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Martin Bamford: No Autumn Statement surprises

Martin Bamford MM blog

Finding me glued to the TV and watching proceedings in Parliament is a rare thing. After losing several hours of my life a couple of years ago to the Westminster Hall debate on independent financial advice, I now reserve my political attention for the most interesting select committee hearings and that weekly lunchtime fodder that is PMQs. And the Budget. Always the Budget.

The Autumn Statement is essentially a mini-Budget in all but name. I could just read about it in the papers the following morning, but few national events give me the opportunity to be this nerdy about pensions, investments and taxes.

This opportunity for nerdy-ness combined with the relatively new social experience of watching the Autumn Statement live (there was a lot more action on Twitter than even during the X Factor live final) makes it compelling viewing.

Of course our clients and professional connections want to know what we think, later that afternoon rather than a day or week later. Waiting for a summary to appear from elsewhere puts the IFA at a distinct competitive disadvantage.

This was an Autumn Statement delivered with little room for manoeuver. In such tough economic times, no Chancellor could have done much more than tinker around the edges; making concessions for some and clawing the cost back from others, whilst all the time balancing responsibilities to a delicate coalition partnership. Few of us would envy that job in the current climate.

Advisers are bound to fixate on the pension changes. About the only good thing about the lower lifetime and annual allowances is that they were not implemented at midnight the day of the Autumn Statement.

Saving their implementation until 2014/15 at least gives our clients a little time to plan for the implications, even if all of the detail is unknown and will remain unknown for some time. Nobody likes anti-forestalling rules.

It was no surprise to see the annual allowance being cut to £40,000; my money was on a bigger cut to £35,000 or £30,000, which I guess could still be announced in the spring if the economy remains in a hole.

Reducing the lifetime allowance to £1.25m is bound to create more work for advisers who will need to contend with yet another large fund protection regime.

Most advisers I guess will be caught between wanting consistent policy and delighting in the complexity each change introduces to the system, prompting the need for expert advice to navigate the new pension minefield.

At least it deals with a few hours of structured CPD next year.

Making a concession to those in capped drawdown caught up in the double whammy of falling gilt yields and lower maximum income limits was a nice touch, albeit with no timescale or detail. However, it fails to help those who have already been forced to buy an annuity.

The original move from 120 per cent to 100 per cent was another example of unnecessary tinkering that has done nothing to help anyone.

Other announcements sounded OK at the time but are less exciting after a period of reflection.

Lower corporation tax would be welcome if the FSCS levy wasn’t killing any chance of making a profit as an IFA business. Canceling the fuel duty increase in January would be nice if it wasn’t for prices at the pump only ever seeming to rise.

The cynic in me thinks the £1bn investment in a new business bank will line pockets in the City, rather than finding its way into the real economy.

Assuming the UK economy doesn’t completely collapse before then, we only have a few short months to wait until the proper Budget, which I’m sure will be a more ‘exciting’ event for IFAs and our clients.

Martin Bamford is managing director of Informed Choice


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