A Budget of limited impact then for savers and investors - Tom Ham

Building wealth shouldn’t be about breaks and reliefs and limits; it’s about making a plan and sticking to it

“This is impossible!” shouted Madam Deputy Speaker as the kids of the House of Commons tried to outdo each other in a display which would give Old Firm games a run for their money. She wasn’t wrong – for savers and investors it is impossible to work out exactly what the Chancellor was trying to achieve.

The big headline is the “UK ISA”. This is effectively an extension of the £20,000 annual ISA limit. If you agree to invest £5,000 directly into UK shares, your £20,000 limit rises to £25,000 and will be free from income and capital gains tax.

More tax-free savings is better than less, so this may well be something you’ll welcome – but the mechanisms for making it work in an already brutally complex ISA system aren’t clear. There is a consultation document on the delivery of it with lots of key questions still to answer such as whether funds or trusts that invest in UK companies should count, whether you can hold any of the £5,000 in cash, and whether you should be allowed to transfer out of your UK holding into something else if you want. I’m afraid this looks like it will be complex to deliver and at the risk of being too negative I’m not completely sure it will be in the short term. And of course not everyone has an extra £5,000, let alone the existing £20,000 to invest in the current climate.

A new UK ISA is to be launched

For those who prefer guaranteed investments, there will be a new British Savings Bond, which looks like a typical National Savings and Investments guaranteed bond except with ‘British’ in front of it. This will be a three-year bond; we don’t know rates and limits yet but I’d expect it to be very popular. It’ll launch next month.

We didn’t see much in the way of pensions changes; the Chancellor indicated he’s still interested in the idea of a ‘pot for life’ to stop people accumulating lots of wee pensions as they change jobs throughout their working lives. But nothing concrete yet.

And that was pretty much it. There are some measures which will either hurt or help those who prefer property to investment; the furnished holiday letting scheme goes as does multiple dwellings relief. But on the flip side the higher rate of CGT on property disposals reduces from 28 per cent to 24 per cent. The impact on the landlords among you will depend on your situation; but this is a welcome reminder that bricks and mortar don’t shelter you from the whims of politicians.

A Budget of limited impact then for savers and investors – and that’s fine. Building wealth shouldn’t be about breaks and reliefs and limits; it’s about making a plan and sticking to it. The optimisation of the plan across pensions and ISAs and all the rest of it is entirely secondary; it’s not a bad thing to keep in mind that what you do is up to you, not up to the Chancellor.

Tom Ham is group chief executive officer of Calton Wealth Management