Author: richard

Your business doesn’t stand still and many changes will take place around you every single day.

Perhaps there are new rules and regulations being introduced that directly affect your business.

Or maybe there are shifts in the wider marketplace and economic landscape, which in turn change the needs, requirements and demands of your customers.

There may be internal changes happening too, such as a merger or takeover, key members of your team leaving or joining, or the launch of a new product or service that takes your company into new territory.

You’re likely to already have a business continuity plan in place, so you’re prepared if you’re hit with unexpected disruption or disaster, such as a fire on your premises,

But when was the last time you looked at it?

The last thing you want is to discover that when you actually need to put it into practice, it’s out of date and useless in your current situation.

So as your business develops and the landscape around you evolves, your business continuity plan needs to be updated accordingly, so you can be sure it’s fit for purpose should it ever be required.

Schedule times throughout the year, perhaps every three to six months, where you can ask yourself key questions and make changes to your business continuity plan if necessary.

For instance:

Does your plan name the right people, and take into account recent departures and hires?
Does each named person have clearly defined roles and responsibilities – and are they the best people for these particular jobs?
Has each named person been given relevant training? If so, was it a long time ago or in the last year?
Is your contact list for staff, clients and suppliers up to date?
Do your current tech recovery needs match what’s laid out in your plan?
Once your business continuity plan has been updated, you can then schedule a time to test it, so you can see how it works in practice. This gives you the opportunity to identify strengths and weaknesses, and make further refinements to your plan if they’re needed.

It’s easy to sit back and think you’re ready for anything once you have drawn up a business continuity plan.

But it’s wrong to view it as something that’s set in stone.

Instead, it should be treated as a live document that evolves in line with changing business needs, customer demands and market conditions.

By reviewing it regularly and making sure it reflects your current needs and circumstances, you can be confident it will work for you should it ever need to be implemented, and that you’re in a strong position to keep trading even during a period of intense disruption.

It’s easy to rack up all sorts of debts throughout life, from credit card balances and outstanding bills to personal and business loans.

While many will be manageable and barely register on your radar, they can collectively add up to quite a significant burden, and become a problem that slows down your progress to achieving true financial freedom.

So what practical steps can you take to reduce the burden of debt?

Assess your debt situation
Start by writing a list of all outstanding debts, how much you owe, the minimum monthly payments and the interest rates attached to each one.

If you’re able to take a look at the big picture, you’ll have more clarity over what needs to be done, the scale of the problem and how quickly you need to pay everything off.

Prioritise high-interest debts
High-interest debts will prove more costly over time, so it’s well worth paying these off first. Not only does this help you avoid huge interest accumulation, it also wipes out the most significant debts first and means you can focus your efforts elsewhere.

Create a realistic budget
You can only put together a debt repayment strategy that works if you have a clear idea of how much money you’ve got coming in and what you’re paying out on various day-to-day expenses.

Once you understand your starting position, you’ll be able to allocate a portion of your budget specifically for paying down debts, without compromising on other aspects of your life.

Speak with creditors
If you’re struggling to repay any particular debts, it could be well worth reaching out to creditors directly and negotiating with them. Letting them know you’re finding it hard to repay the money is far preferable to ignoring the issue and allowing it to get worse.

Simply being proactive and saying something can also assure creditors you’re acting in good faith and encourage them to offer more flexible, manageable payment terms.

Track your progress to stay motivated
Reducing your debt burden takes time, so it can be easy to lose motivation if you can’t see any measurable results.

It’s therefore well worth tracking your progress and celebrating any wins, both large and small, that may occur along the way.

Not only does it help you keep an eye on the outcome you’re working for, but it can give you the extra nudge you need to stick to the plan and hold yourself accountable.

Reduce your outgoings
Examine your spending habits and regular expenses to see where any savings could be made. Even if you can only save a small amount of money, reinvesting it into repaying debts could make a big difference to you in the longer term.

Get professional advice
If you don’t know where to start or want to put together a more detailed debt repayment plan, it could be well worth speaking to a professional, regulated financial adviser.

Consulting with an expert in this field can give you the confidence and peace of mind you need – and you can be sure the advice you’re given reflects your wider financial circumstances and goals.

If you want to speak with a specialist about reducing your debt burden, please don’t hesitate to get in touch and we’ll be happy to speak with you.

The beginning of a new year is always a good time to take stock and think about what you want to get out of life.

With that in mind, it’s a perfect opportunity to look again at your financial goals, and get into good habits that help you work towards these outcomes.

So what realistic steps can you take to maximise your financial wellbeing and make sure you’re on course to achieve your long-term objectives?

Commit to regular financial check-ups
Your financial situation and wider circumstances will evolve over time, so make sure you assess your net worth, cash flow and overall financial stability every few months.

A professional, regulated financial adviser will be well-placed to help you review your financial health, and can help you revise your financial strategy in a way that aligns with your current situation, priorities and ambitions.

Refine your investment portfolio
Take a fresh look at your existing holdings and consider whether they align with your current goals and risk tolerance.

It may be that now is a good time to look at new opportunities or diversify into different asset classes, sectors and markets.

Assess your retirement plans
You want to do more in retirement than simply make ends meet, so assess your retirement plans to make sure you’re on course to live the kind of lifestyle you want in the future.

