Pre-Budget Report 2009 - Predictions
I have to say that trying to predict what is likely to happen in the Pre-Budget report due in the next few weeks, I have some sympathy with Alastair Darling. Sitting on a fence may be uncomfortable, but coming down on either side could be disastrous.
The problem really is whether to announce legislation to be introduced in next year’s Finance Bill, when a different Government may be in power; to introduce legislation with immediate effect and risk the wrath of the electorate, or actually to do very little but promise a lot if re-elected.
In reality, whichever Government is elected it will need to raise substantial sums of money in addition to cutting public expenditure. Raising money will almost certainly be done by way of tax and National Insurance (unless you already count NIC as a tax). It seems somewhat unlikely that income tax would rise above 50% but the differential between income and Capital Gains Tax is an obvious target. Similarly, at 17.5% (from January) the UK’s VAT rate is one of the lowest in Europe.
Judging by recent press comment about 'tax cheats' I think we are also fairly safe in assuming there will be a lot of anti-avoidance legislation, probably with immediate effect, some of which has already been announced and some of which will undoubtedly follow.
We will be blogging on SME Plus Blog and Tax Plus Blog on Pre-Budget Report day. If you do not already subscribe to our blogs click here for SME Plus Blog or here for Tax Plus Blog to ensure you get our comment and analysis as and when it happens.
Cathy Corns is a tax adviser and a partner at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Cathy you can call her on 01908 605552.
Date: 10th November, 2009
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