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Autumn Statement reaction: Issues and impacts for savers and investors

Friday 5th December 2014

This week chancellor George Osborne gave his Autumn Statement in front of the House of Commons. The announcement to receive the most headlines was the reforming of the stamp duty system after 300 years.
There were however other announcements which will have an affect on the UK economy as well as investors and investment firms. A number of figures and organisations within the investment industry have given their take on the Autumn Statement, here is a selection of this week’s outpouring of reaction:
ISAs: Hargreaves Lansdown
Partners can now effectively inherit a deceased spouse’s ISAs. For deaths on or after the 3rd December, surviving spouse’s will have an additional ISA allowance, equal to the amount the deceased spouse had in their ISA, which can be used from 6th April 2015. 
The ISA limit will also increase to £15,240 from 6th April 2015. 
Danny Cox, Chartered Financial Planner at Hargreaves Lansdown, commented: “Couples almost invariably manage their money jointly using individual tax wrappers such as ISA to shelter their savings and investments from tax. This change has righted a wrong in the tax system which was the source of deep frustration and additional cost for surviving spouses.”
SME Funding: Fleximize
The Autumn Statement announcement to provide a near £1 billion boost to SME funding – including £500 million of new bank lending - is not enough and it does not properly address the main problem, which is that mainstream banks are not interested in lending to small businesses.
New analysis by Fleximize suggests that banks rejected £1.44 billion of loan and overdraft applications from SMEs during Q3 of this year alone.  It estimates that this is an increase of £317 million on Q2.
In addition to this 44% of SMEs who have been offered credit by banks over the last year said the amount fell short of what they applied for.
Max Chmyshuk, Founder and Managing Partner, said: “Any additional sum of funding for SMEs is welcome but the amount pledged falls disappointingly short of what is needed; and more importantly, banks face other commercial and regulatory challenges discouraging them from lending more to the SME sector. It’s much easier for them to deploy money to large corporates.”
Stamp Duty/Devolving Corporation Tax: Baring Asset Management 
Christopher Mahon, Investment Manager and Director of Asset Allocation Research at Baring Asset Management gives his take on two of George Osborne’s most eye catching initiatives. 
Stamp duty reforms: These reforms create winners and losers, with the losers being buyers of expensive properties.  These properties are overwhelmingly concentrated in London so there is a risk that London property market reacts badly to these reforms, with a cascading effect around the country. 
Devolving corporation tax:  The welcome ambition to allow Northern Ireland to lower the level of corporation tax in the province to match those charged in the Republic carries the obvious challenge that existing UK corporate tax revenues are rerouted via NI, cutting the Treasuries overall take.
Abolition of Air Passenger Duty for Under 12’s: Investec
Guy Ellison, Head of UK equities at Investec Wealth & Investment: “The abolition of air passenger duty for under 12’s, moving to under 16’s in due course should provide a modest fillip for the airline industry. On the negative side, changes to tax relief for banks will see them making a greater contribution to the Treasury and may weigh on that sector.”
P2P and Alternative Finance Industry: Abundance
Bruce Davis, Cofounder and CEO of ethical investment crowdfunder Abundance said: “The Autumn Statement delivered almost all of the P2P and Alternative Finance Christmas wishes in one go.  The extension of the ISA consultation to debt securities means that P2P investors will also be able to add debentures and bonds into their ISAs - which will revolutionise investment in green infrastructure and other ethical investment projects and mean that Abundance investments would attract ISA tax breaks.”       
“We also welcome the continued focus on creating a level playing field for P2P and crowdfunding to compete with the mainstream banks by ensuring lenders can write off bad debts (as banks already do), opening up bank data and investigating the market for payment and banking services provided to alternative finance.” 

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