For example, could you afford to pay a bit more into your pension scheme? Are you taking full advantage of the tax benefits that come with pension saving?

Taking the right steps to maximise your pension saving now could pay off handsomely in later life, as you’ll benefit from greater compound growth.

Again, a financial planner will be able to help you and suggest strategies that could set you up for a happy, fulfilling and financially secure retirement.

Review outstanding debts
Take a look at any existing debts so you can manage them in the most efficient way possible. For instance, you could prioritise paying down high-interest debts, so you ultimately end up paying less in the long run.

At the same time, you could try to prevent getting into unnecessary debt where possible, perhaps by committing to using your credit card more responsibly.

Review and update your estate plan
As your financial situation and overall circumstances change over time, it’s important to update your estate plan accordingly, so it reflects your current situation, assets and wishes for the future.

Don’t overlook your mental health
Money is one of the biggest causes of stress and anxiety, so getting on top of your finances is one of the best ways to protect your mental health.

If you know that your financial strategy accurately reflects your current circumstances and that you’re on course to achieve your financial goals, you’ll be better able to focus on what makes you happy and enjoy your life.

Our financial planners are here to help you get into good habits and advise you on how you can maximise your wealth in 2024.

Please don’t hesitate to get in touch with our friendly team of specialists and we’ll be happy to speak with you.

Financial difficulties are one of the biggest causes of poor mental health in the UK.

In fact, figures from the Money and Mental Health Policy Institute show that nearly three-quarters of Brits have felt anxious in the last two weeks, with many citing money issues as the cause of their anxiety.

But a problem shared is a problem halved, so if you’re struggling under the weight of financial burdens, it’s well worth seeking professional advice.

An expert financial planner can do much more than advise you on balancing budgets and investing wisely.

They can also give you a much-needed sense of security and reassurance, so you can live your life on your terms and take control of your future.

How can a financial planner help you
Making the complex simple

Countless elements of financial planning, from setting household budgets to building savings strategies and repaying debts, can be hugely overwhelming.

After all, the terminology and technicalities can be hard to get your head around, and of course, the cost of getting it wrong puts you under added pressure.

But a financial planner will have the expertise and knowledge that you may lack, and be able to advise you from a much more informed perspective.

That can massively relieve the burden you’re experiencing, both now and in the longer term.

Giving you confidence

If you have both a better understanding of your financial situation and an expert helping you put together a plan for the future, you’ll gain a new sense of confidence over your affairs.

As a result, you can feel in control of your own destiny and empowered to make decisions.

Certainty for the future

Financial anxiety often stems from not knowing whether we’ll be able to make ends meet in later life.

Working with a financial planner helps you address this problem, as they can help you build a strategy that prepares you for retirement, makes sure you’re ready for emergencies, and puts you on course to achieve your long-term goals.

An objective viewpoint

Emotions can run high when you’re making financial decisions, particularly if your dreams and ambitions are at stake.

This can often mean you’re not in the best place mentally to make big financial decisions, and you could be swayed by your feelings into making unwise choices.

However, a financial planner doesn’t have the same emotional investment and can look at your situation in an impartial, objective way.

Knowing you have that sense of clarity available can offer valuable reassurance at a time when you’re making decisions that define your future.

If you have any questions about getting your finances in order, please get in touch with our friendly team of specialists.

You’ll find that having access to the professional advice you want and need will make a big difference to every aspect of your life.

Any business owner will know that they can face sudden and unexpected challenges, and be forced to grapple with factors that are well beyond their control.

Perhaps your premises are damaged in a fire or through crime, or maybe there’s a wider slump in the economy or your industry that hits trading.

As a business owner, it’s your responsibility to be ready for the unexpected, so you can withstand any disruption and come back in a strong position.

You can do that by creating a financial emergency plan. Here’s how…

Look at your current financial situation
You can start building your financial emergency plan by gathering relevant documents such as balance sheets, cash flow reports and income statements.

You should also take a look at any outstanding invoices you may have, your existing debt obligations and any other areas where you could be financially vulnerable.

Identify potential risks
Think about what factors could possibly derail the smooth running of your business, both internal and external.

Internal risks could include losing key clients and cash flow problems, for example, while external risks may include economic downturns and natural disasters.

Once you’ve identified these potential issues, you can draw up strategies to mitigate each one.

Create an emergency fund
It’s well worth having a separate pot of money that can serve as a safety net during difficult times, so you can continue meeting necessary expenses from energy bills to staff salaries.

This should be easy to access whenever it’s needed, and ideally be enough to cover around three to six months’ worth of operating expenses.

Make sure you’re properly insured
Insurance is a lifeline in the event of a disaster, so make sure key areas of your business are properly covered and that each policy is suitable for your needs.

Your insurance should be regularly reviewed, as you can never know when you need to turn to your insurance provider, and you don’t want to find yourself without adequate protection when you need it most.

Draw up a crisis communication plan
Communication is key during a crisis, so it’s really important that key stakeholders across the business know exactly how to stay in touch with each other in tough times.

This includes everyone from members of your team to third parties such as customers and suppliers, so you can manage expectations and maintain important relationships at the same time.

