The Chancellor's Autumn Statement was as headline-grabbing as the former Chancellor's Mini-Budget a couple of months earlier. All the tax breaks were taken back and it certainly wasn't a good budget for investors ...
Investors may feel particularly gloomy at the moment, but there is light at the end of the tunnel!
Changes to Capital Gains Tax (CGT) and Dividend Tax meant investors will get hit. Alterations to the treatment of Unearned Income mean that tax on Earned Income is at its limit and investors are going to get their wallets lightened even more at some point in the near future.
"We are living in a time of high taxation!"
Jeremy Hunt remarked on the size of allowances on Unearned Income in other countries and CGT is regularly targeted for reform at home. The Chancellor decided to cut the annual exempt allowance this time, but he may hit the tax rate itself in the coming years.
The Office of Budget Responsibility (OBR) has itself given a gloomy outlook on the economy to match the Bank of England's own evaluations. However, both believe that the current recession will only last for around a year with GDP contracting by 1.4% and unemployment rising to 4.9% by the end of the year. they believe inflation will return to about 2% in 2027.
The capacity of inflation to erode real incomes remains and along with stealth taxes and more expensive mortgages, many households will become significantly worse off. Of course, this will affect our spending, savings and investments.
"It's all quite unsettling!"
Proper plans to generate growth are taking a back seat as the Chancellor attempts to stabilise the economy. Many of the spending cuts he announced have been put off until after the 2024 General Election, but we are definitely on the bumpy road to economic stability.
Apart from the UK, all the other G7 economies have regained their pre-pandemic size. The OBR believes it will take until the end of 2024 for the United Kingdom to get there. Investors may feel particularly gloomy at the moment, but there is light at the end of the tunnel.
I know some really good tax advisors and investment experts if you want a fresh pair of eyes to take a look at your portfolio.
Until next time ...
ROGER EDDOWES Business Godparent
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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