Reactions to the Spring Statement 2019

The Spring Statement was as expected a non-event for personal finance, especially as it was overshadowed by the Brexit crisis. Still, there were clue to future developments

James Gard 13 March, 2019 | 3:27PM
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Philip Hammond delivers the Spring Statement

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Sarah Coles, personal finance analyst, Hargreaves Lansdown says: "The frosty environment of Brexit meant a less than fruitful spring for Philip Hammond, frozen into inactivity by uncertainty over where we’ll be this time tomorrow, let alone by this time next year. He has always said that his Spring Statements were largely just a response to the Office for Budget Responsibility’s forecasts rather than a mini Budget, and that’s what we got.

"While much of today’s announcement involved pushing things further down the road, there are some things coming in April regardless of what goes on in Westminster. We can look forward to the personal allowance rising to £12,000, the higher rate threshold to £50,000, the capital gains tax threshold to £12,000 and the Junior ISA allowance to £4,368.

"However, this doesn’t necessarily mean we’ll be paying less tax, many will be paying more. It’s not just the new allowances that will affect your pocket, the ones that haven’t shifted will take their toll too. This includes the inheritance tax threshold that has been frozen for a decade, and the dividend tax threshold, which remains at £2,000. The impact of inflation, wage rises and asset price growth means many more people will be paying more tax over time."

Steve Webb, director of policy at Royal London and former Pensions Minister, said that the brighter outlook for public finances makes a raid on pension tax relief less likely. The introduction of a flat rate of pension tax relief was expected in the Budget 2018 to plug the gap in NHS funding. That didn't come to pass, to the relief of higher earners, and Webb thinks this is now less likely in the Autumn Budget:

"Last Autumn the Chancellor said that the cost of pension tax relief was ‘eye-wateringly expensive, and hinted that more cuts were likely, over and above the six separate cuts to lifetime and annual limits since 2010.  But now that there is less pressure on the public finances than previously thought, there would be no justification in going ahead with such cuts.

"Too often, governments have raided pension tax relief for extra revenue to meet a short term spending crisis.  Now that the public finances are improving faster than expected, there is no justification for further ‘salami slicing’ of limits on tax relief.   Pensions should be a long-term business, not subject to annual tweaking by cash-strapped Chancellors.  An improving fiscal picture means the Chancellor should refrain from any further short-term cuts."

In the 2018 Budget, the higher-rate tax threshold was raised to £50,000 starting in April 2019 and the lifetime pension allowance will rise from £1,030,000 to £1,055,000.

Rebecca O’Keeffe, head of investment, interactive investor says: “Overall, while there may be some disappointment for investors that the Chancellor didn’t come up with any new investment or savings benefits, UK investors have several opportunities to invest tax efficiently and should aim to take advantage of these before the tax year end. They can also hope that by the time the Budget rolls round, the uncertainty that is tying the Chancellor’s hands currently should be removed and that private investors will be able to benefit from any future ‘deal dividend’.”

Quilter Investors portfolio manager, Helen Bradshaw says: “In a Spring Statement overshadowed by Brexit, the Chancellor today issued a cautionary note on the possible inflationary impacts in the event of a no deal or disorderly Brexit. Although some inflation is crucial in a well-functioning economy, with falling prices risking a stagnation in spending, it is a careful balancing act. The Chancellor warned that although disruption is likely if the UK exits the EU without a clear agreement, the scope for deploying monetary and fiscal tools to stimulate the economy may be limited.

“For investors, it is important to remember that a globally diversified portfolio has some natural protection against domestic matters because the UK will only make up a part of the holdings in a portfolio. However, alternative asset classes such as infrastructure which can offer inflation-linked cashflows, and floating rate instruments that benefit from rising rates, could become particularly valuable in the event of rising inflation.”  



The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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James Gard  is content editor for