Budget 2018: What did Spreadsheet Phil do for your investments?

After waiting patiently* for more than an hour for any news on changes to our investments, the Autumn Budget was a bit of a damp squib, but it was a relief that pensions allowances and tax breaks, were left well alone.

So from FundCalibre’s point of view there was little to report. From April 2019:

  • an increase in the lifetime allowance for pensions to £1,055,000
  • the capital gains tax allowance will rise by £300 to £12,000
  • the Junior ISA allowance will rise in line with inflation to £4,368

One piece of good news was that the government has finally confirmed it will make pensions cold-calling illegal. This should hopefully help the fight to stop pension fraud and make it harder for scammers to trick people into handing over their savings.

Devil in the detail

#1: Infrastructure

As always, there was a little more to find hidden in the detail of the 106 page document.

Having already announced that he would undertake Britain’s biggest ever single cash investment in our road network, the Chancellor also said the government would abolish the use of Public Finance Initiative (PFI) framework for funding future infrastructure projects, but would honour existing contracts.

Commenting on this, Will Argent, investment advisor of new Elite Radar fund VT Gravis UK Infrastructure Income, said: “The Chancellor’s commitment to delivering public assets in concert with investment from the private sector is very encouraging. Half of the government’s £600bn infrastructure pipeline will be built and financed through the private sector and will therefore provide significant opportunities for infrastructure companies operating in the UK. Meanwhile, the private sector’s involvement helps to transfer many of the risks inherent in developing and operating social infrastructure projects away from the tax payer.

“Although Mr. Hammond confirmed that no future infrastructure projects would be contracted under the maligned PFI framework, he pledged a commitment to honouring all outstanding PFI contracts. While this stance was widely anticipated under a Conservative government, it removed a layer of uncertainty for companies invested in live PFI projects.”

VT Gravis UK Infrastructure Income fund currently has 6% exposure to PFI, which with today’s Budget statement is confirmed as secure from the threat of nationalisation, under a Conservative government.

#2: Residential Property

The Chancellor also tinkered with some aspects of the residential property market. Measures included:

  • £500 million for the Housing Infrastructure Fund to support the development of an estimated 650,000 new homes
  • Local authorities will be able to borrow more to build council housing after abolition of the cap on their housing revenue accounts
  • The plan to remove lettings tax relief from absentee landlords, so that it only applies where property owners share a home with their tenants.
  • An additional £2 billion for the Affordable Homes Programme, targeted at housing associations.

Commenting on the measures, Hearthstone Investments plc, managers of Elite Rated TM home investor fund, said: “Overall, we believe the Budget proposals offer a promising mix of measures to stimulate much needed new housing supply, and a package of infrastructure improvements, without creating obstacles to increased institutional investment in the sector.”

*There was actually a lot of huffing and puffing and cries of “get on with it Phil!” – Ed.

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views of the author and any people interviewed are their own and do not constitute financial advice. However the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions.