PM-in-waiting tries a Budget balancing act
Brown daren't raise taxes - but he could still close loopholes
Sunday 12 March 2006
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.
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.
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.
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.
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.
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".
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."
auctionThe first 23 lots have now gone. But there are 22 more still up for grabs
healthJames Bond's alcohol consumption puts him at 'high risk' of cirrhosis, tremors... and impotence
musicPolice chief rejects rappers' claims that his work is as dangerous as law enforcement or military service
comedy'Fresh Meat' star sees off stiff competition from Alan Carr, David Mitchell, Graham Norton, Lee Mack and Sarah Millican to win top prize
tvSpoiler alert: Find out the result of a heated final show
Beatles rush out 'bootleg' album to defy EU copyright law
Harvey Weinstein reveals his secret weapon on-set
Now that an oil trader's drinking has got him sacked, will we all have to make do with an afternoon latte?
Chiwetel Ejiofor and Idris Elba get nods for Best Actor, which no black Brit has ever won
Geoffrey Macnab reviews The Desolation of Smaug - the meat in Peter Jackson's Hobbit sandwich
peopleWhat advice would David Cameron give to his younger self?
- 1 French café starts charging extra to rude customers
- 2 Sun will 'flip upside down' within weeks, says Nasa
- 3 Australia incest case: Severely deformed children found in remote farming community after generations of inbreeding
- 4 Physicists discover 'clearest evidence yet' that the Universe is a hologram
- 5 Fox News presenter tells viewers it is a 'fact' that both Jesus and Santa Claus are white
- < Previous
- Next >
iJobs Money & Business
£30000 - £45000 per annum + Bonus + Benefits: Harrington Starr: Regulatory Man...
£50000 - £75000 per annum + benefits + bonus: Harrington Starr: Pre-Sales / Cl...
£40000 - £60000 per annum + Bonus + Benefits: Harrington Starr: Regulatory Man...
£40000 per annum: Harrington Starr: Senior Network Engineer (CCNP, CCIE, Netwo...
Day In a Page
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.
John Lennon's childhood home in Liverpool to be sold at auction. Guide price: £150,000-£250,000.
A six-bedroom detached period property with secluded gardens, ample parking and a double garage in Rye, £675,000.
A large split-level property with three double-bedrooms and roof terrace, close to Crouch End Broadway, £625,000.
A charming barn conversion in the picturesque Cotswold village of Ilmington with three bedrooms, a detached garage, workshop and beautifully manicured gardens £675,000.