You know you are dancing with the devil when the Irish grab their coats and leave the party before you do.
They may be famed for enjoying the craic more than most, but anyone who has taken a glance over the Irish Sea in recent months will see how the Emerald Isle has pulled in its horns dramatically through a series of emergency budgets.
These budgets have brought austerity to the country with the weight of a mediaeval portcullis and the festival of credit is well and truly over for the Irish who are now getting serious about paying their dues.
It is not only the Irish austerity that we should take note of, however, but also the fact that things can change a lot faster than most of us would believe, as shown by the measures introduced in these emergency budgets.
Each one increased income tax by 2% at all rates, and the most recent halved all benefit payments and reduced all civil-service salaries across the board.
This is why it is important for UK savers, investors and high earners to spread what little jam they are offered on their financial toast as soon as they can and certainly before the next elected government decides to change the rules that Chancellor Alistair Darling outlined in his final Budget before the public gets into the voting booth.
For investors and savers, the best piece of news was probably that annual Isa limits would not only be increased to £10,200, but that the limit will also be linked to inflation.
For those over 50, the new limit will take effect from October and for those under 50 they will have to wait until the following April.
I would recommend that those able to do so use up their limit as soon as they get it and before any changes are potentially made by whichever party comes to power following the election.
Once the polling is out of the way, political parties are going to be less populist and will be forced to at last address the financial quagmire we are sinking into.
Anyone who doubts the possibility of these limits changing and is not convinced by the Irish example, should remember that it only took three years for the pension legislation that allowed contributions of up to £245,000 per annum to, effectively, be revoked.
For those with any sort of asset base, the freeze on the £325,000 inheritance tax threshold will bring little comfort for either them or their heirs and the £1million limit proposed by the Conservative Party at least serves to draw a clear distinction between the two political combatants.
Equally, those at the top of the financial tree will be hit by the introduction of a new stamp duty bracket, applying a levy of 5% on the purchase of houses valued at £1million or more. This is expected to pay for the stamp duty break given to first-time buyers on properties up to £250,000, however, one wonders whether the higher limit will be repealed when the two-year holiday for first-time buyers is over.
For savers, investors and higher-net-worth individuals the unfortunate truth is that there was little to cheer in this Budget. Indeed with national insurance rises and fuel and alcohol duties increasing, everybody has been disappointed to some degree.
Once the voting is over, I think we will see forthcoming Budgets contain a lot more substance and will likely be a lot more forceful than that delivered by Mr Darling.
Article courtesy of The Press and Journal
Monday 29 March 2010