Don’t put all your eggs in one basket
Many businesses make the mistake of relying on just one revenue source, so it’s well worth diversifying revenue streams where possible.

For example, you could actively seek to widen your target audience or roll out new products or services.

This could ensure your business is far less exposed to factors beyond your control, such as economic downturns, market fluctuations and changes in customer behaviour.

Get professional advice
You don’t have to create a financial emergency plan by yourself, as there are plenty of professionals who are there to provide expert guidance and support.

A financial planner, for example, can work with you to devise a realistic strategy that reflects your business’s current needs and circumstances.

With an expert at your side, you can make sure your business is resilient, financially sound and able to weather any storms you may face.

If you have any questions about drawing up a financial emergency plan to ensure your business is prepared for all eventualities, please don’t hesitate to get in touch, and we’ll be happy to speak with you.

What do you do with your monthly earnings when they land?

Do you leave all the money sitting in your current account?

Or do you invest some elsewhere, so you can make your money work hard for you and maximise your returns?

Well, a new survey by the Building Societies Association (BSA) reveals that many of us are, worryingly, doing the former rather than the latter.

According to the data, 34 per cent of savers in the UK don’t ever compare the rate on their savings accounts to other alternatives.

Figures also showed that 30 per cent don’t even check what their rates are with their own bank or building society.

Yet 34 per cent of people are storing most of their savings in a current account.

And since these offer little interest at best, they could potentially be missing out on thousands of pounds in what’s essentially free money.

So why are so many people letting this happen?

Well, many of us simply don’t have a disciplined approach to saving.

For example, 33 per cent of those polled said they just put money into savings when they can.

Meanwhile, 34 per cent said they only save whatever they can afford to put aside at the end of the month.

It’s clear that many people need to be taking a more strategic approach to saving if they’re to truly benefit from it further down the line.

By putting some thought and planning into it, you’ll be in a position to not only benefit from more favourable interest rates, but also increase the size of your savings pot.

Of course, you’re a busy person, and we understand that, but making a point of putting a set amount into a high-interest savings account doesn’t take much time and effort.

It’s simply a case of getting into the habit of saving, and having an idea of what you’re saving up for, such as a dream holiday, private school fees or money for a rainy day.

A professional planner can work with you to build a savings strategy, so you can be confident you’re on course to achieve your long-term goals, rather than just hoping for the best.

If you have any questions about planning for the future and maximising your income, please don’t hesitate to get in touch with us, and we’ll be happy to answer any questions you may have.

Introduction

Jeremy Hunt has delivered his Autumn Statement, his third fiscal event as Chancellor of the Exchequer.

But as the Conservatives lag behind in the polls, growth remains sluggish and the general election looms ever closer, he has been under huge pressure to unveil a game-changing set of policies that reset the narrative, placate restless MPs and appeal to floating voters.
The political background

At the beginning of the year, Prime Minister Rishi Sunak unveiled his five priorities: Halving inflation, growing the economy, reducing national debt, cutting NHS waiting lists and stopping migrants from crossing the English channel on dinghies.

However, the Prime Minister has failed to curb Labour’s consistent lead in the polls, and many political watchers are predicting that the current opposition will form the next government following the general election.

This was particularly evident during the recent party conferences, as figures from the Financial Times showed that 43 business groups purchased exhibition space at Labour’s annual conference in Liverpool – up from 16 last year. By contrast, just 28 business groups exhibited at the Conservative conference in Manchester.

A similar pattern was seen among charities and non-profit organisations, as the number exhibiting at the Labour conference more than doubled from 40 to 87 this year, while just 30 bought stands at the Conservative conference.

This points to a clear expectation among business and lobby groups that it could be Shadow Chancellor Rachel Reeves delivering the Autumn Statement in a year’s time.

Against this backdrop, the government has sought to regain control of the agenda, most notably when Rishi Sunak announced delays and exemptions to several key green policies.

This was followed by a pledge to end the “war on motorists”, after concerns over London’s Ultra Low Emission Zone were cited as a factor behind the government’s narrow victory in the Uxbridge by-election.

Mr Sunak also sought to disassociate himself from his predecessors, using his speech at the Conservative conference to claim that politics has failed in the last 30 years and that he is the candidate of change. But curiously, he brought former Prime Minister David (now Lord) Cameron into his cabinet as Foreign Secretary just six weeks later.

Given that his conference speech failed to trigger a bounce in the polls, this has been interpreted by some as an attempt to reset his government once again and boost his appeal to the centre ground ahead of the general election.
The economic background

Inflation was in double digits at the beginning of the year, but has gradually fallen over the last few months. In fact, the latest data from the Office for National Statistics (ONS) shows that overall UK consumer price inflation fell from 6.7% in September to 4.6% in October – the lowest rate in two years.

However, it must be said that inflation remains well above the Bank of England’s target of 2%, while successive interest rate hikes are also putting pressure on both consumers and businesses.

Interest rates are currently at a 15-year high of 5.25%, and this has contributed to anaemic economic growth in 2023. According to official data, gross domestic product flatlined between July and September, following an increase of just 0.2% in the previous quarter.

The government has sought to talk up the positive impact of falling inflation on people’s finances, but it is clear that there is still some way to go to help people feel better off.

