PM-in-waiting tries a Budget balancing act

Brown daren't raise taxes - but he could still close loopholes

In 10 days' time, Gordon Brown is due to unveil his 10th Budget. And, prime ministerial ambitions very much in mind, his top priority will be his relationship with the tax-paying electorate.

"As this could well be his last, the Chancellor will look to deliver a Budget which he feels confident will help him as a new prime minister," says Ian Luder, tax partner at accountants Grant Thornton.

Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants, agrees. "I think he will minimise tax rises where he can - leaving these to his successor," he says. "He will want to show he is a man of the people, and go out on a high."

The first Budget of a new parliamentary term is often an occasion to announce unpopular measures. But within the financial services industry there is a strong feeling that, this time, nasty shocks such as an increase in national insurance contributions or the standard rate of VAT are unlikely.

"Instead, the Budget could provide the Chancellor with the opportunity to pursue some of his current hobbyhorses - such as green policies and [a clampdown on] tax avoidance," says Victor Dauppe, tax principal at accountants MacIntyre Hudson.

That said, the Chancellor's spending programme and subsequent budget deficit mean he will need to boost tax revenues.

Below, we take a look at the Chancellor's options, what the tax specialists expect him to do, and what they would like him to do.

Tax avoidance

New rules demanding that accountants disclose details of tax-avoidance schemes such as onshore and offshore trusts have already been announced, and will be extended from 6 April, the start of the new tax year.

Mr Roy-Chowdhury predicts a widening of these measures to take in areas such as stamp duty and inheritance tax. Those most affected are likely to be people with comfortable incomes, rather than the super-rich.

Savings

Individual savings accounts (ISAs) and the child trust fund (CTF) could be enhanced in the Budget.

Last year, the Chancellor announced that the £7,000 annual limit for investing in tax-free ISAs would stay in place until 2010. But there are calls for this allowance to be extended beyond this date, and also to be raised.

Speculation is also rife about the Savings Gateway, a pilot scheme under which the government matches savings accumulated by those on low incomes.

"Is this going to be taken forward or quietly dropped?" asks John Whiting of accountants PricewaterhouseCoopers.

The Chancellor may also decide to put a figure on proposed CTF payments to be made when a child reaches the age of seven.

Pensions

On the question of self-invested personal pensions (Sipps), independent financial advisers (IFAs) and pension providers are desperate for the Chancellor to finalise details of any further restrictions on investors. In December, Mr Brown horrified the industry when he did a U-turn and decided that exotic investments such as holiday homes could no longer be put into Sipps.

A-Day - on 6 April - will bring about the biggest changes for years in the UK's pensions regime, including greater flexibility for those taking benefits from pension schemes. From A-Day, people can opt to bequeath part of their pension savings to their families - but the inheritance tax (IHT) implications are still unclear, and tax specialists will be looking to the Chancellor to provide answers.

VCTs

Investors are nervous about changes to tax rules surrounding venture capital trusts, which back small unquoted companies or start-ups. Since 2004, VCT investors have received 40 per cent income tax relief, but this is due to end on 5 April. Many experts, including Grant Thornton's Mr Luder, expect it to revert to 20 per cent.

Trusts

Draft legislation has already been published on modernising the taxation of trusts - often set up by grandparents for grandchildren.

Andrew Swallow from IFA Swallow Financial Planning warns that family trusts could be dealt a "massive tax hit".

The environment

Could Mr Brown use this Budget to push a green agenda?

Mr Whiting says: "We may see small moves towards an environmentally based tax system - such as a rise in air passenger duty."

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
people
Life and Style
healthMovember isn't about a moustache trend, it saves lives
News
people
Life and Style
food + drinkFrom Mediterranean Tomato Tart to Raw Caramel Peanut Pie
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment
Armstrong, left, and Bain's writing credits include Peep Show, Fresh Meat, and The Old Guys
TVThe pair have presented their view of 21st-century foibles in shows such as Peep Show and Fresh Meat
Arts and Entertainment
Keys to success: Andrew and Julian Lloyd Webber
arts + entsMrs Bach had too many kids to write the great man's music, says Julian Lloyd Webber
Arts and Entertainment
Hand out press photograph/film still from the movie Mad Max Fury Road (Downloaded from the Warner Bro's media site/Jasin Boland/© 2014 Warner Bros. Entertainment Inc.)
films'You have to try everything and it’s all a process of elimination, but ultimately you find your path'
Extras
Boys to men: there’s nothing wrong with traditional ‘manly’ things, until masculinity is used to exclude people
indybest13 best grooming essentials
News
i100
Arts and Entertainment
Imelda Staunton as Dolores Umbridge in the Harry Potter films
books

New essay by JK Rowling went live on Pottermore site on Friday

News
Russia Today’s new UK channel began broadcasting yesterday. Discussions so far have included why Britons see Russia as ‘the bad guy’
news

New UK station Russia Today gives a very bizarre view of Britain

Arts and Entertainment
Keira Knightley and Benedict Cumberbatch at the premiere of The Imitation Game at the BFI London Film Festival
filmsKeira Knightley tried to miss The Imitation Game premiere to watch Bake Off
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    The benefits of Recruitment at SThree...

    £18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

    Trainee Recruitment Consultants

    £20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

    Finance Assistant - Part time - 9 month FTC

    £20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

    Marketing Manager

    £40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

    Day In a Page

    Bryan Adams' heartstopping images of wounded British soldiers to go on show at Somerset House

    Bryan Adams' images of wounded soldiers

    Taken over the course of four years, Adams' portraits are an astonishing document of the aftermath of war
    The drugs revolution starts now as MPs agree its high time for change

    The drugs revolution starts now as MPs agree its high time for change

    Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
    The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

    Gotcha! The camera is turned on tabloid editors

    Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
    Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

    Fall of the Berlin Wall

    It was thanks to Gorbachev that this symbol of division fell
    Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

    What makes ouija boards and demon dolls scary?

    Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
    A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

    Rose Rouse's safari in modern Britain

    Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
    Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

    'My world of no smell and odd tastes'

    A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

    Matt Parker is proud of his square roots

    The "stand-up mathematician" is using comedy nights to preach maths to big audiences
    Paul Scholes column: Beating Manchester City is vital part of life at Manchester United. This is first major test for Luke Shaw, Angel Di Maria and Radamel Falcao – it’s not a game to lose

    Paul Scholes column

    Beating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
    Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

    Frank Warren column

    Call me an old git, but I just can't see that there's a place for women’s boxing
    Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

    Adrian Heath's American dream...

    Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
    Simon Hart: Manchester City will rise again but they need to change their attitude

    Manchester City will rise again but they need to change their attitude

    Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
    Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

    A Syrian general speaks

    A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities