Axa's Graham Harvey: How the Budget impacts protection

If you've read a newspaper over the past few weeks, you will inevitably have been faced with a number of articles on the emergency Budget, along with a healthy dose of World Cup coverage.

For advisers and their clients, the impact of any Budget is usually more strongly felt in the areas of pensions and investments, but what about protection?

Impacts here tend to be less direct but, as we all know, failing to take out adequate cover can have dire financial consequences.

The rise in VAT will hit most people's pockets, which could prove challenging for advisers.

If clients are spending more on their outgoings whilst having to take pay freezes or cuts in benefits, it could persuade people to make cutbacks themselves. And, as we all know, the first items to go in times of adversity are optional insurance policies.

But the story might not be that simple. By making people more aware of their finances, they might realise what they have to lose. It's worth bringing up the Budget with clients and asking them how they think it will affect them. Perhaps they don't realise that the one thing they should hold onto is the security of being protected, particularly for people with children.

The rise in capital gains tax for higher rate taxpayers might be bad news for first time buyers.

Bringing in the rise the day after the Budget has avoided any rush of buy-to-let owners offloading their properties before they're hit with the higher rate tax.

But, for people looking to get onto the property ladder, if the market had been flooded with more properties it might have pushed down house prices, making it easier for people to buy their first homes and as a result more people looking to buy protection.

Arguably the winners from the Budget were small to medium sized businesses. The Chancellor offered businesses new incentives to get them off the ground and they will benefit from a reduction in the Small Companies Tax Rate to 20%, which The Federation of Small Businesses says will help over 850,000 small firms.

So it seems people are being encouraged to take the bold step of starting up their own businesses and with that comes the need to ensure clients protect the future of their company with business protection.

Graham Harvey is managing director of protection at Axa UK.