Welcome to our latest series of interviews on GBI Magazine! Previously, we have spoken to a range of experts on the changes of a new tax year. This series is also all about change, this time focusing on the recent UK general election, and the changes we can expect to tax-efficient investments with a Labour government.
Joining us for the first interview in this series is David Hall, Executive Chairman of YFM Equity Partners. He reveals how the results of the general election have affected his company, and discusses how the outcome will impact tax retirement savings.
1.) How has the result of the general election affected your company?
Whilst it has only been a few short weeks since the election, there has already been some encouraging activity from the Government. The effects are most notable in the areas where the businesses we invest in operate—specifically, small businesses with high growth ambitions. Early positive signs are evident in healthcare, with a focus on reducing waiting lists and delivering operating efficiencies, which is promising for the businesses we support that aim to tackle these issues. Similarly, the early declarations around infrastructure investment and the green economy send strong messages in those sectors.
2.) Do you think the outcome of the UK election will impact tax policies on investments?
Do you think the outcome of the UK election will impact tax policies on investments? That’s more difficult to say, and we’ll have to wait for the first budget later this year to get a better understanding. In terms of supporting small businesses through the VCT, EIS, and SEIS schemes, there was strong support from Labour prior to the election. Completing the extension to the sunset clause is a promising early move. It appears there will be efforts to raise the income needed to revitalise our public services, with wealth and asset taxes likely being the first approach.
3.) In what way(s) will the Labour government’s pension policy impact tax-efficient retirement savings?
There’s an interesting dichotomy here; it is vitally important to encourage long-term saving, and pensions are a very effective vehicle for that. Additional taxing of pensions, which is one of the areas being considered, won’t help achieve the long-term aim. Therefore, perhaps some additional short-term incentives to save could offset any new taxes on current pensions.
4.) How will the Labour government’s approach to wealth taxes influence high-net-worth individuals’ investment decisions?
Another tricky balance: too much additional tax will change behaviours, as many studies show there’s a tipping point above which tax increases actually reduce tax revenue. Individuals are always likely to seek ways to shelter income, so the prevalence of seeking out those shelters will increase. We want our country to be attractive both to those who are here and to others considering coming to work here. Any wealth tax that is out of line with those of competing countries may well influence people to move, either themselves or their capital, which would be counterproductive to achieving growth.
David joined YFM in 2000 to open its Manchester office. In 2003, he became Managing Director for the company’s Private Equity division, and in 2009 all its investment activities were combined under him. Four years later he led the buy-out of the buy-out from the parent and in 2014 the wider investment team joined the newly formed partnership. Since then the business has increased from £100m to over £650m under management. In April 2023 he became Executive Chair. Over the years he’s been responsible for fundraising and investment management.
