When it comes to investing, there are numerous questions that need to be asked, and lots of things which need to be properly understood before committing your hard-earned money
The Autumn Budget: A job well done?
In recent times, the contents of a Budget speech have seldom been a watertight secret. Indeed, certain proposals aren’t leaked to the media by accident – it’s often a deliberate feeler on the part of the Chancellor of the Exchequer to gauge public opinion, and allow the opportunity to amend or retract if there is backlash.
Yet it’s difficult to recall a build-up to a Budget where such a vast array of ostensibly nailed-on policies was as openly discussed as this one. So much so that there didn’t seem to be many rabbits left in the hat to pull by the time Philip Hammond addressed the Commons; nor much in the way of new ground to cover.
The question for a beleaguered Chancellor, and a Government grappling with a majority squandered in June, is whether the events at the despatch box on Wednesday were a success, and a basis upon which a corner can be turned. As we highlighted last week, pleasing everyone, or even an overwhelming majority, is pushing the realms of the impossible. But for the public as a whole, was there enough to take away from Wednesday to put a spring in their step?
The numbers game
Let’s get the negatives out the way first. Growth forecasts from the Office for Budget Responsibility make for disconcerting reading. For 2017, a cut to 1.5 per cent from the original forecast of 2 per cent in March. Additionally, all yearly forecasts until 2021 are down on those from eight months ago. Productivity figures (just 0.1 per cent since 2008) are even more dismal, with output-per-hour predictions having been downgraded 4.6 per cent by 2022. And despite borrowing coming in £8.4bn lower than expected, the budget deficit for 2017/18 is set to be higher than forecast, and nearly double the original figure for 2021/22. With a national debt fast approaching £2 trillion, one hopes that the need for fiscal discipline will be respected on all sides of the House.
Tech companies and SMEs are the winners
Now time to turn to cheerier news… has there ever been a Budget where tech has featured so prominently? Aside from driverless cars and robotics, Hammond unveiled the so-called £20bn 'action plan' geared towards innovative firms, putting a strong emphasis on the importance of Britain's digital sectors and start-ups to long-term national prosperity.
Among the numerous measures were new investment in the British Business Bank (£2.5bn), a boost to investment limits for the Enterprise Investment Scheme (to £2m) and an expansion of the National Productivity Investment Fund (up by £8bn). Investment, providing access to finance, and supporting up-and-coming enterprises will be essential to lifting productivity growth, and cementing Britain's place at the forefront of the tech revolution.
Well, not big tech companies...
The likes of Apple and Google may well have been less pleased, with it being revealed that there will be a new tax on sales generated in the UK by technology companies that will likely have a big impact on how large digital businesses are structured. The devil will inevitably be in the detail, but, with tech companies representing the future, the principle that they should be taxed appropriately is reasonable.
Housing in the spotlight
This most complex of issues unsurprisingly took centre stage, and we were pleased to see stamp duty axed for first-time buyers on homes under £300,000. Some have argued that stamp duty abolishment could have been extended further, while others suggest it will apply upward pressure on house prices. But this, coupled with a pledge to build 300,000 homes per year, should hopefully make a start at correcting a hugely imbalanced market.
Pensions - no harm, no foul
No news, quite simply, was good news here. There was much talk of a Robin Hood-esque raid on older citizens in a bid to improve inter-generational fairness, but the Chancellor wisely steered clear of reducing pension relief for workers approaching retirement. In fact, the only news of significance was that the lifetime allowance will increase to £1.03m from April 2018. While the gap of living standards between young and old needs to be addressed, the means of doing so should not be to make the one side poorer. Instead, proactive measures should be used to enrich millennials and Generation Y - not to mention encourage long-term retirement planning across the board too.
A boost for personal finance
Aside from pensions, there was further good news with regard to the income tax threshold, which is increasing (as planned) to £11,850 in 2018, while the rate at which the higher-rate of tax applies will rise to £46,350 - an increase of £1,350 in both cases. The minimum wage will also increase, while there was also no assault on insurance premium tax either. There had also been speculation that the annual ISA allowance could be reduced, but this remains untouched at £20,000.
Other points of interest
There was much else to digest, including some pleasing announcements regarding funding for science and maths education, while smaller businesses will have breathed a sigh of relief on two fronts - the VAT threshold remains unchanged at £85,000 for the next two years, while, from 2018, business rates increases will be sensibly pegged against the consumer price index, rather than the retail price index.
There were numerous other political footballs which came into the mix, such as Brexit and the NHS, and ultimately the noise of politics may well go on to cannibalise the long-term significance of Autumn Budget 2017. But, the disappointing macroeconomic figures and forecasts for the UK notwithstanding, the Chancellor must, at the very least, be given the dues that he exceeded expectations. And he quite possibly did a lot more than that too.
For all the resilience the UK economy has shown, there is no doubt that this year's ISA season is set against a backdrop of uncertainty. Whatever the pros and cons, Brexit, and a lack of clarity on what our future economic relationship with the EU will look like, has left us at a crossroads.
The Lifetime ISA (LISA), announced in 2016, would prove to be one of George Osborne’s last flagship gestures to UK savers and investors as Chancellor, eventually launching against a backdrop of anti-climax a year later in April 2017.
As the tax year end approaches, the financial services industry readies itself for a flurry of activity. That's in large part because, with just a couple of months to go, the so-called 'ISA season' is upon us.
Over the last decade, there can be little dispute that the reputation of mainstream banks – and particularly the so-called ‘Big Four’ (HSBC, Barclays, Lloyds and RBS) – is at its lowest ebb.
The peer-to-peer (P2P) lending industry is now regulated by the Financial Conduct Authority (FCA). The regulatory framework has been designed to protect customers and promote effective competition.
Loan underwriting is the process that we undertake to analyse all of the information provided by each loan applicant and their credit file to assess whether or not that applicant meets our minimum loan criteria. As part of that process all data is verified, analysed and summarised to paint a picture of each applicant.
When you earn interest from a regular bank savings account, for example, the bank automatically deducts basic rate tax (currently 20%) before paying your interest. With interest earned from peer-to-peer lending, tax is not deducted automatically so lenders will need to declare their income to HMRC.
As 2018 draws to a close, with our bellies full of Christmas turkey, it's only natural to look back on the past 12 months and reflect. No doubt, it's been a turbulent one economically and politically, and not everyone has had it all their own way.