This perhaps explains why, in the run-up to the Autumn Statement, Mr Hunt ruled out tax cuts that fuel inflation, yet insisted that “everything is on the table”, which raised speculation that National Insurance and Inheritance Tax cuts were likely.

But as we have seen in previous Budgets, Chancellors often find some money in their back pocket to guarantee positive headlines the next day, even in dire economic circumstances.

Clearly, there was lots of 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 Autumn Statement by insisting that the government’s plan is working, as the economy has grown and avoided slipping into recession.

The Chancellor’s statement was accompanied by forecasts from the Office for Budget Responsibility (OBR), which predicts that the economy will grow by 0.6% in 2023. This is higher than its earlier estimate of a 0.2% contraction.

Mr Hunt also confirmed that the OBR is predicting growth of 0.7% in 2024 and 1.4% in 2025. However, Mr Hunt neglected to point out that these estimates are down on its previous forecasts of 1.8% and 2.5% respectively.

Inflation, meanwhile, is set to fall to 2.8% by the end of 2024, and reach the Bank of England’s target of 2% in 2025.
Personal taxation and allowances

What Employee National Insurance to be cut from 12% to 10%
When January 6th 2024
Comment Whereas changes to the tax regime are usually brought in at the start of the new tax year in April, the government is introducing urgent legislation so a cut in Employee National Insurance can be brought in from January.

The government believes this will benefit around 27m people and enable someone on the average salary of £35,400 to receive a tax cut of more than £450 in 2024-25.

The annual cost savings for someone employed with an annual salary of £20,000 will be £148.60, £548.60 for someone on £40,000 and £754 for someone on £60,000.

The annual cost savings for someone self-employed with earnings of £20,000 will be £253.70, £453.70 for someone on £40,000 and £556.40 for someone on £60,000.

What Class 2 National Insurance charge for self-employed people earning more than £12,570 to be abolished
When April 6th 2024
Comment Self-employed people earning more than £12,570 must currently pay a flat rate compulsory charge of £3.45 a week, which means they’re entitled to a state pension.

Mr Hunt described Class 2 National Insurance as a tax that “most people haven’t heard of”, but said “it is a big deal for those who have to pay it”. The Treasury, meanwhile, has called it “outdated and needlessly complicated”.

The Chancellor has therefore confirmed that “in recognition of the contribution made by self-employed people”, the charge is being abolished completely.

The government believes scrapping the charge will save the average self-employed person £192 a year.

What Main rate of Class 4 self-employed National Insurance Contributions to be cut from 9% to 8%
When April 6th 2024
Comment Self-employed people also pay Class 4 National Insurance at 9% on all earnings between £12,570 and £50,270. This will be cut to 8% from the start of the next tax year.

What No change to Income or Inheritance Tax rates
When N/A
Comment There was considerable speculation that a headline grabbing cut in Inheritance Tax would be announced in the Autumn Statement.

However, IHT was not mentioned at all in Mr Hunt’s speech or in the accompanying Treasury documents, which means the standard IHT rate remains 40%.

Similarly, many analysts had predicted that a cut in Income Tax was likely, but again, this did not happen, and the personal allowance of £12,570 is currently frozen until April 2028.

Pensions and savings

What Government to open consultation on pension pot reforms
When No date confirmed
Comment Employees who are auto-enrolled on to a workplace pension must join a new scheme every time they move to a new job.

The government wants to simplify the process by giving savers a legal right to require a new employer to pay pension contributions into an existing scheme if they wish to do so.

However, employers should note that this would take some considerable time to implement due to the practical problems this presents.

What ‘Mansion House’ reforms
When N/A
Comment The government will make regulatory changes to consolidate pension contributions into larger funds with the ambition of an allocation of 10% into higher risk private equity funds.

The Chancellor also stated that these reforms could help to “unlock an extra £75bn of financing for high growth companies by 2030” and increase pension values. They are, however, higher cost and higher risk investments.

What Flat rate state pension will increase by 8.5%
When April 2024
Comment The new flat rate state pension will increase by 8.5% to £221.20 a week, up from £203.85 a week.

This is in line with average earnings growth of 8.5% and will be worth up to £900 more a year for people receiving the state pension.

The maximum paid to those who reached state pension age before April 6th 2016 is currently £156.20 a week, increasing to £169.50 a week.

What Pensions triple lock to be maintained
When April 2024
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%

What ISA limits frozen, but ISA rules to become more flexible
When April 2024
Comment The government is introducing a raft of changes to the ISA system to give more choice to savers.

The changes include:

● Allowing multiple subscriptions to ISAs of the same type every year
● Allowing partial transfers between providers
● Scrapping the need to reapply for an existing ISA every year
● Expanding the Innovative Finance ISA to include Long-Term Asset Funds
● Expanding the Innovative Finance ISA to include open-ended property funds with extended notice periods
● Allowing savers to invest in certain fractional shares within stocks & shares ISAs
● Digitising the ISA reporting system to make it more effective
● Changing the account opening age for any adult ISAs to 18

What The Lifetime Allowance remains on track to be abolished
When April 6th 2024
Comment The government will legislate in the Autumn Finance Bill 2023 to remove the Lifetime Allowance.

