Brewin Dolphin Exeter's Autumn Statement – “Go For Growth”

Ahead of the autumn statement next Wednesday, Brewin Dolphin urges the Chancellor to focus upon growth, which includes creating a new Business EIS, pushing up the JISA allowance and an end to tinkering with pensions.

Tim Walker - Divisional Director and Head of Office, Brewin Dolphin Exeter

“Britain needs to be allowed to grow,” says Simon Blowey, Divisional Director of Financial Planning. “By softening HMRC’s stance on legitimate tax planning, allowing the pension system to settle down a bit so that savers can trust it and creating and supporting schemes that encourage taxpayer investment in British business, we believe the government can help it to do so.”

Tim Walker Head of Brewin Dolphin in Exeter, said: “The majority of our wish list would be a huge Christmas present for British families, much of which would cost the Chancellor very little. Let’s hope he listens before next week’s statement.”

Simon Blowey, Divisional Director Financial Planning at Brewin Dolphin, details his ideas for growth:

Surety on pensions:

“The welcome and revolutionary changes to pensions need time to bed in, be properly understood and simply communicated to savers – especially those nearing retirement who face some bewildering choices,” he said. “Let’s see some assurances from the government that there are no further big changes on the horizon.”

A less aggressive attitude from HMRC:

“A general anti-abuse rule has been established, but there is a danger that HMRC is still treating statutory reliefs such as EIS, VCT and BPRA planning with suspicion and this has investors running scared,” he said. "The Treasury needs to encourage, rather than hinder or frighten investors in such areas, and focus upon the wider public benefits as the underlying investments encourage huge economic generation.”

An increase in the Inheritance Tax threshold:

“With a nil rate band (NRB) increase of less than £100k in the last 15 years, 1 in 20 households are caught by IHT. By 2019 – now only four years away, it is predicted to be 1 in 10 households – scarcely the rich minority the tax was meant to hit. We would like to see the inheritance tax NRB raised to £500k per individual.”

Increasing the JISA allowance to £15,000:

“The current JISA allowance of £4,000 a year is far too low to encourage real saving for university fees,” Blowey said. “Increase the JISA allowance to match the NISA. This will encourage parents to really save for their children’s future – when this cash will be much needed.

A continuation of reliefs aimed at new business growth including:

A Business EIS

“A scheme similar to the individual EIS scheme would free up nearly half a £trillion in cash sitting on big company balance sheets and encourage investment in smaller companies. Such a scheme would bring invaluable knowledge and experience from within big business, as well as the cash investment,” he said. “The Centre for Entrepreneurs wants to promote corporate venturing by creating incentives for large firms to draw on their combined £488bn of capital for investment in SMEs.”

A rise in the VCT threshold:

“An increase in the VCT threshold from £200k to £500k would further encourage ‘investment in growth’ in smaller companies, so that UK Plc can re-energise economic growth.”

An extension of the SEIS scheme:

“With the successful Seed Enterprise Investment Schemes scheduled to come to an end in 2015, we would welcome a 5 year extension to tie-in with the next Parliament, avoiding political uncertainty. We would like to see an increase to the individual investor limit to £150k and company raised investment to £250k, demonstrating The Treasury’s support for entrepreneurial start-ups.”

More business-friendly measures:

“We would like to see the creation of a ‘Silicon Roundabout’ broad brush of business-friendly measures, to continue supporting the organically growing UK technology and science entrepreneurs. This would cement the UK’s position of global importance alongside the US’s Silicon Valley, attracting high value jobs to this growing sector.”

Other Brewin Dolphin experts suggest the following changes.

Stephen Williams, Divisional Director UK Equity Research suggests the following measure to ease the property market for new entrants:

 “We’d like to see the Chancellor radically reform stamp duty. It should be paid on the sale of a house, rather than the purchase, making it easier for first-time buyers to find sufficient money to buy a house and capped for the over-65s, to allow them to downsize more easily - which would in turn free up homes for struggling families.”

Ian Armstrong, oil and gas research expert wants to see changes in the tax position in the North Sea.

“The North Sea has been a political football and the Chancellor has made numerous changes to appease the Scots (as well as increase the Treasury’s coffers) so it is about time that he sorted out an attractive medium / long term tax regime,” he said.

“The larger producing fields, which get fewer special investment incentives, are hit with higher corporation tax than other UK companies (30% versus 24%) in addition to Petroleum Revenue Tax. This means they are effectively paying 81% marginal tax; making the North Sea one of the least attractive operating areas in the world.”

“A fuel price escalator should be re-instated to plug the gap in falling tax revenue from the North Sea if the Brent price falls to $75.

While Nik Stanojevic, Divisional Director UK Equity Research suggests the following possibilities for the Utilities sector:

“Looking ahead to the Autumn statement, investors would be keen to see any change of emphasis away from affordability toward security of supply and enough investment in new power generation to ensure that power cuts do not occur. National Grid, who is the UK’s electricity system operator, predicts that the reserve margin (excluding special supply / demand capacity payments) will fall from an already tight 4.1% this winter to around 2% next winter. The reserve margin is a measure of the system’s ability to deal with peak demand on the darkest coldest day – most utilities consider above 5% as comfortable.”

“However, given the popularity of the Miliband election promise, investors may be disappointed.”