No news seems to be good news to the financial industry as the announcements by chancellor Philip Hammond has left the sector mainly untouched and several threats such as moving against pensions or hike IHT did not materialise.
“Pleasingly a mooted raid on pension tax reliefs, did not happen. These have looked like they have been living on borrowed time since the Chancellor’s predecessor, George Osborne, came close to overhauling them in 2016. The current system of pension tax reliefs have proved as resilient as a cat with nine lives. That will undoubtedly be welcomed by many middle class professionals, but with a potential Labour government in the wings no one should take the long-term continuity of such generous reliefs for granted because of today’s stay of execution,” Jason Hollands, managing director of investment and financial planning group Tilney said.
For Andrew Megson, executive chairman of My Pension Expert “No news is good news for retirement savers. However, without adequate advice, consumers could still be making the wrong decision about their retirement finances. With less than a third of consumers seeking advice when they access their pensions, it’s clear more needs to be done to ensure consumers aren’t making the wrong financial decision.
For Chris Groves, partner at Wither Private Client and Tax team, the certainty that this Budget brings is very positive.
“In one of the most febrile political environments in living memory, the Chancellor introduced a welcome note of certainty, emphatically stating that ‘I didn’t get into politics to put up taxes’. This will be welcome relief to HNWI’s, but there remains considerable uncertainty as a result of the Brexit negotiations, which could see a new Chancellor in No 11 or a change in government and considerable scope remains for changes in the future,” he said.
Financial advisers are showing support to the decision to ramp up efforts to clamp down tax evasion as they see it as a matter of fiscal justice.
“In today’s budget the government reaffirmed its commitment to tackling tax avoidance and evasion. The government is right to take these steps and ensure that people pay the right amount of tax at the right time. However, those that save for the future and build wealth for themselves and their families should not be put off planning because others choose to abuse the system,” Rachael Griffin, financial planning expert at Quilter said.
Hammond also announced that the UK will create a digital tax aimed at the FAANGS, starting in 2020 as the EU seems to be at a standstill regarding this matter.
“Any attempt to ensure some of the large tech companies pay their fair share of tax is welcome, particularly given the Chancellor has protected small technology businesses by setting a worldwide revenue threshold of £700m, in line with European Union (EU) proposals,” Chris Smith, head of Kajima Community said.
“It is unlikely that the likes of Amazon or Google will be able to avoid this tax reform particularly as the UK is likely to have the cooperation of Brussels. This is hugely important as any attempt to equalise tax paid by technology firms without this threshold could have led to the UK’s smaller tech firms shouldering the burden of this taxation,” he added.
The chancellor has also announced he will increase the investment allowance for two years to £1m.
“There will be some businesses that would probably prefer the Treasury leave the investment allowance alone. Having said it wouldn’t change two years ago, chancellor, Philip Hammond, has increased the investment allowance to £1m once again – from £200,000 – for the next two years.
“This may well simply be an attempt to encourage businesses to invest in machinery and other equipment in order boost productivity. But, equally, Brexit uncertainty has been holding back investment and Mr Hammond clearly wants to give it a shot in the arm by raising the tax relief again in case Brexit turns out worse than anticipated. Whether it works is however, is another matter,” Toby Ryland, corporate tax partner at H W Fisher & Company, comments.
However, there are some who are still waiting on the Brexit negotiations to believe the words of Philip Hammond.
“This Budget could be entirely defunct in a matter of weeks depending on what happens in the Brexit negotiations. Therefore, this could potentially leave SME investors in dark, particularly in the short term,” Mark Brownridge, director general of the Enterprise Investment Scheme Association, warned.
“With the uncertainty of Brexit looming larger than ever over the public purse, it is unsurprising that today’s budget has proven to be a damp squib from a private wealth and capital taxes perspective,” John Annetts, partner & head of Administration of Estates, Howard Kennedy added.
For Hermes IM, nothing is really happening with this Budget.
“For all the resounding announcements, catchy slogans and jokes, today’s Budget amounted to little in practical terms. Chancellor Philip Hammond announced “a Budget for Britain’s future” and reiterated that, after almost a decade of spending cuts, fiscal austerity was “coming to an end”, as also suggested by the Prime Minister during the Tory party conference early this month. Alas, it is not happening now, it is only vaguely defined in practical terms, and it is conditional on a good Brexit deal,” Silvia Dall’Angelo, senior economist at Hermes Investment Management said.
Richard Stone, Chief Executive of The Share Centre, summed it up like this: “The chancellor delivered the longest Budget speech in a decade but had little to say for personal savers and investors.
Chancellor Philip Hammond addressed the House of Commons for 72 minutes.