According to the Treasury, this will “clarify the taxation of lump sums and lump sum death benefits, and the application of protections, as well as the tax treatment for overseas pensions, transitional arrangements, and reporting requirements”.

Business investment and taxation

What Full expensing to be made permanent
When April 1st 2024
Comment During the Spring Budget this year, the government introduced full expensing for three years, 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 is now making this change permanent, which it believes represents “the biggest business tax cut in modern British history”.

What Action on SME late payments
When April 6th 2024
Comment Any company bidding for large government contracts will have to demonstrate they pay their own invoices within an average of 55 days.

It is hoped this will discourage large corporates from taking advantage of smaller businesses and put SMEs on a stronger financial footing.

What 75% discount on business rates for retail, hospitality and leisure firms extended
When April 6th 2024
Comment The business rates discount for retail, hospitality and leisure businesses is to be extended.

The 75% discount on business rates up to £110,000 was originally set to be in place for a year. However, the government will now continue the policy for another 12 months.

Mr Hunt described this as a “large tax cut” that recognises the role that pubs and high street shops play in communities across the country.

According to Treasury estimates, extending the business rates discount will save the average independent pub over £12,800 next year.

What Small business multiplier will be frozen for another year
When April 6th 2024
Comment Although the standard multiplier that applies to high-value properties will go up in line with inflation, the Chancellor is freezing the small business multiplier for another year.

What New rules to encourage local authorities to fast-track major business planning applications.
When From next year
Comment Mr Hunt said in his speech that the approval of infrastructure projects and business planning applications “takes too long”, and added that many businesses would be prepared to pay more if they knew their application would be approved faster.

He has therefore confirmed that he will work with the Communities Secretary to reform the system accordingly, where local authorities can recover the full costs of major business planning applications in return for being required to meet guaranteed faster timelines.

If this doesn’t happen, fees will be automatically refunded and the application will be processed free of charge.

What More investment in supercomputing innovation centres
When 2024/25 & 2025/26
Comment £500m is to be invested in supercomputing innovation centres, which the government says will help universities, scientists and start-ups access greater computing power and enable the UK to become an “AI powerhouse”.

What Reforms to R&D tax reliefs to simplify and improve the system
When April 1st 2024
Comment A new system that combines the existing R&D Expenditure Credit and SME schemes will be put in place.

Under the merged scheme, the rate at which loss-making companies are taxed will be reduced from 25% to 19%, while the intensity threshold in the R&D intensives scheme will fall from 40% to 30% for accounting periods starting on or after April 1st 2024.

A grace period for businesses that dip under the 30% threshold will be in place for a year.

The government hopes that these changes will simplify the system and offer greater support for companies that drive innovation.
Other announcements

What Up to £10,000 off electricity bills over 10 years for those living closest to new energy infrastructure
When No date confirmed
Comment The government is aiming to halve the time it takes to deliver new electricity networks from 14 to seven years on average.

It is hoped that offering energy bill discounts to people living close to infrastructure such as electricity pylons will help to speed up the rollout of new networks.

What Tobacco duty to increase
When Immediately
Comment Duty rates on all tobacco products will increase by RPI + 2%, and duty on hand-rolling tobacco will go up by RPI + 12%.

What Alcohol duty to be frozen
When Immediately
Comment The government will freeze alcohol duties until August 1st 2024.

What Extension to Enterprise Investment Scheme and Venture Capital Trust regimes
When N/A
Comment The existing regimes for these products will be extended to 2035.

Conclusion and reactions
Despite plenty of rumours, there were few changes to personal taxation. Cuts to National Insurance rates and the abolition of the flat rate for self-employed people were the only points of note. National Insurance isn’t paid by pensioners, so these cuts are aimed at workers rather than those who’ll benefit from the state pension triple lock.

Critics are citing ‘fiscal drag’ as evidence that tax burden remains high, wiping out any real terms savings made from the cut in National Insurance. This is because allowances and thresholds have been frozen for some years, and as a result, more people are being dragged into higher tax bands.

For example, the £12,570 personal allowance has been in place since 2021 and was frozen last year until 2028. It would be significantly higher if it had risen with inflation (by any measure), and the overall result is higher tax revenues for the Treasury.

As we will see below, anyone claiming the new flat rate state pension of £11,501 in the 24/25 tax year will only be £1,069 short of the tax exempt personal allowance limit, due to the boost of the triple lock versus a static personal allowance.

We will be as keen as ever to utilise your tax allowances over the coming months.

Although it wasn’t in the speech itself, there are some tweaks to ISA rules from April 6th 2024. The restriction on the number of ISAs you can pay into (of the same type) each year is going, as well as some wrinkles around transfer processes.

It is no bad thing that we have avoided the launch of yet another type of ISA, as too much confusion and choice in what was always designed to be a simple product can put off inexperienced investors. For those with Junior ISAs maturing, it is worth noting that the account opening age will be harmonised to 18 for all adult ISAs. At present, adult cash ISAs can be opened at 16 and adult stocks and shares ISAs at 18. Junior ISAs can be encashed from 18.

Although the final legislation wasn’t published alongside the Autumn Statement, there was a further update on the removal of the pensions Lifetime Allowance.

