Bassline 18 – A Perspective on the Budget from Lance and Adrian

Our latest podcast is a chat with Lance and Adrian about the recent UK budget and its potential impact on businesses, investors, and individuals. 

Here are some key takeaways worth noting:

1️⃣ Borrowing & Gilt Yields: With new fiscal rules allowing more borrowing leeway, the government has turned to accounting shifts to classify assets like student loans as offsets to debt. But this flexibility isn’t without cost—gilt yields are on the rise, increasing borrowing expenses. As Lance noted, the increased cost of government debt could mean less spending elsewhere. 

2️⃣ Capital Gains & Inheritance Tax: The changes in capital gains tax, especially for entrepreneurs selling businesses, will sting. Entrepreneurs’ relief rates are gradually rising, which might discourage growth in small businesses. And with inheritance tax adjustments pulling pensions back into the taxable estate mix from 2027, Adrian warns that effective legacy planning is more essential than ever. 

3️⃣ National Insurance Shifts: National Insurance contributions have been raised while the threshold has lowered, meaning more costs per employee. As businesses adapt, this could lead to wage freezes or cuts in some sectors, ultimately affecting hiring and wage growth across the board.

4️⃣ Investment & Portfolio Insights: For investors, the budget doesn’t directly shake UK equity markets, which are largely driven by international factors. However, higher gilt yields may make them an appealing option, though inflation and broader economic forces remain key influencers. 

Overall, it’s a budget that combines short-term fixes with longer-term complexities, leaving investors, small business owners, and individuals with plenty to consider. 

So listen to the podcast, and if you want to chat about anything, please contact your adviser.