How to adapt investment strategy to a Burnham premiership

Susannah Streeter, chief investment strategist at Wealth Club, said: “The political winds may be shifting toward a more interventionist ‘Manchesterism’ style of economics under Prime Minister Andy Burnham, with potential tax rises on the horizon, but investors must resist the urge to hit the panic button. History shows us that rashly switching and ditching assets based on speculation is a sure fire way to lock in unnecessary transaction costs, trigger premature tax liabilities, and crucially miss out on the power of long-term compounding.

“Market timing is a notoriously difficult game and time in the market is what counts the most. It is also important to remember that a domestic regime change won’t cause global corporate earnings, which power the FTSE 100, to grind to a halt, nor is it likely to stop overseas suitors from circling attractive UK targets.

“However, keeping a steady hand on the tiller doesn’t mean cutting yourself adrift from changing realities. It is vital to remain nimble and ready to adjust your course as the political winds begin to blow in a new direction. With the spotlight firmly on wealth and property under a Burnham administration, the radar is flashing red for potential changes to Capital Gains Tax (CGT) and the top-rate of income tax. For those looking to shelter their portfolios, it is well worth exploring government-backed, tax-efficient life rafts like Venture Capital Trusts (VCTs), the Enterprise Investment Scheme (EIS), and the Seed Enterprise Investment Scheme (SEIS).

“These vehicles offer a highly attractive double-whammy of upfront income tax rebates, scaling up to 50 per cent under SEIS, alongside completely tax-free capital gains growth. While EIS allows you to defer existing capital gains, SEIS provides 50 per cent relief, when directly investing into early-stage businesses. VCTs offer a different ride via a diversified, listed fund structure that pays tax-free dividends and 20 per cent initial tax relief. Each is undeniably higher risk and requires holding your nerve, but as a strategic shield against a shifting fiscal landscape, they deserve a closer look.

“With public markets feeling like a bit like of a see-saw, caught between geopolitical fractures and stretched tech valuations, investors are naturally looking elsewhere to find some shelter and stability. Private markets offer an excellent alternative, especially with the growing ability to move slices of SIPP investments into some of the world’s biggest private equity and real asset firms. It is super important to ensure you are making the most of all tax-wrappers, and SIPPs are central to this strategy.

“Andy Burnham in Downing Street has the potential to act as a significant accelerator here. He has long championed a blueprint of unlocking huge tranches of private capital to power regional growth. Of course, private markets aren’t a smooth ride for everyone, given that your money is less liquid and locked up for longer. But as the government seeks a recipe for long-term economic growth, firms with deep pockets and a track record of funding multi-year projects are the ones likely to get the biggest bite of the cake.”