Removing the Lifetime Allowance makes pensions more tax-efficient for anyone with a pension worth £1,073,100 or more, and aims to stop people leaving the workforce because they might suffer pension tax charges. Two new allowances will be created under the plans:

1. An individual ‘Lump Sum Allowance’ set at £268,275 measuring the tax-free cash taken over someone’s lifetime. This is a quarter of the old lifetime allowance.
2. An individual ‘Lump Sum and Death Benefit Allowance’ of £1,073,100, which incorporates both the tax-free lump sums someone takes while alive, and any serious ill health lump sum and lump sums paid out when they die.

If anyone goes over these allowances, then the excess will be taxed in the same way as income. So it isn’t all tax-free, but you can take as much as you like without incurring the previous punitive lifetime allowance charge of either 25% (if taken as income) or 55% (if taken as a lump sum) on anything in excess of the Lifetime Allowance limit.

One concern we had was that HMRC were considering a new pensions death tax for anyone taking income withdrawals, and they have dropped this proposal. So if you die before the age of 75, your beneficiaries can inherit your defined contribution (DC) pension completely tax-free if it is under your Lifetime Allowance.

There are, however, some unanswered questions which will need to be addressed if the new legislation does not include simple transitional rules for those who have already taken some of their pension before April 6th 2024, but still have some untouched funds. This is now our focus once the new legislation emerges.

Employers and employees will have noticed a lot of talk around company pension schemes in this year’s Autumn Statement. Much of this relates to consolidating pension funds and opening them up to far higher levels of private equity exposure than they have previously exposed their funds to.

While there has been much talk about the greater returns this could offer, it should be remembered that these are also higher risk investments. The primary aim is to introduce greater flows of investment capital into UK businesses, especially those requiring start-up funding.

There is also to be a consultation on a pension ‘pot for life’. It seems like a sensible idea in principle. Allowing someone to take their pension pot with them when they change jobs and asking their new employer to pay into that sounds convenient.

However, it is fraught with a number of practical problems, not least gaining the cooperation of payroll providers who have found this extremely difficult in the past. Employers can expect this to take a considerable time to implement, even if it gets through the consultation process. It is attracting some scepticism as an idea at this early stage.

Finally, there was an extension of the Enterprise Investment Scheme and Venture Capital Trust regimes to 2035. Whilst the regimes were expected to be further extended when they ended in 2025, confirming it at this early stage is useful for anyone using these products.

Wider reaction to the speech
With fiscal events such as Budgets and Autumn Statements, it’s important to look beyond what was announced at the despatch box and also think about what the Chancellor didn’t say.

Many of those reacting to this year’s Autumn Statement have certainly been doing that, and drawing attention to OBR figures that weren’t highlighted in Mr Hunt’s speech.

For example, the body has said that while the tax changes in the Autumn Statement will reduce the tax burden by 0.7% of GDP, it will still rise in every year to a post-war high of 37.7% of GDP by 2028-29. That’s because the thresholds at which people start paying tax on their income, or move into a higher rate, have been frozen, all while inflation has gone up and wages are rising.

Furthermore, the OBR believes that living standards, as measured by real household disposable income per person, will be 3.5% lower in 2024-25 than their pre-pandemic level. This, it says, represents “the largest reduction in real living standards since Office for National Statistics records began in the 1950s”.

Unsurprisingly, Mr Hunt did not draw attention to these predictions, an omission that has been seized on by many of the newspapers. The i, for example, led with “Tax burden to hit record high despite 2p cut for millions”, while the Financial Times splash read “Tax burden surges despite Hunt cuts”.

Nevertheless, many newspapers were happy to talk up the National Insurance reduction, with the Times stating “Hunt eases tax burden” and The Sun leading with a picture of a champagne cork popping and the headline “New year’s wa-hey (but taxes will still be highest since WWII)”.

Shadow Chancellor Rachel Reeves also pointed towards the OBR’s forecasts in her response to Mr Hunt’s statement, in particular the fact it has downgraded its economic growth forecasts for 2024 and 2025.

Speaking in Parliament, she said growth has “hit a dead end”, and argued that nothing Mr Hunt announced would “remotely compensate” for the “damage that this government has done to our economy over 13 years”.

Indeed, she stressed that despite the National Insurance cuts, “taxes will be higher at the next election than they were at the last”, and said inflation is still double the Bank of England’s target rate of 2%.

Reeves added that the Conservatives recently voted against Labour’s amendment to the King’s Speech, which would have given the OBR the power to produce and publish forecasts for any government fiscal event, and therefore prevent a repeat of the “last year’s economic horror show” under Liz Truss and Kwasi Kwarteng. This, she said, clearly shows that Labour is “the party of economic and fiscal responsibility”.

Liberal Democrat leader Ed Davey, meanwhile, described the Autumn Statement as a “Hunt hoax”, as a £200bn stealth tax raid was “buried in the small print” because of allowances and thresholds being frozen. This, he said, would “drag millions into paying a higher rate in the coming years”, and added that people will be “furious” at being “forced to pay the price for Conservative chaos”.

The Institute for Fiscal Studies (IFS), meanwhile, has cautiously welcomed elements of the Autumn Statement, such as making full expensing permanent rather than temporary. However, the think tank pointed out that while a National Insurance cut would “put more money into workers’ pockets”, it “won’t be enough to prevent this from being the biggest tax-raising parliament in modern times”.

