UK Chancellor Philip Hammond has revealed the true cost of Brexit to the British public in his first Autumn Statement.
Hammond announced that Government finances would be £122 billion worse off by 2021 as a result of Britain’s decision to leave the European Union. As a result, the Government will no longer be attempting to achieve a budget surplus by the end of Parliament in 2020. Hammond added that there was still “uncertainty” over how Brexit would affect the UK economy but that the economy was still “resilient”.
Labour and SNP were critical of the Chancellor’s announcement, stating that the Government was ill-equipped and lacked a coherent plan to deal with Brexit. The Economists for Brexit group said that the borrowing and deficit estimates were far too high, with officials taking an assumptive, pessimistic viewpoint using “poor economic policy”.
The Chancellor also announced changes that would have a noticeable effect on the British public. £1.1bn will be put into local transport projects, whilst fuel duty is frozen for a seventh consecutive year. However, insurance rates will rise from 10% 12%, the third such rise in 18 months, with analysts fearing a resulting hike in consumer insurance costs.
Elsewhere, salary sacrifice schemes, where employees receive perks such as gym membership and health screening instead of taxable salary, will be taxed from April 2017. Fundamental salary sacrifice schemes such as pension contributions and childcare vouchers will remain unaffected.
There are also notable pension changes. The Chancellor has placed a limit on the amount of money people can recycle from their pension pots. The annual tax-free allowance for withdrawal will drop from £10,000 to £4,000 in April 2017 for those withdrawing from defined contribution pension pots. This will reduce the amount of money people are able to withdraw tax free, and then replenish their pension pot at a later date to reduce their tax liabilities.
With the Chancellor’s statement having a notable effect on people’s finances going forward, it is worth seeking financial advice from professional advisors. Should you wish to assess your investment needs or portfolio please contact us, or alternatively schedule a free, no obligation, consultation, with one of our Financial Advisors here.
Disclaimer: Any information or related news item displayed on this site is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed or as advice in anyway and all users should seek independent advice before relying on any information or comment expressed within the site. All expressions of opinion reflect the views of their respective authors as of the date of publication and are subject to change. Use of Links (hyperlinks) to or from other internet sites may be included at times for the convenience of the user. Synergi Europe and its affiliates assume no responsibility for the content of any linked site. The fact that such links may exist does not indicate approval or endorsement of any material contained on any linked site.