Author: richard

Introduction

In recent years, the landscape of philanthropy in the United Kingdom has undergone a significant transformation. Traditionally viewed as an act of charity or goodwill, philanthropy is increasingly being recognized as a strategic investment with the potential for meaningful social impact. This shift reflects a growing awareness among individuals and institutions of the power they hold to effect positive change in society through targeted giving. In this article, we will explore the factors driving the growth of philanthropy as an investment in the UK and its implications for the future.

Changing Perspectives

Philanthropy in the UK is no longer confined to traditional notions of charity or altruism. Instead, it is increasingly being approached through the lens of strategic investing, where donors seek measurable outcomes and long-term impact. This shift in perspective has been fueled by several factors, including a desire for greater transparency and accountability in charitable giving, as well as a recognition of the interconnectedness of social, environmental, and economic issues.

Moreover, the rise of social entrepreneurship and impact investing has provided new avenues for individuals and institutions to align their philanthropic efforts with their values and goals. By investing in innovative social enterprises and initiatives, philanthropists can not only address pressing societal challenges but also generate financial returns that can be reinvested to further amplify their impact.

Corporate Philanthropy

Corporate philanthropy has also played a significant role in driving the growth of strategic giving in the UK. Many companies are recognizing the importance of integrating social responsibility into their business models as a means of creating shared value for both shareholders and society. This has led to the emergence of corporate social investment programs that prioritize initiatives with the potential to deliver both social and financial returns.

Furthermore, corporate partnerships with non-profit organizations and social enterprises have become increasingly common, allowing companies to leverage their resources and expertise to address complex social issues collaboratively. Through these partnerships, businesses can make a meaningful difference in their communities while also enhancing their brand reputation and employee engagement.

Government Support

The UK government has also taken steps to encourage philanthropic investment as a means of addressing social challenges and driving economic growth. Initiatives such as the Social Value Act and the creation of social investment tax relief schemes have incentivized private sector investment in social enterprises and community projects. Additionally, the government’s commitment to promoting the UN Sustainable Development Goals has provided a framework for philanthropic efforts to align with broader global priorities.

The Future of Philanthropy

Looking ahead, the growth of philanthropy as an investment in the UK shows no signs of slowing down. As individuals and institutions continue to recognize the potential for social impact through strategic giving, we can expect to see greater collaboration across sectors and increased innovation in philanthropic approaches.

Moreover, the ongoing digitization of philanthropy is likely to democratize access to giving opportunities, enabling a broader range of donors to participate in driving positive change. Platforms such as crowdfunding and social impact investing networks are already connecting donors with projects and organizations that align with their interests and values, making philanthropy more accessible and transparent than ever before.

Conclusion

The growth of philanthropy as an investment in the UK represents a fundamental shift in how we approach social change and community development. By harnessing the power of strategic giving, individuals, businesses, and government entities alike have the opportunity to address some of the most pressing challenges facing society today while also creating sustainable, long-term value for future generations. As we continue to explore new models and methodologies for philanthropic investment, the potential for transformative impact remains immense. However, it also has it’s challenges.

Financial planners are adapting to accommodate how some clients wish to invest in a more philanthropic manner. The investment options available are still in a state of flux and cover very diverse objectives, from ESG (environmental, social and governance) investing, to impact investing.

For some it will be about de-selecting investments in specific sectors such as fossil fuels or weapons. This is arguably not philanthropy, and could be better described as ethical investing, but it is very much on the rise. For others it will be about actively choosing a specific business to invest in because of what it does for society. Every investor will have their own expectations on risk and returns.

It is not yet a mature, well defined market, and so it is important that we manage your expectations and and explain the risks along the way if this is something important to you.

Pensions have been a big topic in UK politics for some time, nevermore so than in an election year. That’s no surprise to us given their crucial role in the financial security of millions of citizens, but not everyone is as interested and engaged in pensions as we are! Here’s a quick summary of why pensions have been at the forefront of UK politics in recent years.

The UK is Getting Older
The UK, like many developed countries, is experiencing significant demographic shifts. The population is aging, with a growing proportion of retirees compared to working-age individuals. According to the Office for National Statistics, by 2042, the number of people aged 85 and over is projected to double. This demographic change puts immense pressure on the pension system, raising concerns about its sustainability and adequacy. The same can be said for social care. It also means that the average age of the electorate is getting older. The ‘grey vote’ has long been coveted by all parties, not just because of the increasing numbers, older voters tend to turn out and vote in greater percentage terms also. Securing the support of people over 60 is incredibly important for an election win.

The State Pension Will Come Under Pressure
The state pension is a critical component of retirement income for many UK citizens. However, debates around its adequacy and the age at which it should be accessed are heating up. The state pension has benefited from the ‘triple lock’ which has been incredibly valuable to pensioners at a time of high inflation, but many argue this is insufficient to support a comfortable retirement, particularly with rising living costs. On the other hand, questions have been raised about whether the triple lock can be maintained given its cost to the public purse, and there is ongoing debate about further increases to state retirement age to reflect longer life expectancy. These issues are central to voters’ concerns, especially for those nearing retirement age.

Tax Relief on Pension Contributions
This is always a contentious issue and viewed as a big vote winner. Higher-rate taxpayers receive more generous relief than basic-rate taxpayers, leading to debates about fairness and potential reforms. Counter proposals often include capping tax relief or introducing flat-rate relief to make the system more equitable and to increase government revenue. These proposals are met with mixed reactions, as they could impact higher earners’ incentives to save for retirement. There is also the question of how tax relief is equalised between defined benefit and defined contribution pension schemes. Any cuts to public sector schemes, for example, will also raise objections from public sector workers, even if they are just the same as the private sector. More recently there is fierce debate (at least amongst the financial services sector) about the contribution limits imposed for pension tax relief, both annual and over the course of a lifetime. These limits have seen a great deal of tinkering recently as it is probably politically easier to change them than make wide-sweeping change.

