Autumn Statement: what can we expect?
21 November 2016
On Wednesday November 23 2016, Philip Hammond will stand up and address Parliament and it is anyone’s guess as to the content and the impact this may have.
With Brexit looming, it is very likely that the focus of the Statement will be devoted to supporting the economy, particularly in light of removing ourselves from the EU. It is important that the Statement attempts to dilute or soften the impact of recent happenings in the UK and USA to ensure that the markets don’t over react to uncertainty.
Uncertainty always brings with it volatility, which arguably could be regarded as a good thing for investors with a long term investment horizon, however this cannot be said for individuals invested in pensions either close to retirement or in retirement. Particularly if individuals are taking income from a pension that is holding volatile assets, determining when the best time to withdraw monies from these assets can have a huge impact on the overall value of the pension. Ideally you do not wish to be drawing monies from a pension fund when it is at its lowest point and timing markets has always been an impossible task.
As always with the Autumn Statement there are some tax giveaways and in recent times we have seen the introduction of life time ISA, Help to Buy ISA and the question always asked at this time is whether this is the pre-curser to a new style of pension. Pensions, tax relief and the ability to contribute to pensions has been affected massively over the last few years. The reduced lifetime allowance, as well as reduced annual allowance for higher earners, has impacted many clients and businesses. A key question is whether the government can continue to apply penalties on the amount of monies being invested in to pension as well as penalties on the amount accumulated in pension. We would certainly welcome the abolishment of the lifetime allowance.
Some of the other calls have been around the removal of the second home surcharge which means buyers who already own other property have to pay an extra 3% percent in tax on the purchase. This impacts parents buying for children as well as holiday home buyers. Removing this might help the house builders, particularly as the focus is on to “Get Britain Building” where the 3 billion housing fund has already been set up.
We look forward to hearing what Mr Hammond has to say and this will give us an indication of the new Conservative government and how they look to manage the economy over the next few years.
This blog is for information purposes only and should not be construed as an individual recommendation. This article is the opinion of Johnston Carmichael Wealth Limited.
