18 March 2015
Stephen Ford – Head of Investment Management at Brewin Dolphin said:
“We might have expected George Osborne to throw everything but the kitchen sink(s) at today. Instead, he provided us with a fully funded budget, and didn’t spend the money on cheap giveaways. How very grown up of him – but he’s kept plenty of wriggle room to offer some stunning manifesto pledges on IHT.
Cash ISAs were pretty pointless before, but now they are pointless and unworkable. You’d need to have cash savings of more than £100,000 at one per cent interest to need to shelter any of it from the taxman, while the plan to allow you to take money in and out in any tax year looks like an administrative nightmare. The Chancellor’s announcement on deeds of variation leaves us with uncertainty – but we’d assume that the trade-off will be the much-anticipated £1m IHT relief offer in the Tory manifesto
Moving on from the JISA and the NISA, the Help to Buy-SA joins the family of increasingly complex tax shelters. However, a £15,000 deposit (including £3000 Government bonus) won’t go far for first-time buyers in the South East, but be useful anywhere outside London on a property up to the £250,000 cap.”
Our plea to stop tinkering with pensions – please stop before everyone stops saving – was not heeded with another reduction in the lifetime allowance to £1m. After taking 25% tax free cash – this pot could only buy an indexed linked joint life pension of £26,000*”.
Simon Blowey – Divisional Director of Financial Planning at Brewin Dolphin said,
“Osborne today, whilst stating that Britain was on the rise, was hoping he would also be the comeback Chancellor. Whilst sounding a little ‘Bullseye’ at times (“£10 off a tank with the Tories”), his measured and funded display of giveaway restraint rather than “looking at what you could have won”, produced a few key headlines. The biggest that he didn’t blow any windfalls, but rather comfortable and statesman-like, preferred to “build an economy of savings, not debt” by lopping off some of the public deficit.
The expected loosening of IHT didn’t materialise, heading that useful tool of family planning – the Deed of Variation – unexpectedly back into legislative play. The trade-off for a tightening of legislation here will surely give way to a manifesto pledge to remove the effect of IHT upon the family home.
Further unwelcome tinkering of the pension Lifetime Allowance down to £1m in 2016/17 was thankfully offset with no changes (yet) to the level of tax relief nor limits, whilst contributing to pensions. ISA providers must be pulling their hair out at the thought of administering the new cash only Flexi-ISAs (FISAs) and Help to Buy ISAs (BISAs) with a 25% contribution from the government up to £15,000 for first time buyers.
As usual, high earners (£150K+) won’t benefit from the new personal savings allowance, but farmers will raise a glass tonight, allowing themselves to average out their income over 5 years.
Politically a clever pre-election Budget, focussing upon middle income earners, “working for themselves, not the tax man”. Come May 7th, the Chancellor might just feel like he has won Bully’s Special Prize.”
-ENDS-
*Source – Fidelity
For further information please call the Brewin Dolphin Press Office on 020 3201 3330
The value of investments can fall and you may get back less than you invested.
No investment is suitable in all cases and if you have any doubts as to an investment’s suitability then you should contact us.
Any tax allowances or thresholds mentioned are based on personal circumstances and current legislation which is subject to change.
The opinions expressed in this article are not necessarily the views held throughout Brewin Dolphin Ltd. No Director, representative or employee of Brewin Dolphin Ltd accepts liability for any direct or consequential loss arising from the use of this document or its contents.