You will have by now received our budget update detailing the main points from Rishi Sunak’s Budget from last month. You will have probably also received several other organisations’ budget updates.

We thought it might be useful to summarise the key points that will affect many Satis clients and also to offer some commentary.


The key point here is that this was 2021’s third budget. The real budget was Boris Johnson’s announcement in September regarding the National Insurance increases that I mentioned at the client appreciation event. This was the real blockbuster (and manifesto busting) announcement. Rishi Sunak’s budget in March announced the freezing of personal allowances and other tax thresholds plus a substantial rise in corporation tax (for larger companies). So by the time we got to the third budget, most of the big announcements had already been made.

Capital Gains Tax – The feared revisions did not materialise and a very welcome increase in the deadline for reporting and paying capital gains tax (CGT) on the sale of second properties was announced. The current (idiotic) deadline of 30 days is increased to 60 days. 60 days is still tight to gather all the information required when selling a second property, but it is far more sensible than the current limit of 30 days.

State Pension – confirmation that the triple lock will not apply (it is “temporarily suspended”) and state pensions will instead rise by a more modest amount. Also as previously announced the earliest date that most individuals can start withdrawing money from pensions will increase to 57 from 2028

Income Tax rates and inheritance tax rates are unchanged. The freezing of personal allowances, capital gains tax annual exemption, inheritance tax nil rate band and pensions lifetime allowance will all result in significantly greater tax revenue for the UK government.

That really is about it. And the alcohol duties system will be simplified.

Taken in the round, the three budgets of 2021 amount to an extraordinary tax and spend strategy. This hardly looks like a Tory plan, but we live in extraordinary times. It is clear from the post Budget interviews that Mr Sunak, along with many of his MP colleagues, see this as a high-water mark and plan to offer tax cuts later in this parliament.

While there will always be exceptions, businesses are worried about:

  • the increasing of corporation tax
  • the increase in the tax burden
  • the increase in inflation
  • the knock-on effect on individuals’ disposable income

While Boris Johnson talks of a high wage economy it takes great optimism to see how this is going to happen in the near term. Stories of stratospheric starting salaries for lawyers capture headlines but the Office for Budget Responsibility (and others) forecast very low overall increases in disposable income. This is hardly surprising given the freezing of all those allowances plus the pandemic effect. Given this we remain very happy that we have a modest exposure to UK listed companies in our portfolios.

To finish these thoughts on a positive, though not in the budget, HMRC have confirmed that the limit for excepted estates will rise. This is a complicated area, but excepted estates are broadly estates where no inheritance tax is due, and the total value of the estate is less than £1,000,000. This limit is to be raised to £3,000,000 for deaths after 1 January 2022. This is a welcome measure that will mean far less paperwork will have to be completed for estates that meet these new rules.


The positive statements and mood that were a feature of the Glasgow summit were encouraging and there is much to praise. The deforestation commitments for instance are significant. However I notice the media is talking a great deal about fossil fuels – this is a complicated area where soundbites and voxpops are memorable but misleading. Yes, there was an eye-catching agreement to phase out coal power. But China, India and the US were not signatories and account for about 70% of global production.

This has brought Environmental, Social and Governance (ESG) or Socially Responsible Investing (SRI) back into the press. ESG investing has not been around very long – a dozen years maybe; SRI however has been around for far longer. Using our own definitions (in a Humpty Dumpty sense) SRI is fundamentally an exclusionary policy.

There is historic data suggesting exclusionary policies may reduce returns. We are nervous of extremely exclusionary policies (a small number of exclusions are easy – cluster bomb manufacturers for example). Exclusionary policies may well damage your return – and I doubt they work. If we sell all our shares in BP, for example, what happens to BP? Not much except that BP has a new shareholder. And that new shareholder surely will not have the same high moral standards of a Satis client. (In the long run I acknowledge that the cost of capital for BP may rise if there are enough sellers)

The largest fund manager on the planet is Black Rock which is run bv Larry Fink (aka the ten trillion-dollar man). Larry Fink describes the selling of these stocks by pension funds and the purchase of them by hedge funds / private equity as “the biggest arbitrage in my lifetime”. That is some call.

Our belief is in engagement. All the fund managers we use engage very actively with the companies in which we/they invest. They work with BP, Shell, Amazon et al to encourage them to behave better. This is the sensible strategy right now. We will continue to own these stocks, we will continue to engage with these companies and in doing so we can be pleased that we are investing intelligently and with consideration for our planet.