3rd January 2017
On Thursday in his first autumn statement, new chancellor Philip Hammond announced a number of different policies, focussed on investment and tax cuts, to try and boost a strained post-Brexit economy for businesses and savers.
Tech was a particular focus area, with funds allocated for investment into broadband, funding for scale up businesses and a new fibre infrastructure allowance.
In total £26 billion will be pumped in the economy to help the UK adjust to life outside of the European Union.
Savers
Personal Allowance and Income Tax Thresholds -
Savers will be able to continue to benefit from rises in the tax free allowance and higher rate income tax bandings.
The tax free allowance, currently £11,000, will rise to £11,500 in 2017/18. This means that individuals will not have to pay any tax until their income exceeds this amount.
The Chancellor reaffirmed that the 40% tax rate will rise to £45,000 in 2017/18 and will rise in total to £50,000 by the next parliaments.
The net effects of these changes is that savers will have more disposable income which they can use to invest for their future.
Saving Bonds
The “Investment Guaranteed Growth Bond” will be launched by the Government, and will allows savers to earn interest of 2.2% of up to £3,000.
Whilst the return offered beats the current rate of inflation (0.9%), the returns are minimal when compared to the 8.7% average APR rates of debt businesses on our platform.
Buy To Let
The buy to let sector has been hit hard. Letting fees for tenants will be banned as soon as possible. This is in addition to the rise in stamp duty and tapering off of mortgage interest relief announced previously.
The banning of letting fees is another signal of the buy to let property no longer being a viable long term investment strategy – with savers having to look to new asset classes such as P2P.
Businesses
Venture Capital Funds -
£400 million of venture capital funds is going to be allocated to the British Business Bank. This is a measure to try and support scale up companies in the UK during their growth phase, and to stop them being sold off by overseas investors.
It is predicted that this will unlock £1 billion of new finance for growing firms.
Hammond said, “I am taking a first step to tackle the longstanding problem of our fastest growing technology firms being snapped up by bigger companies.”
We see these funds as being complimentary to the alternative finance landscape of which Crowd2Fund is part of.
Digital Infrastructure Investment -
£1 billion investment will be made into broadband. This will spread fibre networks and 5G across Britain.
This will help solve the UK’s connectivity and problem, and will make it easier and more cost effective to start up and run digital businesses.
Additionally, businesses will be able to benefit from 100 per cent business rates relief for companies who invest in fibre infrastructure.
Export Finance -
The Government’s UK Export Finance department will have its funding doubled to £5 billion, which will make it easier for businesses to export overseas and think more globally in their outlook post Brexit.
Pre-approved local currencies by UK export finance will increase from 10 to 40, meaning that overseas buyers can pay for UK exports in their own local currency.
Productivity Fund -
£23 billion of funds has been allocated to try and solve the UK’s productivity problem. Currently it takes a UK worker five days to perform the four day output of their German counterpart.
The fund will include investment into infrastructure and innovation over the next five years. The funds will predominantly be focussed on digital communications, transport and research and development.
It is hoped that this will cumulatively increase the output of GDP, and make it easier for people to grow their businesses and create jobs.