Paul Johnson, Director of the IFS, also noted that these tax cuts have been paid for “in effect, by letting fiscal drag become even more of a tax rise than previously expected and through a bigger squeeze on the real-terms value of public service budgets and an even bigger squeeze on public investment, which is frozen in cash terms”.

“There’s a material risk that those plans prove undeliverable and today’s tax cuts will not prove to be sustainable,” he added.

The Resolution Foundation was also critical, noting that Mr Hunt’s “well-targeted specifics” were “juxtaposed with far less well-designed big picture fiscal choices”.

Torsten Bell, Chief Executive of the Resolution Foundation, said: “Tax cutting rhetoric clashed with tax rising reality, and positive steps to encourage business investment combined with a growth sapping hit to public investment. Ultimately this reflects the pressures, not only of an upcoming election, but of governing a sicker, older, slower growing Britain, amidst an era of far higher interest rates.”

Mr Bell added that this is a “disaster for households whose wages are stuck in a totally unprecedented 20-year stagnation” and that this will be the first parliament in which household incomes will be lower at its end than at its beginning.

The Autumn Statement was much more warmly received by leading business groups, with the CBI stating that Mr Hunt was “right to prioritise ‘game-changing’ interventions that will fire the economy”. The Federation of Small Businesses, meanwhile, described the announcements on late payments, business rates and self-employed taxation as “very welcome” and said Mr Hunt deserves credit for “driving pro-small business change”.

UK Finance, the trade association for the UK banking and financial services sector, was also fairly positive, saying the Autumn Statement demonstrates a “continued commitment to growth”.

Chief Executive David Postings, said: “We welcome plans to introduce more flexibility and simplification of ISA rules and look forward to working with government on implementing changes to help more people save for the future.”

The Pensions Management Institute also welcomed many elements of the Autumn Statement, although President Sara Cook said the failure to abolish the “unpopular” Tapered Annual Allowance is a missed opportunity, as the tax revenues it generates “must now be so small that its retention seems hard to justify”.

The Investment Association added that the Autumn Statement “confirms the importance of investment in powering the UK economy and providing for the financial futures of UK households”.

Conclusion
Ultimately, Jeremy Hunt chose to avoid what he described as “crowd-pleasing” tax cuts such as reductions in Inheritance Tax or Income Tax. Instead, he argued that he went for tax cuts that would help businesses and stimulate economic growth.

However, the focus on the OBR figures, which give valuable context and an indication of the overall direction of travel, will be uncomfortable for the Chancellor, and is unlikely to ease as we move towards the general election.

Of course, we don’t yet know when the election will take place, and political observers are split on whether it will be in May or October next year. Either way, this means we’re likely to see a Spring Budget before voters go to the polls, which could bring with it the crowd-pleasers that Mr Hunt was reluctant to deploy this time round.

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

Autumn Statement 2023 – Snap Reaction

Jeremy Hunt, the Chancellor of the Exchequer, has delivered his Autumn Statement, 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 12% to 10% from January 6th 2024.

● Class 2 National Insurance charge for self-employed people earning more than £12,570 to be abolished from April 2024.

● Main rate of Class 4 self-employed National Insurance Contributions to be cut from 9% to 8% from April 2024.

● No change to Income or Inheritance Tax rates.

Pensions and savings

● Government to open consultation on pension pot reforms, so savers have a legal right to require a new employer to pay pension contributions into their existing pension. Employers should note that this would take some considerable time to implement due to the practical problems this presents.

● The flat rate state pension will increase by 8.5% from £203.85 to £221.20 a week from April 2024. The maximum paid to those who reached state pension age before April 6th 2016 is currently £156.20 a week, increasing to £169.50 a week.

● Pensions triple lock to be maintained.

● ISA limits frozen, but ISA rules to become more flexible. We will provide more detail on this in our full report.

● The Lifetime Allowance remains on track to be abolished in April 2024, via legislation in the Autumn Finance Bill 2023.

Living costs

● Up to £10,000 off electricity bills over 10 years for those living closest to new energy infrastructure.

● Duty rates on all tobacco products will increase by 2%, and duty on hand-rolling tobacco will go up by 12%.

● Alcohol duty to be frozen until August 2024.

Businesses

● Tax break allowing businesses to deduct the full cost of investing in machinery and equipment from their tax bill is now permanent.

● Tougher regulation on late payers to improve prompt payments to SMEs to be introduced.

● 75% discount on business rates for retail, hospitality and leisure firms extended for another year.

● New rules to encourage local authorities to fast-track major business planning applications.

● £500m to be invested in schemes to make the UK an “AI powerhouse”.

● Reforms to R&D tax reliefs to simplify and improve the system, which will combine the existing R&D Expenditure Credit and SME schemes.

Economy

● The OBR forecasts inflation will fall to 2.8% by the end of 2024, and reach the Bank of England’s 2% target in 2025.

● OBR predicts economic growth of 0.6% in 2023. This is higher than its earlier estimate of a 0.2% contraction.

