Ahead of tomorrow’s Spring Statement, Andy Butcher, Branch Principal & Chartered Financial Planner at Raymond James Investment Services has shared his thoughts, noting that Chancellor Rachel Reeves must prioritise stability and support for small businesses in order to encourage growth.
“In the Autumn Statement, Chancellor Rachel Reeves said she would facilitate growth by encouraging smaller companies, yet the reduction in VCT tax relief from 30% was disappointingly hidden in the small print. Given many VCTs are likely to face pressure in the coming months concerning the valuation of software companies, which many are heavily invested in, the double whammy of a reduction in tax relief from April could lead to an imminent drying up of funding.
“Most VCTs need to raise around 15% of their assets each year simply to stand still, so at a time when smaller British companies are desperate for funding, we could see a real issue. If the Government wants to encourage smaller enterprises in the UK, a reversal in the tax relief reduction would be a prudent and most welcome decision.
“Walking back the levying of IHT on pensions from next year would also be a welcome, if unlikely, step. The Government should really be encouraging individuals to save – this policy achieves exactly the opposite. The absence of any further tinkering to pension rules would also be a positive.
“The Labour Government came to power 18 months ago promising growth as a priority, yet their policies have so far failed to bring about any noticeable change. Now is the time to change that, and to do so, the Chancellor will ideally deliver a minimalist Spring Statement as previously promised. Excessive change in the cycle is damaging for business, especially with the recent increases in taxes for employers, which have clearly disincentivised the hiring of new staff. As such, stability is the main message we’re looking for with this Spring Statement.”
