You might be wondering what a kitten has to do with this week’s budget.
Research shows that people can’t resist looking at kittens, puppies and babies (maybe that’s why cat videos are so popular on the Internet). This particular kitten is rolling around on a nice green background in honour of St Patrick’s Day. And because it might have been Evelyn Waugh who said: ‘The hardest writing in the world is naming a kitten’.
The Chancellor seems to be having almost as much trouble naming and renaming the ISA – which, as you may remember, took over from TESSAs back in 1999.
First we had the simple ISA. And the Junior ISA. The Help to Buy ISA. The NISA. And now the LISA announced yesterday – the Lifetime ISA that’s designed to help under-40s save for their first property or a pension.
No new changes to pensions were announced, although some commentators think this is a back-door test in advance of abolishing pensions as we know them, and The Times has already called the LISA a Trojan Horse.
Perhaps the next option will be VISA?
Sweeteners for everybody (except property investors)
The surprise tax on sugary drinks starts in 2018, and has made campaigning chef, Jamie Oliver, very happy. The Chancellor expects the tax to raise £520 million per year, and help reduce childhood obesity.
Even sweeter news is that, if you have stocks and shares that are not in an ISA (by any other name), they are subject to Capital Gains Tax (CGT). However, with effect from 6 April, CGT is being cut on those investments, reducing from 28% to 20% for higher rate, and 18% to 10% for basic rate.
This makes us happy, because we provide a General Investment Account (GIA) that helps our clients derive an income from carefully controlled release of their funds that are not in ISAs or pensions, and those gains will be subject to a lower rate of CGT.
However, the Chancellor clearly sees property investors as a cash cow, so there’s to be a surcharge of 8% for people who sell their second (investment) property. Property investors will therefore be hit with the full rate of CGT on sale.
Remember, property investment is not the ‘free lunch’ that some people think. For shocking data about the rise in property prices over time, read our article Property Investing: An Obsession from April 2015.
P.S. If you didn’t like the Budget, here’s a nice song from the ’60s to cheer you up.