As everybody has already widely commented on the budget, I would like to explore it from a different angle.
To finance the impact of COVID and Brexit, the Chancellor has in essence, taken a gamble or a bet between the Treasury and the tax payers. In other words, he has traded an option and reached his decision on a probable future outcome.
What does it mean?
- Today, the tax payer receives the benefits of no direct or indirect tax increases, they are the seller of the option, but will pay the cost of it at a latter stage.
- The Treasury is now financially impacted with less tax revenues and forced to raise more debts. The treasury is the buyer of the option but will receive the benefit at a latter stage based on a probable future outcome.
If the economy grows massively (i.e. the future outcome) then the future tax increases might be less painful but do not be fooled, these are tax increases whether the time is right or not. However, like any good bankers he has hedged the treasury position as:
- Interest rates are still low and it would be reasonably cheap to raise more debts before interest rates start to rise .
- While simultaneously being able to receive more tax revenues, through a combination of tax increases from 2023 and freezing thresholds until 2026 .
The risk is that the future outcome does not happen. The economy does not recover as well as expected, maybe a combination of COVID and Brexit .
What will happen?
- The tax payers as the seller of the option will have lost the bet which they, unfortunately, did not even take.
- The Treasury as the buyer of the option, will win the bet as taxes will be increased irrespective of future outcome. Of course in the long term, this may cost the current government an election, but it is probably worth the risk.
So, why should you choose Akoni to help you with your client’s cash decisions?
1) Safe and secure with FSCS protection
All deposits are held with each bank providing protection of up to £85,000 per bank, or up to £1 million for Temporary High balances.
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With the option to spread cash across several providers on the Akoni Cash Management Platform, you can diversify risk, and increase the chances of positive returns.
2) Increased returns & Better interest rates
In a climate of economic uncertainty, and with interest rates being cut across many providers, it’s not easy to find decent interest rates in a simple way. With Akoni, you can find competitive interest rates to suit your client’s specific needs.
4) Quicker, and hassle-free - no form filling
Akoni Hub provides a hassle-free cash management experience - your clients can onboard and open an account online with no fuss. Clients will only need to complete one AML/KYC process, can switch between providers, and manage their account on the Akoni Cash Management Platform in just a few clicks.
5) White label Adviser portal and tools
You have the flexibility to create a platform that works for you and your clients. Add your branding to showcase who you are through a sleek, professional cash management platform designed with you in mind.
Find out more about Akoni: Akoni is an award-winning UK cash platform, which provides a marketplace to financial advisors and wealth managers through a bespoke white-label offering, or off-the-shelf offering. Akoni uses innovative technology to personalise cash planning solutions for clients, and also provides a full API solution to banks and insurance clients.