Few can deny that 2016 was an eventful year, and its shockwaves will be felt well into 2017. With that in mind, we’ve put together a round-up of the key financial events in the year.
The year started with Cameron and Osborne still in power, with Mr Osborne delivering his final budget (though he didn’t know it yet).
Some key income factors were changed, including an increase in the threshold at which people pay 40% income tax from £42,385 to £45,000 by April 2017, and a reduction in the headline rate of corporation tax – currently 20% – to fall to 17% by 2020.
Investors and savers also benefited, with a reduction in Capital Gains Tax from 28% to 20% (or 18% to 10% for basic rate taxpayers), a rise in the annual ISA limit from £15,240 to £20,000 and a New “lifetime” ISA for the under-40s, with government putting in £1 for every £4 saved.
And finally, changes to Commercial stamp duty (0% rate on purchases up to £150,000, 2% on next £100,000 and 5% top rate above £250,000) changed the property market almost overnight, with a rush to buy before the changes took effect.
In a great initial upset for the markets, Britain voted for Brexit, which has since led to a sharp drop in the pound, from which it still has not recovered. Though it didn’t lead to the instant recession many had predicted, it has had a profound impact on investments, and the economy as a whole.
In another upset for expectations, Donald Trump reigned supreme at the US elections, though his impact on financial matters is a little less clear cut. He has made both positive and negative statements on many, often contradictory things, and seems in favour of both a trade deal with the UK and simultaneously against free trade. What this will look like in reality remains to be seen, but though there has not been a great upset, markets and investors do not like uncertainty.
Finally, after the Brexit vote, Britain had a new Prime Minister, and a new Chancellor. There was much speculation on where Phillip Hammond would land on a wide range of issues. That said, by and large he seemed content to hold steady and maintain previous plans to reduce the deficit, albeit with a more cynical outlook as to the outcome.
Among other changes, Higher rate income tax threshold continued to rise (to £50,000 by the end of the Parliament), though tax savings on salary sacrifice and benefits in kind are to be stopped, with exceptions for ultra-low emission cars, pensions, childcare and cycling.
And finally, yet another imposition on the letting market in the form of a ban on upfront fees was introduced, alongside an announcement of a £2.3bn housing infrastructure fund to help provide 100,000 new homes in high-demand areas, and £1.4bn to deliver 40,000 extra affordable homes. What effect these investments will have on house prices and property investments remains to be seen, however for the time being prices rises seem to be slowing at worst.
So what now?
Though 2016 was greatly eventful, its impact and effects may only come to light as 2017 progresses. Many things have changed, and there is a great deal of uncertainty and doubt. More than ever it’s important to have your assets and investments carefully cared for by your own expert financial advisor who can watch the changes as they happen, and make judgements based on years of investment experience.
If you’re worried about the possible upsets of 2017, make an appointment or call one of our advisors today on 0191 2299722.