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Weekend reading: Bashing the budget

Weekend reading: Bashing the budget post image

Good reads from around the Web.

Chancellor Philip Hammond says Wednesday’s controversial Spring Budget will be the last (and not just for him). The Spring Budget is set to become the Autumn Budget, while the Autumn Statement will be reborn as a Spring Statement. Oh, and the Spring Statement won’t really be a Stealthy Second Budget, supposedly. Meanwhile for now we all get Summer Off.

According to the BBC, this kerfuffle is aimed at giving us more time to prepare for tax changes and the like ahead the new tax year, which begins in April.

Well, maybe. Because does that seem to have been any motivation for governments in the past decade?

On the contrary I suspect Hammond may be secretly planning to launch a 24/7/365 Budget. One long unending rollercoaster of financial meddling, streamed on Facebook and pithily summarized via hourly Tweets.

So relentless have been the changes to pensions, taxes, and whatnot in recent years, it must be a drag for them to have to sit around waiting for another Budget to come along before they can have a fiddle again.

Instead, why not just get the latest wheezes out the door pronto?

We’ve had Just in Time manufacturing for years. Let’s have Just in Time policy! It can’t take long to get the back of a fag packet typed up.

(Lifetime ISAs, I’m looking at you…)

Dividends for dummies

Seriously, I have had colds that have hung around for longer than the shiny new Dividend Allowance was left unmolested.

I’d only recently updated Monevator to explain the ‘new’ dividend taxation regime, and now the Allowance has been slashed to £2,000. Annoying enough for me – imagine the hassle writ large across the financial services industry.

I mean, if the £5,000 Dividend Allowance is really so grossly ‘unfair’ then why wasn’t it unfair less than a year ago when this government introduced it? If we’re going to tax investments outside of tax shelters harder, then let’s get it all changed at once so we know where we stand, rather than hiking dividend tax rates, then introducing a new clunky complication to the system with the Dividend Allowance, and then immediately begin chipping away at it. Its policy by Frankenstein.

Ditto the NIC hikes the chancellor has slapped on the self-employed.

Hammond said he’s asked Matthew Taylor, chief executive of the RSA, “to consider the wider implications of different employment practices.”

That review is due to report in summer, but heck, why wait for Taylor’s considered conclusions? Let’s just get some NIC hikes rolled in now, ahead of the review, and keep everyone on their toes! They will likely be rolled back by a Tory backlash anyway, before being rolled back in again as a result of Taylor with the Autumn Budget.

And they wonder why people find this stuff so vexing?

More on the omNICshambles Budget:

  • At-a-glance summary of all the Budget details – BBC
  • Dividend Allowance to be cut to £2,000 – Money Observer
  • This equals a 68% tax ‘pseudo dividend allowance’ cut in two years – Telegraph
  • Why on earth raid the self-employed and small business? – ThisIsMoney
  • “ISAs to come back into favour, say experts”. [Sigh. ALWAYS fill ISAs]Guardian
  • Tax on dividends is a raid on two million small investors – Guardian
  • A novel take: “Dividend crackdown a tax on widows”Telegraph
  • The capital gains tax take has trebled under the Tories – Telegraph
  • Theresa May’s honeymoon is officially over after the tax hikes – Telegraph

Sorry I’m a bit late with the links this week. Reasons!

Have a great rest of weekend.

From the blogs

Making good use of the things that we find…

Passive investing

Active investing

  • Why good (bad) companies can be bad (good) investments – Musing on Markets
  • Meeting company managers is not all that – The Value Perspective
  • A deep dive into Standard Chartered – UK Value Investor
  • Europe still looks relatively cheap and attractive [Graph]Schroders
  • Reader Gregory flagged up this market-beating Hungarian fund – Concorde
  • A quick look at a UK logistics and warehouses REIT – DIY Investor (UK)
  • Eight lessons learned from running a prop desk – Yahoo

Other articles

Product of the week: The Spring Budget saw Philip Hammond confirm a new NS&I savings bond will launch in April. ThisIsMoney is rightly underwhelmed. The three-year product will pay 2.2% – not even a market-beating rate – and you can only put in £3,000. Atom Bank pays the same, and will take £100,000. (Remember the FSCS limit though.)

