Why savers and investors are the real Budget winners

Commenting on the changes introduced in today’s Budget, Gary Heynes, RSM’s Head of Private Client, said

‘The Chancellor promised that this would be Budget for savers and investors, and he certainly stuck to his guns. 

‘The biggest surprise was the cut in capital gains tax from 28 per cent to 20 per cent, which will encourage longer-term investment in, for example, shared portfolios. However second home owners and landlords will not benefit after the Chancellor announced that an eight per cent surcharge would be levied on capital gains on residential property. This will come as a blow so quickly after the rise in stamp duty in last year’s Autumn Statement. Similarly those in the private equity who hold carried interest will not benefit. 

‘The extension of entrepreneurs’ relief to long term investors in unlisted companies will be welcomed by investors as it means they will now get a 10 per cent rate of capital gains tax on newly issued shares from 17 March 2016. However if a company is unlisted and qualifies for the Enterprise Investment Scheme (EIS), then they will already be exempt from paying CGT on their shares – so how this new relief interacts with EIS will need to be considered. 

‘Young savers were given a welcome boost with the introduction of the Lifetime ISA. This was a smart move as it gives young people a flexible pension pot but there are restrictions when it comes to drawing down on the ISA which may mean that pensions still remain attractive. This is just another route to retirement savings and the right option will need to be considered carefully on an individual basis.’