As a platform, we take great pride in all that we've achieved since opening our doors for business nearly six years ago. We’ve
Budget review: Savings, rabbits and headwinds
We know by now to expect the unexpected from George Osborne at the Budget. Of course, many of the rumblings beforehand came to pass. As was predicted, the raid – or ‘reform’, the euphemism preferred by some - on pensions was put on the back burner. Fuel and beer duty were left alone too. GDP forecasts were lowered. All secondary state schools are to become academies. And the brunt of the £3.5bn in proposed cuts would fall on the public sector and local authorities.
Yet, true to form, the Chancellor pulled some rabbits from his red box too, with some assuaging sweeteners to headline an ostensibly gloomy speech. Here are the five things from Budget 2016 which will be the talk of the town over the next few days:
New ISA allowance
The individual ISA allowance’s steady rise since 2010 had been halted by a freeze of £15,240 for the 2016-17 financial year. However, Osborne confirmed that this figure will rise to a staggering £20,000 from the start of the 2017-18 tax year. This is a tremendous boost for savers and investors alike; not least those looking to subscribe to an Innovative Finance ISA in the future. Not only will this increase in the allowance give you the chance to shield more of your money from tax, but also to diversify a greater portion of your portfolio across the different ISA categories.
This one caught even the experts off guard. Osborne announced a new Lifetime ISA, which will be introduced from April 2017 for those between the ages of 18 and 40. And for every £4,000 saved within this ISA each year, Government will top you up with £1,000 (bonus valid until you turn 50). There is no maximum monthly contribution, and the entire annual ISA allowance of £20,000 can be allocated to it. You can then withdraw it all tax free after your 60th birthday; or beforehand if it is to purchase a first home (£450,000 or less), or if you are terminally ill.
However, it has already emerged that early withdrawal for any other reason will result in a loss of the Government bonus, interest on the bonus, and being charged a 5% penalty, so tread carefully here.
We already knew that the current personal allowance of £10,600 would be increasing to £11,000 for the next tax year, and the Chancellor trumpeted more good news by raising the allowance to £11,500 from April 2017 (and £12,500 by the end of the parliament). How it will affect plans to cut the deficit, only he will know. But for consumers, it’s certainly something to be pretty pleased about.
Threshold for higher rate of tax
The question regarding the increase in the threshold of higher-rate tax was less an ‘if’ than it was a ‘by how much’ going into the Budget speech. As it turned out, Osborne went for a fairly moderate step up to £45,000 from April 2017, with the current threshold of £42,385 already set to go up to £43,000 in three weeks. Nevertheless, it will be a boost for numerous members of the middle class.
Arguably the most controversial announcement of all, and one that played into the hands of Jeremy Corbyn and his rebuttal, was Osborne’s promise to lower corporation tax to 17% by 2020. In addition, cutting the headline rate for capital gains tax from 28% to 20% could have political implications in light of the hot subjects of inequality and tax avoidance.
However, the decision to lift small business rate relief from £6,000 to £15,000 should be applauded, and will surely enhance competition across many sectors for years to come.
Of course, the other big headline-grabber was that of a sugar tax on soft drinks. It doesn’t have a great deal to do with peer-to-peer lending, but certainly we as a platform struggle to see how anyone could poke a hole in this proposal, even if it does pass on a small cost to the consumer when it comes into place in two years’ time.
Overall, Osborne can probably reflect on a 62-minute job well done, and a delivery which ticked a lot of boxes. But the proof, as ever, will be in the pudding. Debt to GDP has been revised up to 82.6% for the next tax year, growth is expected to drop to 2% for 2016, the borrowing forecast has been scaled up to £55.5 billion (from £49.9bn) for 2016-17, and the Office for Budget Responsibility has stated that the economy is fundamentally less productive than previously predicted.
All this in the face of storm clouds like Brexit and an unstable global economy. Our economic future is far from being certain, and, needless to say, the Chancellor’s target of a £10bn surplus by 2020 looks a long, long way off from here. Let’s just hope that we’ll look back on Budget 2016 one day as a step in the right direction.
- Budget 2016: A big test for Osborne
- The EU referendum debate and us
- UK Budget deficit: Why all the fuss?
Get email updates for future blogs:
Our website offers information about saving, investing, tax and other financial matters, but not personal advice. If you're not sure whether peer-to-peer lending is right for you, please seek independent financial advice, and if you decide to invest with Lending Works, please read our Key Lender Information PDF first.
Since opening our doors back in 2014, we’ve always prided ourselves on living and breathing two key principles at Lending Works: innovation, and putting the customer first in everything we do.
With the retail sector enduring its fair share of challenges, companies are looking at new ways to attract customers, and drive conversion. In an overcrowded, dog-eat-dog marketplace, with behemoths such as Amazon flexing their muscle, it’s easier said than done.
On 4 June 2019, the Financial Conduct Authority (FCA) released its new regulatory framework for peer-to-peer lending (P2P); a Policy Statement known as PS19/14. As you might imagine, it's a document which, following a three-month consultation, is a hefty read of no fewer than 102 pages.
In a difficult climate, customer acquisition and lead generation present stern challenges for UK retailers, and a great deal of marketing spend invariably gets directed towards getting feet through the door.
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.
Last week we took stock of the labour market, with the latest Office for National Statistics (ONS) data showing that the tide may be beginning to turn on Britain's so-called 'jobs miracle'. Unemployment ticked up to 3.9 per cent for June to August (an increase of 0.1 per cent), with the number of people in work falling by 56,000.
Whenever discussion turns to Britain’s misfiring property market, the words ‘stamp duty’ are seldom far away. Indeed, over the past two decades, it’s been something of a political football – one which has had a profound impact on both housing transactions, and the coffers at the Treasury.
In recent months, it’s been interesting to observe the reception to Greta Thunberg, the 16-year old climate change activist who has been afforded some high-profile forums. The impassioned viewpoints she has shared have earned her legions of fans, albeit no shortage of detractors too. In particular, a speech at the United Nations climate change summit stirred fractious debate.