Financial Advice

A lack of political certainty due to the very slender working majority.

Uncertainty after the General Election

 

August 2017


Far from delivering a greater working majority for the Conservatives, the general election has resulted in more uncertainty. Whilst the lack of political certainty due to the very slender working majority with the DUP, together with the government’s announcement on 13th July of a second Finance Bill later this autumn may not do much to improve business confidence; individuals and businesses may yet be able to breathe a sigh of relief that some of the punitive tax changes tabled may not end up being enacted. Any reforms with the potential of causing controversy may ultimately be put on the backburner nearer the time, for fear of endangering the government’s fragile position.

Most notably, the Triple-Lock to the state pension has been preserved despite the question marks surrounding the long-term viability of financing it, for fear of upsetting the ‘grey vote’. Many of the proposed changes from the budget did not get ratified in the original 2017 Finance Act due to the general election being called, and as such business owners, individuals, Financial Advisers and Accountants, to some extent are being left in the dark over some of the taxation changes that now may, or may not take place. Amongst these, was the cut to the Money Purchase Annual Allowance for pension contributions from £10,000 to £4,000 for those who had taken taxable income through the new pension freedoms of Flexi- Access and lump sums. The sensible approach for those affected may be to leave contributions at the lower limit, and wait to see what happens this autumn when the government attempts to pass the second Finance Bill of 2017.

Similarly, the cut in the dividend allowance from £5,000 to £2,000 is up in the air. If it is left alone it would be a great relief for ordinary shareholders and company owners alike. Pensioners and savers may be also able to take heart that the perennial political football of Private Pensions are unlikely to be tackled by sweeping reforms by a government devoting much of their time to the arduous Brexit negotiations. However, employers should pay some attention to the government’s review of Auto-Enrolment- there are changes being muted that may result in changes to contributions and some companies may have to increase the amount they put in employees’ pension pots. Planning when there is uncertainty can be tricky.

If you wish to discuss any of the above please feel free to contact the team at Woodward Markwell. Remember always seek good independent financial advice before making such important decisions.

Jake Blackmore DipPFS CeMAP