Budget 09: What to expect

Conjecture over whether November's pre-Budget report was in fact representative of an early Budget, along with the sheer scale of the economic deterioration that's transpired since the PBR, will mean all eyes will be on chancellor Alistair Darling.

Here, we take a look at the key agenda items and what leading advisors are hoping and predicting will be announced.

• A state guaranteed credit insurance scheme is likely to be announced, according to Alvarez & Marsal Taxand. This will be a temporary measure - the key will be the amount which will be guaranteed by the Treasury and the implications for firms whose cover has been withdrawn

• Deloitte is calling for an extension of HMRCs Business Payment Support Service. Bill Dodwell, head of tax policy at Deloitte, said the service has proved to be valuable and needs to be renewed and extended. Reports at the beginning of April noted that £1.8bn had been advanced under the scheme, to over 100,000 taxpayers. Businesses and individuals that deferred tax payments under the scheme are unlikely to have turned the corner and further deferrals will be needed

• Mid-tier firm Smith & Williamson are predicting the capital gains tax rate could be increased from its current flat rate of 18% to an individual’s marginal rate of tax. This would immediately stop any perceived tax avoidance strategies that attempt to classify income as capital gains.

• Stephen Herring, senior tax partner at BDO Stoy Hayward, said chancellor Alistair Darling may respond to opposition calls for the corporation tax rate to be cut from 28% to 25% (or lower) to restore the UK's tax competitiveness. This could be achieved without significant cost to the Exchequer if certain other reliefs were reduced

• Grant Thornton would like to see the cash accounting threshold increased to include businesses that have an annual turnover of £10m. At present, a business is eligible for cash accounting if the turnover is no more than £1.35m. However, the firm believes this benefit should be extended to more businesses. Francesca Lagerberg, head of tax at Grant Thornton, is also urging the Chancellor to rethink the date for reinstating the standard VAT rate back to 17.5%.

• Some changes are needed to the to the non-domicile rules to ease the compliance burden, according to KPMG. A statutory residence test is being suggested by the firm to replace the current uncertain and complicated rules, based on a wide body of case law

• PricewaterhouseCoopers is urging the Chancellor to focus on measures that support entrepreneurial investment. According to Mary Monfries, head of tax services for entrepreneurs, private companies and private clients at PwC, 'the greater the overall size of the enterprise cake, the larger the slice of tax revenues the government can take in business and employment income tax revenues.'

Other agenda items to watch out for include an expansion to the amount of losses claimed under the loss carry-back scheme, confirmation and details of the second offshore tax amnesty, the interim tax haven report and clarification on the Taxpayers Charter.

Accountancy Age will be reporting all the details of the Budget as they emerge. Click back to accountancyage.com for all the latest news and updates throughout the afternoon.

Further Reading:

What to expect from the pre-Budget report

Opinion: Is this the most leaked Budget ever?