Plus ça Change

Across the world election apathy fever is building!

In the US, if last night’s Presidential debate was an initial job interview I cannot imagine either candidate getting invited back for a second. In fact, I would have thought Joe Biden’s performance would have maybe justified a concerned call to his next of kin. As things stand the choice is between these two for leader of the world’s most powerful country but there is still just over four months to go and we may well see a change on the Democrat side if the whispers become louder.

In France they have the first of two votes this weekend with Le Pen’s National Rally party likely to become the largest in the French parliament and may even get an overall majority much to the Liberal establishment and BBC’s (are they one and the same?) disgust.

Finally, we have the UK election which is likely to result in a landslide victory for the Labour party. I would love to say this is because they have motivated us with grand plans to get the country out of its stupor, but I suspect it is more that they are not the Tories.

The expected political move to the right in France mirrors movement elsewhere in Europe which means the likely vote for Labour in the UK would make us the only country that appears to be moving to the left. I say appears as it is difficult to know if this will be the case or not.

Apart from putting VAT on school fees there are not many other policies disclosed which could not have come out of the mouth of recent Conservative Chancellors. In fact, in speeches to business Rachel Reeves has come across as more business friendly than a lot of Chancellors we have had recently.

Much has been said about taxes increasing but under a Conservative government the amount of tax raised is already at the highest rate as a percentage of GDP since the Second World War, so I am not sure how much more that can go up.

There are fears, which Labour have refuted, that changes will be made to Inheritance Tax (IHT). However, given the Nil Rate Band (the amount that is tax free on death) is still £325,000, as it has been for the last fifteen years, and the amount raised by IHT continues to rise each year and is forecast to continue to do so dramatically as the baby boomer generation dies off, I doubt they have much need to do so.

There may well be a change to Capital Gains Tax rates to equalise these with Income Tax which is something I have expected to happen for the last few years, but it would be difficult to bring this in midway through a tax year. Labour have already confirmed they will not bring back the Lifetime Allowance in pensions which is an about turn from their previous stance on the issue.

They have also stated that Corporation Tax will not be more than 25% for the entirety of the next parliament and much to my surprise they have said they support the additional ‘British ISA’ that was announced in March (but I will believe it when I see it).

So, what could they do? There have been rumblings about the amounts some investors have accumulated into ISAs which they state goes against the ‘spirit’ of why ISAs were introduced, so they may bring in some sort of cap as to how much you can save into an ISA, but goodness knows how this would be administered.

They may change some of the rules on pensions, the most glaring being the fact that on death before age 75 the fund is tax free in the hands of the beneficiaries whereas if you die after age 75 the beneficiary has to pay tax on withdrawals made from the fund, which is an anomaly and to be honest does not make sense.

However, these are purely guesswork and time will tell.

So unlike the situation in France, I do not expect anything radically different to what we have experienced since Tony Blair came to power in 1997 but time will tell.