Pushing Investment Into the UK
There is a stated desire from both Labour and the Conservatives to change the rules on how we invest pension monies in a way that pushes more money into the UK economy. Diverting more institutional pension money towards the UK is central to their growth strategy, and whether you agree with this level of intervention into investment decisions, it clearly has some momentum now.

Private Pensions and Auto-Enrolment
Auto-enrolment, introduced in 2012, has been a significant policy success, bringing millions into workplace pensions. However, there are concerns about whether contributions are high enough to ensure adequate retirement savings. The current minimum contribution is 8% of qualifying earnings, but experts suggest this may not be sufficient. Political parties are discussing potential reforms, such as increasing contribution rates or expanding coverage to include more low-income and part-time workers. This has to be balanced against short term problems such as the cost of living crisis and wage inflation for employers.

Pension Freedoms and Flexibility
The pension freedoms introduced in 2015, allowing individuals aged 55 and over to access their defined contribution pension pots more flexibly have been widely popular. However, this flexibility has also led to concerns about people exhausting their pension savings too quickly, exposing themselves to financial insecurity in later life. Additionally, there are worries about the potential for scams and mis-selling, making regulation and advice crucial topics in the election debate.

Intergenerational Fairness
This is the counter argument to the policies pitched at current pensioners, with younger generations facing challenges such as high housing costs, student debt, and precarious employment. Many younger voters feel that they are at a disadvantage compared to older generations who benefited from more generous defined benefit pension schemes and stable employment. Political parties are being scrutinized on their policies to address these disparities, ensuring a fair and sustainable pension system for future generations.

Gender Pension Gap
The gender pension gap remains a significant issue, with women, on average having lower pension savings than men due to factors such as career breaks, part-time work, and the gender pay gap. Addressing this gap requires targeted policies, such as enhanced maternity leave contributions, better support for carers and measures to tackle the underlying causes of the gender pay gap. Political parties are under pressure to demonstrate how they will ensure that women are not disadvantaged in retirement.

Environmental, Social, and Governance (ESG) Considerations
There has been growing interest in how pension funds are invested, with increasing emphasis on environmental, social, and governance (ESG) factors. Some voters are now more concerned about the ethical implications of their investments and the role of pensions in promoting sustainability. However, there is also plenty of comment and opinion that this is less of a priority in a time when people have less disposable income and more immediate concerns. Political parties have been responding with policies that encourage or mandate the inclusion of ESG criteria in pension fund investment decisions, aligning retirement savings with broader societal goals. You only need look at the wide ranging policy making on fossil fuel consumption to see how polarised this debate has become.

In Summary
Pension policy is a critical issue for this and future UK elections, reflecting their fundamental role in ensuring financial security in retirement. All of the above points contribute to the complexity of the pension debate and as you can see there are opposing interests. No party is likely to pacify retirees at the same time as resolving the problems young people face. The need to win votes and take a short time view is one reason many in financial services are asking for an independent commission to be set up to take politics away from pensions in much the same way the Bank of England set interest rates, but it’s probably too important a topic right now right now for any Party to give control away.

At a time when economic growth is sluggish, many are hoping that the nation’s wealth creators will be able to drive an increase in output over the coming months.

So as a business owner yourself, what practical steps can you take, beyond stepping up your marketing activity and delivering the best possible service to your customers?

Well, looking after the mental health of your staff is key, as last year, the UK economy lost 17.1 million days of sickness absence to work-related stress, depression and anxiety.

According to research by Unum UK, just 49 per cent of UK employees believe their employers are adequately equipped to manage mental health issues.

That’s a real concern, as 78 per cent of respondents said they’d be willing to leave their jobs due to excessive stress and a lack of mental health support in the workplace.

Only one issue – salary considerations – came ahead of mental health in the list of factors driving employee turnover, so it’s clear that it’s something employers can’t just ignore.

Invest in wellness programmes
So what’s the solution? Well, it’s clear that employees value mental health support.

In fact, 57 per cent of UK employees said that if robust health and wellness programs were in effect in their place of work, they could be convinced to stay.

This points to a clear call to action for businesses: investing in comprehensive mental health strategies can significantly reduce staff turnover.

Taking action for a healthier workforce
Liz Walker, Chief Operating Officer at Unum UK, described the findings as “concerning” and called on bosses to act.

“There’s still work to do for some employers, including introducing high-quality proactive measures to address and support workplace stress and overall mental health,” she said.

“By creating positive, supportive and inclusive working environments, employers can not only improve employee retention but also help foster a healthier, more engaged and productive workforce.”

The Workers Union added: “This superb study is a crucial indicator of the needs and pressures facing the modern workforce, which we have been highlighting for many years.

“Addressing these challenges is essential not only for the wellbeing of employees but also for the health of the entire business sector.”

Investing in your employees’ mental health might require some effort, but the results are clear: a happier, more productive, and loyal workforce leads to less disruption and a thriving business.

And that can only be good for the wider economy too.

It’s never been more important to use all of your your tax allowances. As the election campaigning ramps up we will hear more and more about tax cuts to in votes, but the latest data from HMRC shows that their total revenues from tax receipts and National Insurance Contributions were £827.7bn from April 2023 to March 2024, up £39.1bn on the previous year.

It has increased by a striking 83% since the Conservatives came into government in 2010, when it was £453bn. Inflation over the same period has only increased by 49%, which means a purely inflationary increase would have only cost taxpayers £674bn, some £153.7bn less than they paid in the past year.

