I was wondering about delaying this month’s Informing You, but unlike our politicians I believe in sticking to deadlines. This was supposed to be the day we officially left the EU but instead we have MPs playing Brexit “Hokey Cokey” in Westminster with “shake-it-all-about” seeming to be winning just now.
What an ungodly mess. I suspect the whole world is laughing at us and no political party is coming out of this with any credit.
It is probably impossible to quantify the damage this uncertainty is doing to our economy. Would anyone in their right mind invest in the UK without knowing what our future position is going to be? I do not believe in the long term it will make much difference whether that is in or out of the EU, but you can understand why you would prefer to know.
However, from a UK citizen’s point of view this huge political uncertainty means the possibility of a general election is far higher than appeared likely at the start of the year. Given how the voting public feels about politics right now who would predict the outcome if such an election happened? It would not be certain that a Conservative government would be returned and even if it was there is no guarantee it would act as the current administration has been doing.
Therefore from a tax and investment perspective we could see changes brought in midway through a tax year. Although it is unlikely Income Tax rates could be changed immediately, there are other changes that could take effect.
It would be possible to reduce or remove the amount that could be saved into an ISA. This means if you tend to leave it until the last minute before putting your ISA in place doing so sooner than usual may be prudent. Certainly if we do end up having a general election I think it would be prudent to put them in place before then.
The same is true for pension contributions. There has been much chatter about the current government doing away with higher rate tax relief on pension contributions, therefore, this could well be in the plans of any new administration. As a result, if you are in this position and are able to do so, putting as much as you can into a pension sometime in the coming months might be sensible.
Capital Gains Tax is another target an incoming administration may be keen to hit. It would be no surprise to see the rates increasing to the same as Income Tax, which in effect is a doubling of the rates at the current time. I appreciate this will not apply to a lot of you, but if you are fortunate enough to be selling a business and qualify for Entrepreneur’s Relief (which means you would only pay 10% on the first £10m) getting that deal completed as soon as possible might result in a decent tax saving.
Nobody knows how the political landscape will look in the next six months, or six days, but I can see no downside to doing any of the above if you are able to do so. Think of it as a New (Tax) Year Resolution.
Perhaps the Chancellor knew this carnage was coming as he did not increase the duty on alcohol in his budget last November. For that at least we should all be grateful….