From defender of savers to their worst enemy

Fifteen years on, George Osborne appears to be following the same pattern. The man who at one time talked of the virtues of saving now seeks to undermine savers at almost every turn.

In three weeks he will present his eighth Budget, when he is widely expected to announce changes to pensions tax relief.

Now, I would not be unhappy to see a fairer redistribution of tax relief. But this has all the marks of a tax raid of potentially devastating proportions.

In fact some have suggested it could prove every bit as damaging as Mr Brown’s raid on dividend tax relief in 1997.

It is fascinating to see how Mr Osborne has gradually moved from defender of savers to potentially their worst enemy.

Under the coalition government we had pension freedoms, higher Isa allowances and, in 2014, the decision to allow up to £1,000 of interest to be earned tax-free every year depending on tax status.

But since last year’s General Election, Mr Osborne has plenty to say on taxes and benefits, but surprisingly little to say on saving – except talk of a pension Isa, which would kill upfront tax relief.

There have also been constant rumours that higher-rate tax relief is about to be abolished – fuelled it must be said by those in the investment industry with a vested interest in scaring investors into parting with their money now.

All this from the man who once said: ‘Believe me, I understand that most higher rate tax-payers are not the super-rich.’

Mr Osborne’s behaviour has almost felt at times like that of an old-fashioned Labour Chancellor who feels that the only way to establish his left-wing credentials is to attack those with money to invest.

While his changes to buy-to-let income tax benefits were needed to bring balance to the market, the punitive rate of stamp duty on second homes feels mean, petty and decidedly socialist.

It could even affect first-time buyers who inherit a home from their parents but do not manage to sell it before buying for themselves.

Changes to dividend taxation will mean higher tax bills from April for some investors who have to rely on income from shares. Who cares if their investments are supporting UK industry?

Taken together, these are the actions of a Chancellor who would rather us spend our money than save it. Now who does that remind you of?

These are the actions of a Chancellor who would rather us spend our money than save it

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Property a no-brainer despite burst pipes

I recently had a bit of a Punch and Judy dispute with an IFA friend over property investing.

His argument was basically that investors deceived themselves over its true cost and property investing had no future.

He helpfully pointed out that by investing in shares he would not get a call at 2am demanding a burst pipe be mended.

Fair enough. But then again property investors are unlikely to see the value of their capital fall by 2.5 per cent in a day.

The problem right now is what can investors do with their money? As I have mentioned above, pensions are under attack – the £1m lifetime limit will drop into place next month.

Putting new money into the stock market feels about as welcome as swimming in shark-infested waters.

Cash savers are half-way through what looks like a lost decade. Axa Wealth says the value of cash has fallen by an average 1.69 per cent per annum since March 2009 based on £5,000 in an instant access account.

Wise savers will have found better rates, but returns are still puny and look set to remain that way for a few years.

Some may like the look of gold, while the more adventurous may dabble in wine and other alternatives.

Against all this the solidity of property in the right location in a market that seems perpetually under-supplied probably does not look so awful to many with money to invest – even with all the extra costs.

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Freedom blockers out of step

Anyone dragging their heels handling pension transfers should now be in no doubt of the Government’s attitude to the issue following its response to the Pension Transfer and Early Exit Charges consultation.

A small but significant number have been effectively prevented from accessing the pension freedoms.

Baroness Ros Altmann pushed home the Government’s message: “No consumers should have to pay excessive early exit fees, regardless of the type of scheme they are in.”

You cannot make it clearer than that. Let us hope the pensions world is listening.