"It also creates a drag on the performance of UK equity funds which pay the tax on the transactions."
Khalaf added: “Aside from the idea of reforming stamp duty on UK shares, which the fiscal position may not permit at the current juncture, there is one egregious anomaly in the system which is overdue correction.
"Investment trusts currently pay stamp duty on UK shares they buy within the fund, and UK investors then also pay stamp duty when they buy investment trusts. The result is double taxation for investment trust buyers, which puts them at a disadvantage compared to investors in open-ended UK equity funds doing an identical job just within a different fund structure.”
Pensions
Although there is not expected to be much on pensions, the government could use the Budget to push ahead with its pot for life proposals.
But there are concerns about this from the industry.
Aegon's Smith, said: “The new ‘pot for life’ concept will give employees the ability to select their own pension provider and force their employer, as well as any future employers, to pay their employer and own employee contributions into this chosen pot. This could work well for a minority of higher paid employees who wish to select their own pension scheme, but risks poorer retirement saver outcomes for millions of employees if economies of scale are lost.
"Costs are spread across scheme memberships, where those with higher pensions effectively ‘cross-subsidise’ the pensions of those with smaller pensions pots who tend to be the lower paid, enabling them to benefit from lower charges. Those left behind, on modest incomes, could face higher charges which means lower retirement incomes."
No 'seismic shift'
SG Kleinwort Hambros chief investment officer, Gene Salerno, said overall the Budget is not expected to "result in a seismic shift to the UK economy".
Salerno explained that his lack of expectations are due to the fact “fiscal constraints limit any major policy changes”.
“Similarly, we do not expect this Budget to have a substantial impact on financial markets, which continue to be driven by the Bank of England’s monetary policy,” he added.
Salerno, stated that, while tax cuts are “plausible” this may not come to fruition following the International Monetary Fund’s latest warnings.
This sentiment was shared by SG Kleinwort Hambros head of wealth planning, Andrew Dixon, who pointed out: “The recent so-called ‘stealth taxes,’ such as freezing allowances, have worked quite well for the Treasury in terms of tax collection.
“But, in an election year the pull of reducing taxes is going to be strong, and therefore all bets seem to be placed on a modest reduction in National Insurance.”
