Budget 2013: Dour or defining? Or both?
Calum Fuller takes a look at the likely comings and goings in this week's 2013 Budget
AS I WRITE THIS BLOG, George Osborne will presumably be frantically rehearsing his lines ahead of what I’m reliably told will be either the most dour – or indelibly defining – Budgets of the coalition’s term.
Having garnered the views of some of the profession’s great and good, it appears there will be four key themes the chancellor will focus on.
One of those themes is tax vs spend. That is to say, bringing in reliefs to encourage business and entrepreneurialism, while at the same time trying to maximise the tax take. It’s the usual balancing act, but following the recent loss of the UK’s AAA credit rating, it’s an area that will come under scrutiny. Specifically, a drop to business tax rates and a reduction in capital gains tax in order to stimulate the housing market appear to be in the offing.
In terms of reliefs, well there’s the whole will-they-won’t-they question over breaks for married couples, while reliefs for the creative sector are likely to be broadened. Shale gas exploration is, too, expected to benefit from more credits. There will not be, though, any cuts in National Insurance, and indeed there could be a rise for the self-employed to match the flat-rate state pension.
Then there is the inevitable focus on reducing tax avoidance, with potential news or proposals on how international tax co-operation might work, or – as Baker Tilly tax partner George Bull suspects – an alternative minimum tax rate for multinationals.
In terms of property, steps could be taken in the direction of Vince Cable’s much-loved mansion tax with the introduction of a capital gains tax charge on high-value – around £2m upwards – residential properties held by non-natural persons, while the 15% rate of stamp duty land tax on those properties could be removed.
VAT, though, is likely to be untouched, with most agreeing that to adjust it would cause trouble at a delicate time for the economy. But, if Osborne does become tempted to make changes, it is expected some items and services such as restaurants, hotels and cultural events will be moved to the reduced rate.
A point to bear in mind, though, is that if the government wishes to enact any particular proposal before the next election, it must be announced in this year’s Budget.
Whether dull or explosive, the 2013 Budget is key for the coalition.
Calum Fuller is the tax correspondent for Accountancy Age and Financial Director.