Mainstream media money

Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.1

Passive investing

  • A clinical test of the five most important Smart Beta factors [Search result]FT
  • How to get started with a simple passive ETF portfolio – ThisIsMoney

Active investing

  • Hedge funds run by women outperform [Search result]FT
  • Does Warren Buffett not understand risk-adjusted returns? – Bloomberg
  • The case for owning too many equities – Morningstar
  • Goldman Sachs’ lesson from the ‘quant quake’ [Search result]FT
  • Mutant turtles: A real-life Trading Places story [Podcast]Bloomberg
  • Ultimate stock-pickers: Top 10 buys and sells – Morningstar
  • SEC rejects Winklevoss Bitcoin ETF – ETF.com
  • 15% of hedge fund staff work over 60 hours a week – Business Insider

Other stuff worth reading

  • Why are Britain’s new homes built so badly? – Guardian
  • No pay rise for 15 years, IFS warns workers [We’re a decade in]Guardian
  • £40,000 to buy your new-build leasehold back – Telegraph
  • How to retire successfully – Guardian
  • I always enjoy the ThisIsMoney podcast [Podcast!]Share Radio
  • Richard Dawkins: Britons have not spoken on Brexit [Video]BBC
  • Lonely EuroMillions winner moves back in with her mum – Daily Mail
  • Is Russia’s president really the richest man in the world? – MarketWatch

Book of the week: Barel Karson was disappointed by passive guru Larry Swedroe’s The Incredible Shrinking Alpha, noting:  “[The authors] seem only interested in one dimension: linearly factoring historical returns, and implicitly assuming these don’t change going forward.” Anyone read the book and care to comment?

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{ 55 comments… add one }
  • 51 The Rhino March 15, 2017, 12:31 pm

    Me too – net pay > gross pay at the moment, long may it continue?

  • 52 The Investor March 15, 2017, 4:22 pm

    It seems this Lady is for turning*:

    Plans to increase National Insurance levels for self-employed people – announced in the Budget last week – have been dropped.

    Chancellor Philip Hammond has said the government will not proceed with the increases which were criticised for breaking a 2015 manifesto pledge.

    He told MPs in a Commons statement: “There will be no increases in National Insurance rates in this Parliament.”


    So I’m glad they’ve reversed on the NIC hike for the self-employed… but “no changes”…?!

    Again, I have to wonder even more now what that poor bloke who is doing the wide-ranging review on employment taxation and so forth thinks he up to?

    First they were making changes before his review, now they’re ruling out changes after his review?

    Perhaps he’s just holed up with a Nintendo Switch and a copy of the new Zelda game?

    No change to the similarly ill-advised dividend tax allowance cut, as far as I can tell, sadly.

    (*Reference, for the kids: https://en.wikipedia.org/wiki/The_lady's_not_for_turning)

  • 53 The Rhino March 16, 2017, 11:24 am

    Well its all a bit of a merry-go-round isn’t it. What a joke??

  • 54 David March 16, 2017, 8:38 pm

    @ The Investor regarding jaw dropping redundancy payments

    Many companies in fact pay the statutory minimum, which is very little indeed. Specifically it’s no entitlement to any redundancy at all until you have 2 years service., and after that:
    – half a week’s pay for each full year you were under 22
    – one week’s pay for each full year you were 22 or older, but under 41
    – one and half week’s pay for each full year you were 41 or older

    But for higher earners it’s not based on your actual salary, as the weekly pay amount is capped at £479. And length of service is capped at 20 years.

    So a 40 year old with just under 5 years service will only get £1,916 if they earn any salary above £25,000 (which is roughly the national average wage) or less if they have a lower salary or perhaps work part time.

    Many companies will also make you work your notice period, so you won’t get PILON (payment in lieu of notice) either. And from April 2018 all PILON will be fully taxable as earnings as well.

  • 55 The Investor March 16, 2017, 9:08 pm

    @David — Thanks for that information.

    I guess it’s the circles of privilege I move in… I have multiple friends who have enjoyed (or were offered for voluntary redundancy that they didn’t take) decent five-figure sums. One has done it twice! I’m talking in the bigger cases “take a paid year off” money. To be fair most of these people were well-paid with good employers, on London money, and in the lower paid case they had quite a few years of service.

    I’m quite prepared to believe that isn’t the norm for the average employee, which your figures would confirm. But then to the point of this discussion, the average self-employed/ltd company director isn’t a tax-dodging high earner, either, going on the average income for self-employed surveys. (Just £240 a week and well below the £400 earned by employees, according to this article in the Independent).

    I can see though that the statutory terms are more important in the context of the NIC debate, so cheers again.

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