Markets seemed unfazed by Chancellor Jeremy Hunt’s Autumn Statement (a budget in all but name). Creditors were also placated, which was a relief considering what happened the last time a new British chancellor took to the dispatch box to lay out Britain’s spending plans. And voters can take comfort in the fact that Hunt managed to keep his policies within the Tory manifesto, by scheduling tax hikes and public spending squeezes for after the next general election in 2024.
This interesting chart from Bloomberg shows where the tax hikes and spending cuts will provide money:
But let’s not kid ourselves that this was a positive statement. In the coming years, Brits are going to see their tax bills scream skywards via a series of stealth tax hikes:
- Dividend and capital gains threshold has been slashed (remember to use your ISA allowance)
- The threshold for the additional rate of income tax has been lowered to £125,140 (the pension salary sacrifice can help you manage your tax bill)
- The freeze on the inheritance tax threshold has been extended along with almost all other personal tax allowances (investments in many AIM companies are exempt from IHT)
So while there are a few mitigations which can help you handle the pain of the tax rising tax bill, this update on top of the squeeze in living standards caused by rising mortgage and interest rates means it’s bleak out there. Unfortunately the financial results that we’ll be running through this week don’t provide much cheer either:
- Vodafone’s cash concerns could put pressure on the dividend
- SSE has a tricky task ahead to please all stakeholders
- Are sin stocks the way to invest as 2022 comes to a close?
Next week I will make an effort to search for cheerier topics!
Vodafone: Cash flow concerns
Many investors don’t like the EBITDA figure because it hides what is actually going on at a company. Vodafone (LON: VOD) uses ‘adjusted EDITDAal’ as its headline metric - a figure which includes depreciation on leased assets, but excludes that on owned assets and joint ventures. It is very hard to unpick. But no amount of accounting wizardry can hide the problems at Vodafone. The business is haemorrhaging cash, leaving the dividend (currently yielding just over 8%) on shaky ground.
In the six months to September, Vodafone spent €2.2bn on mobile network licenses leading to a free cash…
