Autumn Budget summary
Since the September 2022 Budget, it’s understandable that if you have investments in the UK, you’ll be keen to understand how any policy changes may affect your portfolio.
Following the September 2022 Budget, UK government bond prices fell significantly, and the pound fell to its lowest-ever level against the US dollar. This is still fresh in the minds of many UK investors, but overall, investors and analysts alike don’t envision a similar outcome, and the UK government bond market is holding up well.
Whilst many of the planned announcements could affect your day-to-day life – and certain investors may be affected by changes to capital gains tax and pensions – when it comes to your Investment Plan performance, the effect is likely to be minimal.
If you have an Investment Plan with Wealthify, a key thing to remember is that your Plan is well diversified – not only among different types of assets (shares, property, bonds, etc.) – but also across different regions around the world. This means that UK-specific events – such as the Budget – should only ever affect a small portion of your Investment Plan(s), and you will be well protected in the event of a downturn of UK markets.
Autumn Budget 2024 predictions
Given the amount of pre-Budget speculation, it is likely that many of the potential changes are already ‘priced in’ — so the effect on UK markets may not be as great as expected. And with much of the narrative being focused on promoting economic growth, there are reasons to remain optimistic. Under the still relatively new Government, objectives such as improving public services and increasing infrastructure investment could be key catalysts for the growth of small UK businesses.
Autumn Budget 2024 Stamp Duty
Another topic of the Autumn Budget being talked about is Stamp Duty (SDLT). While the majority of this has been in regard to the housing market and the potential plan to decrease Stamp Duty exemptions for first-time buyers; there has been some speculation around the possibility of removing Stamp Duty from UK shares.
Stamp Duty Reserve Tax (SDRT) is the 0.5% levy on purchases of shares in UK companies. This has long been thought to be a competitive disadvantage to investing in UK markets and with the likes of the US, China, and Germany having no equivalent tax, you can see why. Many think that for a government said to be pro-growth, pro-business, and pro-investment — this tax would be the obvious one to go, as it could be hugely beneficial to the attractiveness of UK markets.
This is one of the many tax changes being speculated about, and until the 2024 Autumn Budget is announced on 30th October, it is impossible to know how markets will react. Bond markets will be wary of just how much the government will be looking to borrow in order to fund their investments (although bond prices do tend to rise with falling interest rates). And whilst it does seem that this Budget could see some wealthier individuals and companies experiencing an impact, there could also be renewed optimism for many sectors in the lower interest rate environment.
Short-term volatility vs long-term investing
Finally, it is always important to remember that we are long-term investors. And while this budget may potentially result in some short-term volatility, that scenario can even be of benefit to investors as it will create opportunities in the market to buy assets at cheaper prices. This is something that the Investment Team at Wealthify continue to monitor as we strive for the best outcome for your Investment Plans.
If you have any questions about your investments, please get in touch with our team who will be happy to help: www.wealthify.com/help-centre
With investing your capital is at risk, so the value of your investments can go down as well as up, which means you could get back less than you initially invested.
Wealthify does not provide financial advice. Seek financial advice if you’re unsure about investing.
The tax treatment depends on your individual circumstances and may be subject to change in future.