● OBR has downgraded its growth forecasts for the next two years. The organisation expects growth of 0.7% in 2024, down from its earlier prediction of 1.8%. This will be followed by 1.4% growth in 2025, which is lower than its previous forecast of 2.5%.

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.

After many years of consistent house price inflation, the value of the average property in the UK has started to decline.

In fact, the Royal Institution of Chartered Surveyors has noted that house prices are now on a “downward trajectory at the national level”, and especially so in the West Midlands and south-east England.

Savills, meanwhile, has questioned whether recent data showing house price falls is telling an accurate story, as they don’t take into account soaring inflation over the last few years.

The organisation believes that if you adjust for inflation, average house prices are no higher than they were in late 2015, so if you bought your property around then, it’s likely you’ll have seen a real-terms loss in the value of your home.

Of course, this is bad news if you see your property largely as an investment and have an eye on collecting healthy returns when you sell up.

But interestingly, this drop in house prices isn’t causing any great anxiety among property owners who just want a place to call their own.

According to research by eXp UK, 83 per cent of homeowners are comfortable with cooling house prices, and only 27 per cent are concerned that a market slowdown could turn into a house price crash.

To answer the question of why they’re so relaxed about the situation, we have to look at why they bought a property in the first place.

The eXp UK survey found that 89 per cent of current homeowners believe it’s important to get their foot on the property ladder.

But when asked why, only 12 per cent said they bought a house largely as an investment so they could make a profit when they sell in the future.

By contrast, more than half – 51 per cent – said their main drive was simply to own a home of their own, without being hamstrung by rental market restrictions and having to deal with landlords.

So it seems that how you respond to news that house prices are coming down really is a matter of perspective.

For all the talk about how a housing market crash could represent a major financial hit to Britain’s homeowners, it appears as if the vast majority don’t perceive their house as a financial asset that’s there to generate returns.

If you ask most people, buying a house is about having a place to call their own, laying down roots, being part of a community and giving a sense of security and belonging to themselves and their families.

And if you have bought a property as an investment and are worried about its potential to generate a profit, it’s worth remembering that the value of any type of investment goes down as well as up in the short term.

Markets always bounce back in the longer term, so it’s important not to react rashly if there’s any decline or volatility.

It’s interesting to observe that even though most of the people polled by eXp UK weren’t overly concerned about the profitability of their home, the vast majority were still confident that they’d receive more money than they paid for it, whenever they decided to sell up.

So even if you’re confronted with alarmist headlines and scare stories about plummeting house prices day after day, there’s no need to panic and act impulsively.

If you have any questions about managing your long-term finances, please get in touch with our specialist advisers and we’ll be happy to speak with you.

Love it or loathe it, Christmas is fast approaching, and for many of us, it’ll be the most expensive time of the year.

From buying gifts for friends and loved ones and entertaining dozens of family members, the festive season can be extremely costly.

So how can you make sure your Christmas spending doesn’t tip you into the red and that you don’t end up spending more than you can afford?

Set a realistic budget
It’s important to start with a clear understanding of how much money you’ve got to spend without compromising on other expenses, such as your day-to-day living costs and putting money into savings and pensions.

Review your income, outgoings, savings and outstanding debts so you can get a clear picture of what you can afford to spend on your Christmas festivities.

You can then set a realistic budget, based on all your likely expenses, from food and drink to gifts and travel costs.

Prioritise your spending
Not all Christmas outgoings are equally important. For instance, while you might want to get presents for your other half, your children or your parents, it might be less of a priority to buy presents for work colleagues, or pay over the odds for expensive decorations.

So work out what you consider essential and allocate your budget accordingly, with smaller sums being spent on less important purchases.

Start shopping early
Christmas Day is set in stone, so there’s no reason to wait until December to start buying your Christmas presents.

You could take advantage of sales, discounts and the likelihood of there being more stock in the shops by purchasing early or even throughout the whole year.

Use cash or prepaid cards
Even if you’ve set a budget, the temptation to overspend might still be there, and with that comes the risk of getting into or exacerbating debts. In that case, it could be worth taking steps to ensure you never go above the limit you’ve set yourself, such as only using cash or a prepaid card, so you’re only dipping into a single pot of money with a clear upper limit.

Track your spending
Keep a close eye on your spending during the run-up to Christmas, perhaps by recording all your expenses in a dedicated budgeting app or spreadsheet.

This will help you stay within your budget and see where and when you might be overspending, in which case, you’ll have time to make adjustments to your plan where necessary.

Research the market
The first price you see for an item isn’t always the best, so make sure you shop around for the best deal before making a purchase.

Small savings here and there soon mount up, freeing up cash for other festive expenses, such as extra food for the big day or an additional stocking filler.

Make homemade gifts
Homemade gifts, such as custom photo albums, crafts or sweet treats, are a great way to ease the burden on your wallet at Christmas.

The fact that you’ve gone to the time and effort to make something special can also make a gift more meaningful to the recipient.

It’s important that Christmas outgoings don’t jeopardise or interfere with your other spending commitments beyond the festive season.

So it’s well worth planning in advance to make sure you aren’t putting your financial goals at risk by going overboard.

With just a little thought and effort, you can enjoy the best of both worlds – a happy Christmas and staying on course to achieve your longer-term objectives.