Autumn Statement 2016 – How will Brexit affect the nations finances?
We need clarity and certainty says Keith Senior as he looks ahead to Philip Hammond’s first autumn statement. 2016 has been a monumental year for global politics and that has left some feeling unsure about how best to plan for their long-term financial security.
On November 23 we will have some indication of how the Government believes Brexit will affect the nation’s finances. Mr Senior, a director here at Jacobs Allen Chartered Accountants & Chartered Tax Advisors, revealed there have already been clues as to what is to come. “At the Conservative party conference there were comments that indicated there could be some additional changes to the pension tax relief. They are looking at how the Government can rebalance the incentives.”
He is not convinced with this is the answer and said: “We need to take a broader look at what is happening with pensions. For people to make long term plans for their retirement there needs to be a long term planning arrangement, the Government can’t keep changing it but that is what happens. Over the last couple of years the tax relief on pension savings has changed immensely. It is discouraging some people from saving enough for retirement but because the Government has so much unfunded debt to cover future state pension payments, they are relying on people to save and finance themselves in retirement. The chancellor needs to stop tinkering with it and stop reducing the incentives to save in this way.”
He continues: “Those with lower incomes have less cash to save and are perhaps most in need of government incentives to do so. Maybe it’s time for the Chancellor to give more radical thought to offering more attractive savings opportunities for people in that category.”
In recent years, the instability in pensions has led to some considering alternative options for saving for the future but now those are less lucrative than they once were. “Some may have looked at property investment,” said Mr Senior. “However, there are tax disincentives in property investment as well. From April 2017, you can claim less tax relief on the interest costs and if you are thinking of investing now you may find property doesn’t give you a decent return.”
Reiterating his call for longer term planning, Mr Senior added that the autumn statement has now evolved into a mini budget and that this process needs to be addressed. “The autumn statement is now much more than a spending review, effectively we are seeing budget changes twice a year and that makes it difficult to make decisions that have a long term effect. Post Brexit, people are looking for more certainty so we need to move towards having an autumn statement that clarifies Government thinking but leaves changes for the annual Spring Budget.” He concluded: “It will certainly be interesting this time around.”
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