And it can’t all be blamed on Covid. Since the year 2019/20 tax revenues rose from £633bn to £827bn, a rise of 31% versus an inflationary equivalent of 23%. Well above inflation but better than the 14 year trend.

Much has been made of the fiscal drag, as personal income tax allowances have been static for a number of years, bringing many more people than ever before into paying tax or into a higher tax threshold. It’s expected that around 2.5m more people will be paying tax in 2024 as a result, causing well publicised problems for HMRC’s overloaded helpdesk services.

Personal income tax allowances and thresholds have been frozen since 2021, and Jeremy Hunt announced his intention to continue this until 2028. They would normally increase in line with CPI. The personal allowance and higher rate thresholds have been £12,570 and £37,700 since 2021, respectively. If they had been linked to CPI they would have been set at £15, 225 and £60, 886 for 2024-25 respectively. To someone earning £50, 000 that equates to £13, 000 in extra tax paid over the duration of the allowance freeze.

That said, the personal allowance was just £6, 475 in 2010/11 and despite the recent freeze £12, 570 now is arguably a reasonable increase in real terms during that period.

We will undoubtedly hear more about this as we the polling stations, but it is not a problem specific to the current government. It is unclear if or how Labour plan to address this as they have avoided any real detail on the subject to date.

Rishi Sunak has promised to keep the state pension free from tax if he returns as PM, but that won’t help those below state pension age and will be a relatively insignificant tax saving to those enjoying a decent retirement income with little reliance on the state pension. Both parties face a difficult balancing act as the undoubted generosity of the triple lock pension which has boosted state pension earnings beyond anything originally anticipated, is a major reason why more retirees face paying tax. At the same time it’s an enormously popular policy amongst pensioners for obvious reasons, and neither party dares remove it.

What is clear is that you should use every tax allowance you do get to its maximum. This is a subject we will cover at your next review meeting.

We’re all busy people and our spare time is very precious to us.

So it’s no surprise that many of us are neglecting vital life admin and instead spending time on – how shall we put it? – less important pursuits.

According to research by Moneybox, UK adults spend an average of 48 minutes a week scrolling through social media platforms and 39 minutes a week playing video games.

By contrast, we’re spending just 24 minutes a week looking at our money, reviewing our expenses, budgeting and planning ahead.

Furthermore, just 20 per cent of those polled said they consistently spend time researching the best financial products for them, and 28 per cent admitted they don’t know how to choose the right financial products for them.

Take control of your future
Imagine knowing that you’re able to afford a dream holiday, buy a bigger property or pay for your child’s education because you’ve reviewed your finances.

It could make a huge difference to your life, both in the short and longer term.

So why are we neglecting this vital aspect of our lives, missing out on opportunities to maximise our wealth and storing up problems for the future?

After all, if you’re on top of your finances, you can plan ahead with confidence, and avoid that feeling of dread and uncertainty when letters from your bank, building society and investment manager drop through your door.

As Brian Byrnes, head of personal finance at Moneybox puts it: “Setting aside time every week to review your budget, research the best financial products for your needs or make a plan to help you achieve an important financial goal will make a huge difference to your confidence and your financial position over time.”

Mr Byrnes shares good advice that all of us should follow, regardless of whether we’re on modest or high salaries.

Taking a look at your income and outgoings after tax, including your utility bills, pension contributions, savings and investments, means you can have a clear idea of how much disposable income you have each month, where savings can be made and how much you could possibly invest elsewhere.

Next, researching the best financial products means you can be sure you’re picking the right ones for you, your family and your circumstances.

And if you have specific financial goals in mind, you might have extra motivation to get on top of your finances, actively maximise your wealth and make better, more informed choices, as you’ll have an end point that you’re determined to reach.

Get professional financial advice
Of course, researching the market and navigating the complexities of the financial world can seem daunting and time-consuming, particularly if you have countless other responsibilities on your plate.

But help is at hand.

An independent financial adviser will take a look at your specific circumstances, priorities and objectives, and advise you accordingly.

They’ll also be fully up-to-date with the latest market developments, regulations, product offerings and investment opportunities, so they can point you the right way when market conditions change.

At the same time, they’ll be able to help you set clear and realistic goals, manage your risk exposure and reduce your tax liability.

You can then get on with living your life with confidence and certainty, safe in the knowledge that you’re making informed financial decisions that align with your goals and objectives.

If you have any questions about managing your finances and setting yourself up for the future, please feel free to contact us and we’ll be happy to speak with you.

Many of us dream of being our own boss and taking control of our own destiny.

That’s why so many of us are drawn to the idea of starting our own business.

In fact, a study by Travel Counsellors has found that 59 per cent of people in the UK would consider setting up their own venture.

Perhaps unsurprisingly, younger people are the most entrepreneurially minded, with more than two-thirds of 16 to 34-year-olds saying they would think about starting up a business.

But one in three over-55s are also considering setting up a business – a significant proportion by any measure, and a sign that even 20 or 30 years into your working life, it’s never too late for some to make a big change.

Interestingly, when asked why they want to start a business, people didn’t cite negative reasons such as hating their current job. Instead, they highlighted ways in which they felt that being a business owner could make their life better.

For instance, 41 per cent stated that they want to start a business in order to make more money, while 31 per cent said they thought this would give them a better work-life balance.

In addition, 28 per cent said they were drawn to this option as they wanted to work flexible hours, while an identical proportion revealed they felt it would help them feel a greater sense of control.

The study also revealed that 21 per cent find the idea appealing as they want to feel more fulfilled, while 18 per cent said they want less day-to-day pressure and the ability to set their own targets.

But simply wanting to start your own business often isn’t enough, as there can be many obstacles standing in the way.

For example, 54 per cent said a lack of finance is holding them back, while 36 per cent admitted they are afraid of failure.

