{"id":20198,"date":"2020-07-09T12:20:21","date_gmt":"2020-07-09T12:20:21","guid":{"rendered":"https:\/\/smh.group\/?p=20198"},"modified":"2023-02-15T13:43:47","modified_gmt":"2023-02-15T13:43:47","slug":"accumulated-runs-two-tricky-hundreds","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/accumulated-runs-two-tricky-hundreds\/","title":{"rendered":"Accumulated runs: two tricky hundreds"},"content":{"rendered":"\n

The cricket season may only now be slowly getting underway, but May saw the Chancellor score two centuries which, in different times, would have deeply worried investors.<\/strong><\/p>\n\n\n\n

Every month the Office for National Statistics (ONS) publishes a detailed summary of the public sector finances, showing how much the public sector has spent and how much income (mostly taxes) it has received in the preceding month. It is the sort of data that interests the more investment-oriented economists, but few others. <\/p>\n\n\n\n

May\u2019s data was somewhat different and received national headlines. It showed the stark impact of the two months of the Covid-19 pandemic and the government\u2019s wide-ranging \u2018whatever-it-takes\u2019 response:<\/p>\n\n\n\n

The first of those centuries is tied to government borrowing. In the first two months of the 2020\/21 financial year, the estimated figure stands at \u00a3103.7bn. To put that eye-watering number into perspective, it is six times the amount borrowed in the same period last year and the highest amount for any April\/May period since ONS monthly records began in 1993. In terms of tax, \u00a3103.7bn is almost equal to the total amount of VAT the government is projected to collect in 2020\/21.<\/p>\n\n\n\n

If \u00a3103.7bn sounds like a millstone, then it is nothing \u2013 well, about 5% \u2013 compared with the government\u2019s total debt, that is, its accumulated borrowing over many years. In May that reached \u00a31,950.1bn (the \u00a30.1 billions still count). That figure produced the second century because it was equal to 100.9% of the UK\u2019s gross domestic product (GDP).<\/p>\n\n\n\n

In other words, the UK\u2019s debt was just slightly bigger than a year\u2019s worth of the country\u2019s entire output. The last time the 100% barrier was breached was in 1963, when the government was still in the business of paying down the debt it had incurred in the Second World War.<\/p>\n\n\n\n

It sounds grim and will get worse, but at least for now the interest on all that debt is affordable. The government currently can borrow for 30 years at a fixed rate of about 0.7% and over 10 years at just 0.25%. If interest rates were to start rising, that is when the problems could begin, so HM Treasury will want to reduce the overall level of debt over time. And it will probably be a long, long time. Taxes will rise and manifesto promises may fall by the wayside. Some tax shelters could be watered down, as happened with entrepreneurs\u2019 relief (now business asset disposal relief) in March, or even disappear.<\/p>\n\n\n\n

We should learn more in the Autumn Budget. Meanwhile some pre-Budget tax planning<\/a><\/span><\/strong> could be a wise precaution.\u00a0Our Financial Planning<\/a><\/span><\/strong> team are on hand to assist, and can be contacted on 0114 266 4432<\/strong> or info@smhca.co.uk<\/a><\/span><\/strong>\u00a0<\/p>\n\n\n\n

The value of tax reliefs depends on your individual circumstances.<\/em><\/h6>\n\n\n\n
Tax laws can change.<\/em><\/h6>\n\n\n\n
The Financial Conduct Authority does not regulate tax advice.<\/em> <\/em><\/h6>\n","protected":false},"excerpt":{"rendered":"

The cricket season may only now be slowly getting underway, but May saw the Chancellor score two centuries which, in different times, would have deeply worried investors.<\/p>\n","protected":false},"author":4,"featured_media":20199,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[16],"tags":[550,612,191,77,190,613,259,436,19,14],"class_list":["post-20198","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-services","tag-borrowing","tag-cricket","tag-finance","tag-financial-planning","tag-government","tag-interest","tag-office-for-national-statistics","tag-ons","tag-tax","tag-tax-planning"],"acf":[],"yoast_head":"\nAccumulated runs: two tricky hundreds - SMH Group Financial Planning<\/title>\n<meta name=\"description\" content=\"The cricket season may only now be slowly getting underway, but May saw the Chancellor score two centuries which, in different times, would have deeply worried investors.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Accumulated runs: two tricky hundreds - 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