Post Election Comment July 2017
5th July 2017
Where do we go from here??
Now that the dust has settled on the Election, we are all coming to terms with another Hung Parliament. Unlike last time, we don’t have a coalition, but instead, a rather unusual ‘supply and confidence’ arrangement has been agreed between the Conservatives and the DUP. The hope for the Conservatives is that this will give them sufficient control within Government to enable the UK to continue with Brexit negotiations. That is definitely a ‘wait and see’ brief.
However, as the negotiations continue, the country still has some rather difficult issues with a deficit that just won’t go away. The Hung Parliament has just made matters a lot more serious here.
Firstly, let’s not forget that we still have the problem of finding the cash lost by our Chancellor when he decided to back track on the National Insurance increases for some Self Employed people back in March.
Then, add in the Election deal with the DUP which meant another £1bn has to be found for Northern Ireland. Finally, we have to discard the savings that were going to be made by losing both the State Pension triple lock and winter fuel payment. It is quite clear that either belts will need to be tightened still further or some targeted tax changes are required.
Yet, the talk is of belts being loosened ever so slightly. Therefore, conscious that the Tories are a party that pride themselves on limiting tax increases, we would expect it more likely that there will be changes to some allowances rather than specific tax increases. It may be that Pension Allowances are reduced again including the Lifetime Allowance or more limits to the Annual Allowance. There is a potential change to Capital Gains Tax or Dividend Allowance. There has also been some concern about attacking entrepreneurs’ tax relief.
We clearly don’t know what they will do, but what we would suggest is that you might wish to take advantage of some of the ISA or Pension Allowances that are available whilst Mr Hammond is still doing the maths, because it is quite clear that savings will need to be made.
If you would like to discuss anything raised in this article, please do not hesitate to contact us.