Meanwhile, 21 per cent stated that they don’t have a good idea for a business, while the same proportion said there is a lack of adequate infrastructure and support in place.

Matt Harding, Director of Franchise Sales at Travel Counsellors, said: “Our research suggests that starting and owning a business is an aspiration for many British workers, who are increasingly seeking both better financial rewards and work-life balance.”

However, he acknowledged that many of those who want to “embark on an entrepreneurship journey” find the prospect “daunting”.

That’s why it’s so important for aspiring entrepreneurs to get professional, regulated financial advice.

By speaking to a specialist in this field, you can find out what options are open to you as you seek to obtain the finance to start a business and demonstrate that you’re a good risk for lenders.

And once you’ve got going, they can continue to guide you on managing your company’s money and help you navigate the complex world of business finance.

If you have any questions on starting your own business, please don’t hesitate to get in touch.

The beginning of the 2024-25 tax year saw an 8.5 per cent increase in the state pension – in other words, an extra £900 a year for pensioners.

That’s great news for the current crop of retirees, but what about upcoming generations?

Well, many younger adults aren’t confident that they’ll receive any state pension at all in later life.

In fact, a poll by Phoenix Group’s longevity think tank Phoenix Insights has found that half of under-50s don’t believe a state pension will exist by the time they retire.

It’s understandable that this age group isn’t feeling hugely confident about what they’ll receive in the future, given the wider debate about the state pension that’s currently rumbling on.

With people living much longer these days, providing a state pension is becoming much more expensive for the public purse, especially when you factor in the government’s commitment to the triple lock.

Add to that the fact that the state pension age is set to increase from 66 to 67 between 2026 and 2028, and could go up again before today’s younger adults even start thinking of retirement, and you can see why under-50s aren’t hopeful.

But as Patrick Thomson, Head of Research and Policy at Phoenix Insights, puts it, the state pension is “an important intergenerational social contract”.

As a result, any moves to scrap the state pension altogether would certainly be hugely controversial, especially among this age group.

Indeed, 84 per cent of adults of all ages said they believe that providing a state pension is an essential role of the government.

In addition, 87 per cent said they think the state pension is there to make sure every single person has a minimum level of income when they retire.

“The state pension matters to all of us,” Mr Thomson continued.

“It is the biggest single part of the social security system and has been the foundation for many people’s retirement income for over 75 years.”

But while the level of support for the state pension came across loud and clear, the survey also highlighted some significant gaps in people’s knowledge.

For example, more than a fifth of over-55s admitted they didn’t know their state pension age – and many of those polled said they didn’t know what the triple lock is.

That’s a real concern, as many of these people will be hoping they’re in the last decade of their working lives and wanting to enjoy a retirement free of financial worries.

Another notable finding was that nearly one in five adults across all age groups believe they could live on the state pension alone in retirement.

The full rate of the new state pension is £221.20 a week, and that’s clearly not enough to cover all your living costs and leave you with enough left over to enjoy hobbies, pastimes and luxuries.

That’s why you should make sure you have plans in place to supplement the state pension, such as workplace pensions, private pensions and other investments, and ensure that these make up the bulk of your income.

Then you can set yourself up to enjoy a much more comfortable lifestyle during your retirement, and ensure you have the means to live the kind of life that you want and deserve.

If you have any questions about saving for retirement and making the most of your pensions, get in touch with our specialist team of financial planners.

We’re here to help and will be happy to speak with you, so get in touch and take charge of your retirement planning today.

As you move through your working life, it’s easy to get a rosy picture of retirement and dream of the day when you finally step away from the office.

But how do you work out when that day should actually be?

Well, there’s no simple answer to this question, as there are so many factors that are unique to you personally.

However, there are several other questions you can ask yourself beforehand as you decide whether or not to make the leap into retirement…

Can I afford to retire?
Ultimately, your ability to enjoy a happy, fulfilling and secure retirement and the lifestyle you desire will be underpinned by your financial situation.

So take a holistic look at your finances so you can work out how much income you’re likely to receive in retirement. This includes your:

Private pensions
Investment income
State and workplace pensions
Cash savings
Social security benefits
Other assets, such as property
It’s also really important to look at your existing debts, as this will eat into your income unless you pay them off as quickly as possible.

What do you want from retirement?
There’s no one-size-fits-all model of retirement. Some may dream of a quiet life, staying at home and pottering around the garden.

Others, meanwhile, might see it as their opportunity to be more adventurous, travel the world, go to festivals and indulge in their hobbies and passions.

Or perhaps you’re someone who wants to spend time looking after your grandchildren and making the most of precious family time.

By asking yourself what you want from retirement, you can then work out what your chosen lifestyle is likely to cost you, and when you’ll be in a financial position to fulfil this goal.

Are you ready for the change?
Retiring is one of the biggest life decisions you’ll ever make. So it’s important to consider the practical and emotional impact of hanging up your professional hat.

You should ask yourself probing questions such as:

How will you fill your days?
Do you have hobbies and interests to keep you physically and mentally engaged?
Do you have friends and family around you, so you stay socially connected?
Are you disciplined enough to structure your days without work?
Is your job a key facet of your identity, and if so, what will you be without it?
Of course, you might have been counting the days to retirement for many years and have no qualms whatsoever about stopping work.

But if you’re someone who thrives in the workplace and has struggled to achieve a good work-life balance in the past, adjusting to retirement can be difficult.

Are you in good health?
Retirement should be a time when you have the freedom to enjoy days out, holidays, family time and activities, so you don’t want to be held back by health issues.

You should therefore do all you can to increase the chances of enjoying good health in later life, such as maintaining an active lifestyle, managing existing conditions and not neglecting your mental and emotional wellbeing.

