Laith Khalaf, Senior Analyst, Hargreaves Lansdown:
‘The Chancellor hasn’t rocked the fiscal boat with this Budget, not entirely surprising given the Brexit storm clouds gathering and the mutinous mutterings from below deck. Indeed he’s left the door open to checking the compass again in the new year, and changing course with a Spring Budget if needed.
Improvements in the public finances have allowed the Chancellor to cover the big NHS spending promise, and provide some little tokens of largesse to boot. Bringing forward the manifesto pledge to boost the personal allowance and higher rate threshold will raise a cheer from millions of taxpayers, as will freezes to duties on beer, cider and spirits. Wine drinkers will have to quaff back the usual inflationary tax increases though.’
The high street
‘Cuts to business rates for smaller high street premises will be welcomed by shopkeepers, but it’s not going to deliver a dividend for the big department stores where store closures and job losses can unfortunately still be expected. These companies do at least have the resources to invest in their online proposition to compete in a digital age, even though they arrived pretty late at this particular party, and are suffering the consequences.’
‘The new digital tax will be targeted at search engines, social media platforms and online marketplaces, or in other words, Google, Facebook and Amazon. The global tech giants have proved slippery customers for tax collectors, and focusing on revenues rather than profits makes it more difficult for companies to squirm out of their obligations. A tax take of £400 million or so might seem a small number when you consider that Amazon alone is expected to post sales of $233 billion this year. But the worry for the tech giants, and their shareholders, is that this is the pebble that starts an avalanche of taxes from international governments.’
‘The OBR is still pretty downbeat on prospects for the UK economy, even if forecasts have been lifted since March. Growth for this year has been downgraded after a poor first quarter, but the economics watchdog expects a bounce back next year to growth of 1.6%. That’s still pretty lacklustre though, and is actually forecast to fall back in subsequent years. This paints a picture of an economy muddling through, and withdrawal from the EU clearly remains a risk in the immediate road ahead. This is simply a continuation of the current trend, where the UK remains in a low growth, low interest rate environment. £420 million spent on potholes isn’t going to dig it out of this rut, however a resolution on Brexit might deliver some much needed momentum.’
Danny Cox, Chartered Financial Planner, Hargreaves Lansdown:
‘The government will publish a consultation in 2019 on draft regulations for maturing Child Trust Fund accounts. The annual subscription limit for Child Trust Funds for 2019-20 will be uprated in line with CPI to £4,368. A merger of CTFs with Junior ISAs would simplify the currently over complex ISA family.
NS&I net financing will rise £3 billion from £6 billion to £9 billion. Meanwhile NS&I will allow people other than parents and grandparents to gift Premium Bonds to a child and reduce minimum investment to just £25. After the disappointment of the announcement of the cut in index-linked certificate returns, premium bonds become more accessible as NS&I recognise the importance of digital engagement and low entry points to attract new savers. ‘
Pensions and retirement
Tom McPhail, Head of Policy, Hargreaves Lansdown:
‘The Chancellor’s announcement of an additional £650 million to help English councils meet social care costs will be welcome. However it’s disappointing the government still hasn’t published its paper setting out plans for a coherent long-term strategy to address the financial and social challenges of caring for an ageing population.
The government urgently needs to set out its policy on how much individuals should have to pay themselves, and under what circumstances. The last Conservative manifesto flirted with a comprehensive care policy, before retreating in disarray. The sooner they address this pressing issue, the better.’
Pension cold calling ban
‘The government has confirmed it will bring forward regulations to ban cold calling in relation to pensions. This is welcome news in the fight against fraudsters.’
Pensions for the self-employed
‘This winter the DWP will publish a paper setting out the government’s approach to increasing pension participation and savings persistency among the self-employed. The self-employed have been left behind by pensions auto-enrolment and don’t get the boost of employer contributions, so their retirement savings are in dire need of some attention.’
Pension tax relief
‘Not for the first time, pension tax relief is the rabbit that never came out of the hat. Wider reforms of the pension system is needed, though it should be conducted in a measured way which promotes retirement saving, rather than a smash and grab to fill fiscal holes.’