An independent (financial adviser’s) view

I’ve done my duty and combed the fascinating Autumn Statement for you, see below. It’s been difficult to concentrate on anything this week, as you’ll appreciate I’m sure, with the return of ‘I’m a Celeb’. I have been a (mostly) unashamed fan since its debut with Tony Blackburn and used to have the excuse that the children loved it; but now it seems I’m on my own with Ant and Dec.?As always, ‘celeb’ is a loose term, and until Frankie Dettori arrived, Nigel Farage was the only one of whom I’d heard. The latter’s whispered-but-still-heard comment summed up the man: “I’m trying to get chosen for the trials. You get at least 25% more air time”. Anyway. If you’re not already thinking ‘I must find an adviser with better taste in TV’, let me redeem myself by confirming that Black Friday should be banned outside US borders; and that it’s ‘Christmas’ and not ‘The Holidays’. Or maybe I’ve seen too many TV ads this week.

“Hunt’s national insurance cut: robbing Peter to pay Paul?”

Taking a bullet for you all and the greater good, I’ve listened to Autumn Statement Reaction interviews by the dozen. So far, 31 mentions of helping (or not) ‘struggling families’ of whom 23 were ‘hard-working’; not sure if that means the rest are?bone-idle. Anyway, on whichever side of the divide you dangle your legs, inflation and the freeze, or for dividends and capital gains, big reduction in allowances means we’ll all be paying a lot more tax, pretty much more than ever. No change to Inheritance Tax (you heard it here first), and, yes, pensions tinkering to come, with every employee to be allowed to choose their own scheme. Hopefully, the coming consultation will declare that a barkingly expensive idea. Much more discussion of that and other goodies to follow, no doubt.

"HMRC scraps plans to tax pensions after death"

A couple of other Statement Highlights (in my world, anyway). A welcome ‘nothing happened’ on the treatment of pensions on death. They were never going to be liable to IHT (too complicated with trusts and trust law) but there was talk of making them income-taxable on the recipients at whatever age you die. That seems, thankfully, to be out of the window. The pensions lifetime allowance, he says, will definitely go in the new tax year, although Labour have not changed their minds, it seems, about reinstating it if/when they get in. Whether they get around to it is another question. There are also new ISA rules and allowances. You’ll be able to invest in riskier stuff via ‘Innovative Finance ISAs’; but not via us, you’re on your own with those. And ‘savers will be allowed to have multiple subscriptions to the same type of ISA’ as well as ‘partial transfers between providers’. Another potential administrative nightmare for all concerned (including HMRC), I’d say.

“‘Great news for homeowners’ as HSBC and TSB make further rate cuts”

This should be good news, not just for those getting a new mortgage but also for your investments. Interest rates and inflation are what’s stopping the long-awaited recovery in markets and funds, and much more important to the world of business than ‘world events’. Putin’s invasion hit our finances because of the immediate impact on both food and fuel prices; had neither of those been factors, it would have been little more than a blip rather than the big dip it became. And as always, lil’ ol’ England is not as important, in so many ways, as we like to think it, and it’s the US economy, inflation and interest rates which will have the biggest effect. They also, of course, have an election looming (on Bonfire Night, which won’t mean a lot to them) and that, too could mean a last minute boost. Watch any available space.

“The true impact of inflation on cash savings and pensions”

Leaving your money in the bank or building society has always meant that its ‘real value’ after inflation will go down. Although rates go up to, supposedly, control inflation, any chart you look at will show that, apart from a few very short-term blips (N Lamont, I’m looking at you) they are never more than inflation. So we always say, often until we’re blue or some other shade in the face, that you should leave funds you will or might need in the next couple of years, plus a good rainy-day reserve, on deposit. The rest will always do better if you?invest. For most of this year, that’s been a tough call, however blue our cheeks become; why wouldn’t you prefer 4% or more from an easy access account to nothing much at all from your supposedly balanced investment fund. Well, because it will turn around, quite likely sooner rather than later. A great saying I heard last week: history doesn’t always repeat itself, but it does very often rhyme.

Rory Stewart’s account of his time as an MP and minister (he was turfed out of government and the Tory Party by Boris) begins and ends with that cringe-worthy TV leadership debate which you may remember from that most political of years, 2019. His campaign, in which he refused to make mad and empty promises about miracle Brexit deals and tax cuts, nearly took him to the run-off against BJ, but was undermined by the others' crowd-pleasing pledges and much back-room shenanigans. All history, but reading his fascinating and frequently gripping story makes you realise how little we and they have moved on in 13 years or more. You’ll share his frustration as he tries to actually get things done in the various departments to which he’s promoted, notably prisons, of which we should all be ashamed. He often does not name names, but the clichéd backbenchers he quotes are true to type; as are the behind-the-scenes Cameron and Truss. The latter was his boss when he was minister for rural affairs; at their first meeting, she asked him to cut his staff by 25% as ‘there’s no such thing as rural affairs, they’re no different to urban affairs’. Yes, Prime Minister. PS I’d also recommend his podcast (with Alastair Campbell), ‘The Rest is Politics’.