Investing in your health in the present is an investment in your future, and could put you in a position where you’re able to truly enjoy your retirement years.

Speak to your partner or spouse
If you’re unsure about when to retire, talk about it with your other half. Openly discussing your hopes and expectations ensures you’re both on the same page and working towards the same goals.

Seek financial advice
Getting to grips with every aspect of your finances and working out your likely income in retirement can be complex and overwhelming in equal measure.

However, a specialist financial adviser can take away this burden, examining your finances in the round to create a personalised retirement plan.

They’ll look at everything from your various sources of income to your existing debts, and guide you on what tax strategies can help you maximise your retirement income.

A financial adviser can also help you adjust your plan as your circumstances change over time, so you can be confident that you’re still on track to achieve your financial and lifestyle goals.

Retirement is something many of us dream of, so carefully considering your finances, health and lifestyle ambitions straight away can set you up nicely for the future you want and deserve.

Jeremy Hunt has delivered his Spring Budget, his fourth fiscal event as Chancellor, and the final Budget before a general election.

The timing wasn’t ideal for Mr Hunt, as the economy recently slipped into recession and the Conservatives remain well behind in the polls.

On the one hand, he would have to be financially prudent and responsible, and on the other, he was under huge pressure to deliver giveaways to the electorate before they cast their votes later this year.

Let’s take a closer look at the context in which the Budget is taking place…

The political background

Mr Hunt’s Budget came at a time when the government has been consistently polling behind Labour.

According to a recent poll carried out by Ipsos for the Standard, support for the Conservatives is now at a record low of just 20%, down from 27% in January. This puts them 27 points behind Labour and is the worst result for the Conservatives since 1978.

Meanwhile, a separate poll by Find Out Now and Electoral Calculus has predicted that the Conservatives could be left with just 80 MPs after the election, and that Labour will secure a majority of 254.

The Conservatives have also been hit with a string of by-election defeats. Just last month, Labour overturned a majority of more than 18,000 to win Wellingborough from the Tories, achieving a swing of 28.5% – its second largest swing from the Conservatives ever.

On the same day, Labour overturned a majority of more than 11,000 in the Kingswood by-election. These were the ninth and tenth by-election defeats for the government during the current parliament, and the most suffered by any government in a single parliament since the 1960s.

As the general election moves ever-closer, the Conservatives are also facing a possible electoral threat from Reform UK, formerly the Brexit Party. According to a recent YouGov poll, 33% of those who voted Tory in 2019 would do so again, but 20% would switch their vote to Reform.

Another problem for Prime Minister Rishi Sunak is that four of the five priorities he unveiled at the beginning of 2023 have not been achieved.

In January last year, Mr Sunak pledged to halve inflation, grow the economy, reduce national debt, cut NHS waiting lists and stop migrants from crossing the English Channel on dinghies. At the time of writing, only the pledge to halve inflation has been delivered.

The Prime Minister has so far been tight-lipped on exactly when the general election will take place, saying only that his “working assumption” is that voters will go to the polls in the second half of the year.

But speculation that the election could be called for May continues to swirl, and if that’s the case, the Spring Budget could be the government’s final chance to pitch to voters before the campaign begins in earnest.
The economic background

The UK slipped into recession towards the end of 2023, as the economy contracted by 0.1% between July and September, and then by 0.3% between October and December.

Although the UK economy did grow by 0.1% throughout the year as a whole, the annual growth figure for 2023 was still the weakest since 2009 (excluding 2020, when the pandemic put the brakes on economic activity).

As we discussed earlier, inflation has come down significantly from its peak of 11.1% in October 2022, when it was at a 41-year high. However, the rate of inflation stayed on hold in January 2024, remaining unchanged from the previous month at 4%. That’s still twice the Bank of England’s target of 2%.

The Bank’s Monetary Policy Committee had been hiking interest rates since December 2021 in an effort to tackle inflation. However, the Bank’s Monetary Policy Committee has recently kept rates on hold at 5.25%, which has led to speculation that they could be lowered in the coming months.

Despite this less than ideal economic backdrop, the Chancellor has faced strong political pressure to cut taxes, as the tax burden is currently at a 70-year high. A cut in National Insurance, rather than income tax, was heavily rumoured ahead of the Budget, while there was also speculation that Mr Hunt could abolish non-dom tax status.

This would be a politically risky move for the government, as Labour has long called for non-dom tax status to be scrapped in order to generate funds for public services. The government has also consistently rejected this idea, arguing that the existing non-dom arrangements helped to make the UK an attractive place for wealthy people to live and work.

Mr Hunt approached the Budget in something of a bind, with limited headroom to make big, vote-winning, headline grabbing giveaways, yet facing overwhelming political pressure from many on his own side to deliver exactly that.

Clearly, there was lots at stake for the government as the Chancellor rose to speak, so let’s take a look at what he announced…

The speech

Opening remarks
Mr Hunt began his Spring Statement by announcing that £1m would be invested in creating a memorial to Muslims who died in the two world wars.

Amid noisy heckling from the opposition benches, he said his Budget was designed to create more investment, more jobs, better public services and lower taxes.

The Chancellor’s statement was accompanied by forecasts from the Office for Budget Responsibility (OBR), which predicts that the economy will grow by 0.8% in 2024 and 1.9% in 2025. This will be followed by growth of 2% in 2026, 1.8% in 2027 and 1.7% in 2028.

Inflation, meanwhile, is set to fall below the Bank of England’s 2% target in “just a few months time”.
Personal taxation and allowances

What Employee National Insurance to be cut from 10% to 8%
When April 6th 2024
Comment Class 1 National Insurance paid by employees will fall by 2p in the pound. This follows another 2p cut to National Insurance in last year’s Autumn statement.

