indifferent to the policy.”

He also described the British ISA as a “great soundbite” but one “unlikely to resuscitate a moribund UK stock market on its own.”

Financial Planning and wealth management body PIMFA raised concerns about the appetite for the British ISA, saying it was “a policy announcement in search of a headline” for which there would be “very little appetite.”

Gianpaolo Mantini, Chartered Financial Planner at Saltus, said that while the reform to the non-dom tax regime may be a popular move the reality is that the four-year period of grace will simply see those that would be pulled into the new regime restructure their assets.

He said: “This is a useful first step and removes some of Labour’s options while tackling a political weak spot for the Tories. Whether this will actually generate significant additional income for the Treasury is highly debateable. It provides a window for those to whom it applies to restructure their assets to mitigate these measures in a timely manner.”

Mauro De Santis Bo, partner at GSB Wealth, said the firm has clients who will, “likely reconsider whether to remain residents” after the changes to non-dom status.

Jeremy Croysdill, director of wealth planning at Brown Shipley, said there was a risk that the abolition of the current non-dom regime could be a headache for Financial Planners with clients from overseas.

He called on HMRC to make sure the transition is simple and transparent.

He said: “We wait to see how the widely trailed abolition of the non-dom regime will be replaced in a year’s time. The proposals will hopefully not encourage current non-doms to move away from the UK. We don’t want the transitional provisions to be onerous. Simplicity and transparency is key - it should also be easy to implement and understand.” 

Mr De Santis Bo said that the new residency system could also further complicate inheritance tax rules.

He said: “It will be interesting to see how this new residency system will play with the current rules for Inheritance Tax. If no further clarity is given, this change could potentially lead to some inheritance tax headaches for those non-doms (which will now fall under the new ‘modern, simple and fairer residency-based system’) living in the UK.”

Mr Croysdill also expressed his disappointment that inheritance tax was once again left off the agenda.

He said: “Inheritance tax continues to be overlooked. This remains a tax which is largely untouched but still collects increasing amounts year on year due to frozen allowances, thresholds and increasing asset values. It should be something for a future government to address.”