Alternatively, a substantial widening of the 20p band would spread a small amount of jam even more widely by benefiting the lowest paid as well as basic-rate taxpayers.
If you take the Prime Minister's recent remarks about priority for cutting income tax literally, however, the chances of the Chancellor abolishing inheritance tax and capital gains tax this month have diminished considerably.
Abolition would cost him pounds 2.5bn in a full year and almost certainly leave the Chancellor with too little in hand to implement a cut in the standard rate of income tax as well.
It would also give a Labour Chancellor the opportunity to score political points by reinstating both taxes after the next election.
The Chancellor could, however, simplify CGT by rebasing the indexation allowance. At present, any realised gains on assets which were owned before 1982 are calculated on their value in 1982 and all taxable gains since then are diluted in line with the retail price index.
But it becomes increasingly difficult as time goes by to put a 1982 value on assets other than quoted stocks and shares which have been held for 14 years or more.
There is also a case for taxing long-term gains less heavily than short- term gains, if only to spike the guns of the shadow Chancellor, Gordon Brown, who would almost certainly introduce a two-level tax next year. Either way, however, it makes little sense for investors to establish a taxable gain, or give away assets to minimise inheritance tax before the Budget.
Mr Clarke could please investors by increasing the amounts which can be invested each year in tax-free Tessas and PEPs, especially if CGT continues.
A move to merge the allowances for single-company PEPs and ordinary PEPs is also quite likely. If he wants to be imaginative, he may try to consolidate the annual amount which can be invested tax-free in Tessas, Peps and pension funds combined, on the grounds that few people can afford to put the maximum available into all three pots, and the current rules on tax relief for pension contributions are forbiddingly complicated. But immediate changes in mid financial year are unlikely.
The housing market is hoping the Chancellor will not further reduce the tax relief on mortgage interest payments, and that he will raise the starting point for stamp duty to exempt more house purchases altogether.
Employees in profit-related pay and company share option schemes are also hoping the Chancellor will reaffirm his support rather than clamp down on over-generous schemes, and venture capital trust promoters are hoping for concessions.
Some taxes seem certain to rise. A controversial 1 per cent increase in VAT would damp down spending and pay for bigger cuts elsewhere.
Petrol and tobacco excise duties are certain to rise, as part of the Government's environmental and social programme, so it will pay to top up before the 26th.
But the Chancellor will be pulled two ways on taxing beer, wines and spirits. Rises in the insurance premium tax and the air passenger duty on travellers using UK airports are quite possible.Reuse content