According to Mr Hunt, this means the average worker earning £35,400 a year will be more than £900 better off this year.

What Self-Employed National Insurance to be cut from 8% to 6%
When April 6th 2024
Comment Following a cut from 9% to 8% in the Autumn Statement, National Insurance for the self-employed is being cut again to 6%.

The government believes this will make the average worker earning £28,000 a year £650 better off compared with last year.

What Non-dom tax regime to be scrapped and reformed
When April 6th 2025
Comment The current tax system for non-doms will be abolished and replaced with a “modern, simpler and fairer residency-based system”.

Under the new system, new arrivals to the UK will not have to pay any tax on foreign income and gains for their first four years of UK residency. After four years, people who continue living in the UK will pay the same tax as other UK residents.

The government believes this will be more generous than the existing regime and “one of the most attractive offers in Europe”.

This particular move will be seen by many as highly political, as Labour had planned to use the money raised by scrapping non-dom tax loopholes to fund spending commitments such as extra GP appointments and breakfast clubs in primary schools if it wins the next general election.

Transitional arrangements will be put in place for those who are currently benefiting from the current system, in recognition of the contribution many of these people make to the UK economy.

That will include a two-year period in which people will be encouraged to bring wealth earned abroad to the UK where it can be spent and invested domestically.

What Higher rate of Capital Gains Tax on property to be cut from 28% to 24%
When April 6th 2024
Comment The higher rate of Capital Gains Tax on property is to be cut in an effort to incentivise landlords and second home-owners to sell their properties.

It is hoped this will make more homes available to buyers, including those who are seeking to get on the property ladder for the first time.

Private Residence Relief remains unchanged, which means Capital Gains Tax will not be paid on the “vast majority” of residential property disposals.

What Furnished Holiday Lettings (FHL) tax regime to be abolished
When April 6th 2024
Comment Tax breaks which make it more profitable for second home owners to let properties out to holidaymakers rather than long-term tenants are to be scrapped.

This means that short-term and long-term lets will be treated in exactly the same way for tax purposes. In addition, people with FHL and non-FHL properties will not have to calculate and report income separately.

What Multiple Dwellings Relief to be scrapped
When June 1st 2024
Comment Stamp duty relief for people buying multiple properties in one transaction is to be abolished.

This comes after an external evaluation concluded there was “no strong evidence” it was “meeting its original objectives of supporting investment in the private rented sector”.

What Air Passenger Duty for business class flights to go up
When April 1st 2025
Comment Rates of Air Passenger Duty (APD) on non-economy passengers are to be adjusted on a one-off basis to reflect the rate of inflation.

The government believes this will help to maintain the value of APD in real terms.

Rates will remain unchanged for passengers travelling in economy on domestic or short-haul flights.

What High income child benefit charge (HICBC) threshold to be increased from £50,000 to £60,000
When April 6th 2024
Comment The HICBC threshold is being raised to £60,000, while the top of the taper at which it is withdrawn is being increased to £80,000.

This means that nobody earning less than £60,000 will pay the charge. Government estimates also suggest that the move will take 170,000 families out of paying HICBC completely.

Furthermore, the higher taper and threshold means that nearly half a million families with children will save around £1,300 on average next year.

Pensions and savings

What A £5,000 “British ISA” tax allowance to be consulted on
When No date confirmed, six-month consultation period
Comment The newly-announced British ISA will allow an additional £5,000 annual investment for investments in UK equity, and offer all the tax advantages of other ISAs. This will be on top of existing ISA allowances.

The government hopes this new ISA will enable savers in the UK to benefit from the growth of the “most promising” domestic businesses and support them with the capital to help them expand.

No date on when the British ISA will be introduced has been confirmed as yet and the details are to go out to consultation for six months.

As we note in our conclusions below, there are a number of practical problems which need to be addressed if this extra allowance is to come into force.

What New British Savings Bonds offering savers a guaranteed rate for three years
When April 2024
Comment National Savings & Investments (NS&I) is to launch a product that will offer consumers a guaranteed interest rate, fixed for three years.

The rate will be announced by NS&I in April.

What Pensions Lifetime Provider commitment
When Ongoing
Comment The government has reaffirmed its commitment to exploring a lifetime provider model for Defined Contribution (DC) pension schemes in the long-term.

Continued analysis and engagement will be carried out to make sure this leads to better outcomes for pension savers.

What Pensions triple lock to be maintained
When Ongoing
Comment The triple lock is a mechanism designed to make sure the state pension doesn’t lose value, so it will go up by whichever is highest of the following measures:

● Average earnings
● The rate of inflation (as per the Consumer Price Index)
● 2.5%

Business investment and taxation

What VAT threshold raised to £90,000
When April 1st 2024
CommentThe amount businesses can earn before registering to pay VAT is to be raised from £85,000 to £90,000.

The government believes this will take around 28,000 small businesses out of paying VAT completely and encourage many more to “invest and grow”.

Meanwhile, the deregistration threshold is being raised from £83,000 to £88,000.

What Full expensing tax break for businesses to be extended to leased assets
When No date confirmed
Comment During last year’s Autumn Statement, the government made full expensing permanent, which means that for every £1m a company invests in qualifying machinery and equipment, it gets £250,000 off their tax bill in the same year.

The government has now said it wants to extend full expensing to assets for leasing “when fiscal conditions allow”. Draft legislation on this will be published soon.

What Windfall tax on the profits of energy firms extended
When From March 2028 to March 2029
Comment The Energy Profits Levy sunset clause is being extended for another year, which will raise £1.5bn.

The government believes energy prices are likely to remain “abnormally high” until 2028-29 at the earliest, which means windfall profits in the sector will persist as well.

