Investments  

Investors can ride out the UK's political storm

Lana Corrienne Mallon

Lana Corrienne Mallon

In the three months since deciding to write this article, the UK political arena and Brexit strategy has changed so frequently and quickly it has made it impossible to take a position.

At the time of writing, Theresa May is looking to hold a fourth vote on the UK Brexit deal, although the European elections will be held on 23 May.

What is more, the recent local elections showed a combination of surprising party wins and losses, and growing hostility among the electorate.

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As a result of ‘Definite maybes’, changing loyalties and both Tory and Labour MPs flocking to the new and rising Brexit Party, the uncertainty around Brexit continues.

In addition, the past two years have shown that the ‘political party popularity pendulum’ continues to frequently swing with velocity.

The creation of the Independent group in the midst of everything leaves additional uncertainty in understanding, once the Brexit dust has settled, which party will be leading the UK into the future and what this means for taxpayers.

For the fatigued adviser, or individuals considering succession and legacy planning, any and all options leave questions about portability of existing planning structures, access to funds, diversification of investments and potential changes to taxation which would impact the many, not the few.

Government challenges

While we can look into 2019 with no immediate election in sight, Brexit and political party turmoil have kept the prospect of a change in government alive.

One would expect any government in the aftermath, to be focused on the available sources to generate revenue for the long and short- term.

As an example, the government has already set out that tariffs are to vanish from 87 per cent of imports in an attempt at preventing a ‘price shock’ in the event of a No Deal exit from the EU which was increasingly more likely.

Countering revenue lost from import tariffs is likely to be through increasing taxes, historically, to the wealthier divisions of society. This move has not only proved popular in sections of the voting population, but it provided governments with immediate cash flow.

The absence of a Labour government for an extended period of time, has allowed a Conservative agenda to root itself in people’s expectations of what tax changes and updates would be. Depending on who leads Labour post-Brexit, their policy outlook, and therefore impact, could be very different.

However, the mounting pressure for Theresa May to quit the Conservative party leadership, creates further uncertainty on which party will lead Britain post-Brexit. Political instability can leave investors and advisers wary of taking steps or making decisions, particularly where personal wealth is concerned.

Tax changes afoot?

Increasingly fraught Brexit discussions may cause clients to start considering more radical action, prompted in part by the nature of the Labour government that might come into power, in particular under a ‘Corbyn-led’ Labour.

Reflecting the Labour Conference Autumn 2018, some of the measures put forward by the opposition have been well publicised: