Next week sees the latest step in a two-decades long assault on investors as another chancellor acts to undermine the power of the dividend.
What it is precisely that so irks chancellors of the exchequer when faced with this reward to those who support companies with their cash or create jobs with their enterprise, I cannot say.
But the evidence is there, and next week yet another rap can be added to the charge sheet as the amount of tax-free allowance on dividends outside Isas is slashed from £5,000 to £2,000.
The government estimates 2.27m people could be hit, paying an average of £315 more tax a year and raising £800m to £900m a year for the Treasury.
Dividends, as every keen investor knows, are the key to long-term profits. Philip Hammond is the latest chancellor to decide they are also the key to raising tax income.
Mr Hammond follows in the footsteps of Gordon Brown, the prime pilferer, who removed the tax credit from dividends paid to pension schemes in his first Budget.
Although many other factors have contributed, this was a crucial point in the demise of final salary schemes.
Tax-free savers were the next victims as Isas were initially given a smaller tax credit than their predecessors, Peps, and then had it removed.
This latest attack will hit any investor who holds around £53,000 or more in shares outside an Isa, assuming a yield of 3.8 per cent.
Above this, basic rate taxpayers will pay 7.5 per cent, higher rate, 32.5 per cent, while additional rate payers will face a 38.1 per cent bill.
What is most extraordinary about this change is that the £5,000 limit was only introduced in April 2016 as a sop to changes that were supposed to target small business owners who paid themselves in dividends – but threatened to catch pensioners who relied on dividends for their retirement income.
The previous rules had assumed a notional tax rate of 10 per cent but left basic rate taxpayers with no more to pay (or reclaim in the case of non-taxpayers), while higher rate payers faced a 25 per cent bill and additional rate payers 30.56 per cent.
The changes in April 2016 were expected to raise an extra £9bn between then and 2021.
Isas can provide part of the solution for mitigating the tax hike – though transferring share holdings into Isas comes with costs, tax traps and risks.
This whole episode creates an impression that those at the top level of government regard investors and small business owners as targets to be exploited rather than vital contributors to a vibrant economy to be nurtured.
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Financial advice freebie
Nottingham Building Society conducted an online poll of 1,079 adults, which showed that almost three-quarters would consider becoming a customer of a bank or building society that offered financial advice.
A couple of points sprang to mind. Some banks are closing branches so fast rural customers would probably have to travel for hours to find one.
And Nottingham is regularly named as England’s poorest city. ONS figures for 2015 put the gross disposable household income there at £12,779 per head, less than a quarter of that in the wealthiest areas – so bank financial advisers might find poor pickings there.
To be fair to Nottingham Building Society, it has more than doubled its number of branches to 67 since 2012.
It also offers an initial free face-to-face financial planning session to members as part of its rewards scheme.
So let’s give credit for raising the issue.
If there is a future for financial advice in banks and building societies it has to be more than linking with one insurance firm or flogging the products of an in-house investment operation.
Perhaps this small but growing society is showing one possible way ahead. Time will no doubt tell.
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Knowledge is power
Almost half of advised clients have no idea what they are paying for their defined contribution pension, according to the FCA.
Do not make me laugh.
I would have thought the figure was closer to 0.48 per cent rather than the 48 per cent claimed by the FCA.
Perhaps some may think they know, but very few will have any idea down to the nearest pound how much went out of their pension to pay for the array of fees and charges levied on it.
There is only one thing worse than not knowing. And that is not knowing that you do not know.