However, legislation will be introduced to abolish the levy if market prices fall to their historic norm sooner than expected for “a sustained period of time”.

What Recovery Loan Scheme extended
When Until the end of March 2026
Comment £200m is to be invested in extending the Recovery Loan Scheme as it transitions to the Growth Guarantee Scheme. This will enable 11,000 small to medium-sized enterprises (SMEs) to access the finance they need.

What Tax relief for orchestras, museums, galleries and theatres
When Immediately
Comment Tax relief offered to orchestras, museums, galleries and theatres during the Covid-19 pandemic is being made permanent.

Touring and orchestral productions will benefit from 45% tax relief, while non-touring productions will get tax relief of 40%.

Mr Hunt said the move recognises “their vital importance to our national life”.
Other announcements

What Fuel duty frozen for another year
When Until March 2025
Comment The 5p cut on fuel duty will be maintained and kept on hold for another 12 months.

The government believes this will save the average car driver £50 next year.

What Alcohol duty freeze extended
When From August 1st 2024 until February 1st 2025
Comment The freeze in duty, originally set to end in August, has been extended to February next year.

What Excise duty on vaping products
When From October 2026
Comment A duty on vapes will be introduced in an effort to “protect young people and children from the harm of vaping”.

The Treasury believes this will raise £445m in 2028-29.

What A one-off increase in tobacco duty
When From October 2026
Comment The government is introducing a one-off increase in tobacco duty as it recognises that vapes can “play a positive role in helping people quit smoking”.

This increase will therefore “maintain the financial incentive to choose vaping over smoking” and raise £170m in 2028-29.

What £90 admin fee to obtain a Debt Relief Order abolished
When April 6th 2024
Comment The government is making it easier to access a Debt Relief Order by removing the £90 administration fee, which it believes will help households who are struggling with debts.

Conclusion and reactions

Our thoughts

With little room for the Chancellor to manoeuvre, and the main announcement being leaked beforehand, there was little in this Budget for investors to be excited or concerned about.

Branding existing products as ‘British’ is already being perceived by much of the financial services sector as a political gimmick and unlikely to add significant benefit to the vast majority of investors. That said, we should always look to use any allowances available.

British ISA

Whilst greater allowances are always welcomed, the proposals have some serious practical problems which mean they may never see the light of day.

For example, it is unclear how investing in a ‘UK asset’ will result in more money coming into UK businesses. An investment trust is a UK company but will typically invest much of its money overseas. Purchasing a UK-listed stock like Antofagasta Plc might qualify, but it invests all of its money in Chilean copper mines.

Unlike the UK infrastructure funds proposed in the Autumn Statement, which can be used as long-term investments by pension funds, ISA investments need to be highly liquid as the money can be withdrawn at any time. This poses some challenges when trying to divert funds to the UK, and there are relatively few people in the UK who are likely to use the £5,000 allowance even if it can be achieved.

For our own clients, we have an investment discipline which prioritises diversification and asset allocation over individual fund selection when investing our clients’ money. This involves diversifying not only the assets held – e.g. equities and bonds – but also the regions you are invested in – UK, US, Europe, Asia etc. Should this allowance become available, we would look into the best way to use it, which might mean reviewing and reallocating where your current funds are held rather than purchasing more UK funds. For now, we will keep an eye on the consultation and how it progresses.

Anyone without an adviser faces yet another choice on top of the many types of ISAs already available and more complexity is unlikely to encourage more people to invest.

British Saving Bond

All NS&I bonds are ‘British’ as they are all issued by the UK government, so there is nothing to report on this yet until we find out what the rate is.

The only other NS&I fixed term bond available is the Green Savings Bond, which the government uses to invest in green projects, and that has raised little interest for consumers due to its poor interest rate.

This new bond released in April is also a three-year fixed rate and money will be ‘invested back into supporting the UK’, which is essentially what all UK bonds do, so the rate will most likely be the differentiator.

Wider reaction to the speech
There was no shortage of anticipation surrounding this Budget, especially as it came in a general election year. But whether the speech lived up to its billing is open to debate.

After all, much of the speech had either been trailed or heavily rumoured in advance, and there was no rabbit out of the hat moment guaranteed to grab the next day’s headlines.

The lack of fireworks was reflected in fairly muted rather than excitable newspaper headlines. The Financial Times, for example, simply went with “Hunt leaves door open to more tax cuts”, while the Mail asked “Will it be enough to see off Labour?”.

The Daily Express, however, was very happy with the statement, exclaiming “Britain ready for take off!”. By contrast, the Mirror went in strong with “We deserve better”.

Labour leader Sir Keir Starmer responded to the Budget by describing it as “the last desperate act of a party that has failed”, and branded Jeremy Hunt and Rishi Sunak “the Chuckle Brothers of decline”.

Sir Keir highlighted the scrapping of the non-dom tax regime as an “obvious example of a government that is totally bereft of ideas”, as it has chosen to “finally accept Labour’s argument” after “years of resistance”.

The Institute for Fiscal Studies (IFS) gave the Budget more of a mixed response, praising the cut to National Insurance and the announcement on non-dom taxes, but stating that “the big picture on tax remains much the same”.

IFS Director Paul Johnson said: “Come the election, tax revenues will be 3.9% of national income, or around £100bn, higher than at the time of the last election. This remains a parliament of record tax rises.

“While the OBR got a little more positive in its projections, the picture on living standards also remains dismal. On average, households will be worse off at the time of the next election than they were at the last, following nugatory real earnings growth.”

The Resolution Foundation, meanwhile, pointed to the decision to once again cut National Insurance as the standout moment of the Budget.

