Hammond's First (and Last) Spring Budget

8 March 2017  |  Adam French
Hammond's First (and Last) Spring Budget
Chancellor of the Exchequer Philip Hammond set out his first (and last) plans for the Spring Budget today.
Changes were largely as expected; national insurance contributions for the self-employed increased, corporation tax will fall and spending on social care will rise. We look at these changes in further detail and explain how we can help you save for your future, no matter what changes the Chancellor may make.

The threat of overshadow was cast by the recent dismissal of Lord Heseltine, not to mention the impending triggering of Article 50. However, Chancellor of the Exchequer Philip Hammond’s first (and last) Spring Budget did not go unnoticed. Following months of speculation, here are the highlights of today’s Spring Budget.

Key Changes

Hammond set an optimistic tone about past achievements, determined to avoid complacency as we prepare for a future outside of the EU. He wants to get us back to living within our means, help ordinary families, invest in public services and prepare us for a brighter future.

  • Corporation tax will fall to 17 percent by 2020, as planned.
  • National Insurance contributions for the self-employed will increase by 1 percent to 10 percent in April 2018, to rise a further 1 percent in April 2019 (estimated to cost an average of 60p per self-employed person per week).
  • The tax-free dividend allowance will reduce from £5,000 to £2,000, effective from April 2018.
  • The annual ISA allowance will increase to £20,000 from April.
  • Income tax personal allowance will increase to £11,500 from April, to rise again to £12,500 by 2020 (as planned). The higher rate threshold will rise to £45,000.
  • £16 million will be spent on a new 5G mobile tech hub, and £200 million will be spent on local projects to leverage private investment in full fibre broadband networks. This spending aims to keep the UK at the forefront of disruptive technology.
  • There will be an additional £2 billion of funding over the next three years for adult social care.
  • £325 million will be spent on the first of the new sustainability and transformation plans (STPs), intended to improve healthcare.
  • £100 million will be spent on putting GPs in A&E departments by next winter.

Economic Forecasts

  • Last year the British economy grew faster than the US, France and Japan. In terms of developed countries, our rate of growth was second only to Germany.
  • Employment is at a record high and unemployment at an 11-year low.
  • Growth has been upgraded for this year (to 2.0 percent) but is set to fall next year (down to 1.6 percent). It will return to 2.0 percent in 2021.
  • Inflation is slightly above target at 2.4 percent this year but will fall to 2.0 percent in 2019.
  • The short-term forecast of public sector net borrowing has been revised down and is now £51.7 billion for 2016/17. This is set to fall progressively over the next few years, down to £16.8 billion in 2021/22.
  • By 2021/22, public sector net borrowing will have fallen to 0.7 percent of GDP, from 2.6 percent of GDP this year.

Happy International Women’s Day

International Women’s Day was not forgotten and Hammond was pleased to announce that there are a higher proportion of women in the workforce than ever before. The following spending has been specifically apportioned to women’s rights and campaigns:

  • A further £20 million funding to support the Campaign Against Violence Against Women and Girls. This is on top of the Tampon Tax which delivers another £12 million in support of women’s charities across the UK.
  • £5 million to promoting Returnships to the public and private sector, helping people back into employment after a career break.
  • Next year is the centenary of the 1918 Representation of the People Act, the decisive step in the political emancipation of women in this country. £5m will be spent on projects to celebrate this centenary.

How Can We Help?

No matter what changes are made with every new Budget, there are some principles that remain the same. We all need to save for our futures and we are all looking for the best ways to do so. At Scalable Capital, we have worked hard to create a better proposition for savers and believe that our data-driven, bespoke private wealth management is fundamentally changing the industry for the better.

The essence of investment management is the management of risks, not the management of returns.

Benjamin Graham, investor and mentor of Warren Buffett

As Buffett’s mentor Graham points out, there is extensive evidence to show that risk moves with far greater predictability than returns. It is for this reason that projected market risks drive our investment decisions, not anticipated returns. The dynamic way we manage risk means that the risk of our clients’ portfolios remains constant in all market conditions. This also helps to deliver better returns for every unit of risk our clients are exposed to, as periods of market turmoil typically go hand in hand with lower returns, so bypassing them allows for more stable returns.

By carefully measuring and controlling risk in this way, we can give our clients a granular understanding of the downside risk in their individual portfolios, a first in the retail industry. Use of ETFs allows us broad global diversification at a low cost. We believe that our processes provide investors with far greater transparency than our more traditional competitors are able to. All in all, a better solution for savers.

Our Tax Wrappers

With inflation set to rise, Cash ISAs will be vulnerable to this value-eroding obstacle. We launched our Stocks & Shares ISA last year and are due to launch a SIPP in the next few months. Our ISA offers the full benefits of our service: risk monitoring and management, performance optimisation, globally diversified portfolios, and a low-cost, hassle-free service. You can read more here about how to Find the Best Stocks & Shares ISA For You.

To Find Out More

We have a few events coming up in Edinburgh and London over the next few weeks. These free evening seminars give you the chance to meet the founding team and ask any questions you may have. See here for all the dates and times.

Risk Warning – With investment comes risk. The value of your investment can go down as well as up and you may get back less than you invest. Past performance or future projections are not indicative of future performance. We do not provide any investment, legal and/or tax advice. If this website contains information regarding capital markets, financial instruments and/or other topics relevant for investments of assets, the exclusive purpose of this information is to give general guidance on investment management services provided by members of our group. Please note our Risk Warning and the Website Terms.

 

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Adam circular photo turquoise
Adam French
CO-FOUNDER & DIRECTOR
Adam spent the last 8 years working in London in the financial services industry. As Executive Director of Commodities Trading at Goldman Sachs, he was responsible for the Commodities Structured Products franchise. Prior to this, he worked in Derivatives Trading where he was responsible for electronic trading for private clients in fixed income, currencies and commodities products. Adam studied Business Mathematics and Statistics at the London School of Economics.