Call us: 01202 332333
Email us: info@heritageinvestments.co.uk

Heritage News

Election update

The Tories wrote their manifesto a few weeks ago with hope and probable expectation of an increased majority. The reality is very different; we can therefore expect some of the more controversial elements of their manifesto to perhaps be tempered somewhat.

 

The markets

Sterling and the stock market remained relatively stable in the wake of the result; the FTSE 100 even rose. However, if sterling weakens over the coming weeks, it could make it less likely that interest rates will be increased. That’s good news for borrowers and homeowners, but bad news for savers.

The key point to remember is that you should never change your long-term financial plans based on short-term ‘events’.

 

Brexit

In her speech after seeing the Queen, Theresa May made it clear that the Brexit timetable will remain unchanged.  Whether the ‘type’ of Brexit will change, remains to be seen. Without a working majority, the Prime Minister may be forced to soften her stance on certain issues.

 

Unfinished business

Two measures, announced in the Budget, failed to make it on to the statute book before the snap election was called.

First was a cut in dividend tax allowances. This would have seen shareholders, investors and business owners, have their tax-free allowance cut from £5,000 to £2,000 from April 2018.

The second was in relation to the Money Purchase Annual Allowance which was due to be cut from £10,000 to £4,000.  However, the proposal never became law, leaving thousands of people in limbo, unsure of how much they can legitimately pay to their pension.

Over the coming weeks it will become clearer whether these changes will be discarded or become law.

 

Income Tax and National Insurance

The future of both is unknown!   The Conservative manifesto confirmed the existing commitment to raise the tax-free personal allowance from £11,500 to £12,500 by 2020 and raise the threshold for higher-rate taxpayers to £50,000 by 2020.

 

State Pension

The ‘triple lock’ currently guarantees the State Pension will rise by whichever is the highest of:

  • Average earnings
  • The rate of inflation as measured by the Consumer Price Index (CPI)
  • 2.5%

The Conservatives have committed to maintaining the ‘triple lock’ until 2020. Then the State Pension will rise in line with the higher of earnings or inflation; effectively a ‘double lock’, without the guaranteed 2.5% annual increase. This could be another proposal which could be altered; especially if inflation remains relatively high, which negates the cost of the 2.5% minimum increase.

The age at which we get State Pension is already set to rise for both genders; to 66 by 2020 and then 67 between 2026 and 2028. Whilst the other main parties pledged to keep increases to a minimum, the Conservatives have committed to increasing it in line with life expectancy.

 

Pensioner benefits

Certain benefits that pensioners are entitled to, such as free bus passes and TV licenses will remain. However, the Conservative manifesto stated that winter fuel payments will be means tested in the future.  However, the Conservatives may be tempted to review this.

 

Social care? 

The Conservatives initially proposed that people would be expected to use their capital, including their home, to pay for the cost of care, until their assets fell below £100,000. This is actually a significant increase on the current level of approximately £23,000.  However, that seemed to be overlooked in the heat of the campaign. They also ruled out a cap on fees you can be expected to pay personally for care.

After being dubbed the ‘dementia tax’ a U-turn was performed and the Conservatives have now committed to a cap and consultation on the level it would be set at.

 

For more information on how the General Election will affect your personal finances, please don’t hesitate to get in touch with us in the normal way.