Torsten Bell, Chief Executive of the think tank, said: “The biggest choice Jeremy Hunt made was to cut taxes for younger workers, while allowing taxes to rise for eight million pensioners. This is a staggering reversal of the approach taken by Conservative governments since 2010. It is undoubtedly good economics, even if the politics are a harder sell.”

Nevertheless, he concurred with the IFS’s view on the tax burden, describing the UK as a country “where taxes are heading up not down”.

“The big picture has not changed at all with this Budget,” Mr Bell stated.

Right-leaning think tank the Institute of Economic Affairs was also underwhelmed, stating that the Budget “hasn’t really moved us any closer to where we need to be”.

“There’s no getting away from the fact that raising living standards in the long run depends on generating faster economic growth,” said Executive Director Tom Clougherty.

“That means prioritising tax reforms with genuine pro-growth impact, fixing our broken planning system, and accepting that we need to couple spending restraint with major reforms to public services.”

The Budget also garnered a mixed response from the Confederation of British Industry (CBI), which commended the Chancellor for keeping “his gaze fixed on the structural challenges facing the UK economy” and taking steps to incentivise work.

Rain Newton-Smith, Chief Executive of the CBI, particularly welcomed the move to introduce legislation that extends full capital expensing to leased and rented assets, as it would “offer greater momentum to efforts to increase business investment”.

However, she said extending the Energy Profits Levy “weakens the competitiveness of the sector”, and that businesses “will be looking for more emphasis on delivery by developing a Net Zero Investment Plan to crowd in the private finance needed to deliver the clean energy transition.”

The Federation of Small Businesses singled out the increase in the VAT threshold and the cut to self-employed National Insurance contributions for praise. Nevertheless, Policy Chair Tina McKenzie said there was little to help “ease the tough decisions” business owners are having to make “to keep their businesses going”, as many are facing “serious challenges” such as “rapid hikes in labour and input costs”.

“There’s still a real gap when it comes to the crunch small firms are facing – and the growth, jobs and economic security small businesses provide is not something the country can afford to risk,” she added.

UK Finance, meanwhile, commended the announcement on the Growth Guarantee Scheme, as it would ensure SMEs can access the funding they need to invest and grow, along with Mr Hunt’s plans for a new British ISA.

“[This] will enhance investment in UK companies and increase the levels of retail investment,” said Chief Executive David Postings. “We welcome his focus on promoting ownership of UK stocks and helping more people save for the long term.”

The Investment Association added that the government’s “objectives to improve the quality of DC pensions and to boost the flow of capital to British businesses, whether publicly listed or privately owned” will put investment “back at the heart of the agenda”.

“Risk capital is the lifeblood of economic growth, and attracting a new wave of both domestic and international investors will help reinvigorate the UK investment environment and provide investment to innovative, high-growth companies,” said Chief Executive Chris Cummings.

Conclusion

With the memory of the 2022 Mini-Budget and its aftermath still fresh in the memory, it was perhaps not a surprise that the Chancellor opted for a “safety first” approach.

But with a general election just around the corner, many observers might reasonably have expected more crowd-pleasers, or for the big announcements to be unveiled with a flourish at the despatch box, rather than in the newspapers.

Does this point to a late election and one more fiscal event before voters go to the polls?

Or is the government hoping this more tentative approach reestablishes its credentials as the party of fiscal and economic competence, with a view to calling an election for the spring?

Only the Prime Minister and his team can possibly answer this question at the moment.

But whatever happens, you can be confident that we will be at your side throughout, helping you work towards your financial goals.

Jeremy Hunt, the Chancellor of the Exchequer, has delivered his Spring Budget, and we wanted to keep you informed about what has just been announced.

We’ll provide more detailed insight over the coming days, but for now, here are the main headlines.

Taxes

● Employee National Insurance to be cut from 10% to 8% from April.

● Self-Employed National Insurance to be cut from 8% to 6% from April.

● Non-dom tax regime to be scrapped and reformed, with new rules being introduced in April 2025. Under the new system, new UK arrivals will not have to pay any tax on foreign income and gains for the first four years of UK residency.

● Higher rate of Capital Gains Tax on property to be cut from 28% to 24%.

● Tax breaks which make it more profitable for second home owners to let properties out to holidaymakers rather than long-term tenants to be scrapped.

● Stamp duty relief for people buying multiple properties in one transaction to be scrapped.

● Air passenger duty for business class flights to go up.

● High income child benefit charge threshold to be increased from £50,000 to £60,000.

Pensions and savings

● A £5,000 “British ISA” tax allowance to be introduced, enabling the public to invest in UK-listed businesses.

● New British Savings Bonds offering savers a guaranteed rate for 3 years.

● Commitment to exploring a lifetime provider model for Defined Contribution (DC) pension schemes in the long-term.

● Pensions triple lock to be maintained.

Living costs

● Fuel duty frozen for another year.

● Alcohol duty freeze extended until February 2025.

● Excise duty on vaping products from October 2026.

● A one-off increase in tobacco duty to maintain the “financial incentive” to pick vaping over smoking.

● £90 fee to obtain a debt relief order abolished.

Businesses

● Amount businesses can earn before registering to pay VAT to be raised from £85,000 to £90,000.

● Full expensing tax break for businesses to be extended to leased assets when economic conditions allow.

● Windfall tax on the profits of energy firms extended until 2029.

Economy

● The OBR expects inflation to fall below the Bank of England’s 2% target in “just a few months time”.

● UK economy predicted to grow by 0.8% in 2024 and 1.9% in 2025. This will be followed by growth of 2% in 2026, 1.8% in 2027 and 1.7% in 2028.

Over the coming days, we’ll be taking a close look at what the Chancellor has announced and what it means for you.

We’ll share our conclusions with you in a detailed report, so keep an eye on your inbox.