It’s all relative of course, but the chancellor’s figures are thought to be
in good shape. No need for massive tax rises in this week’s Budget, but the hot
money is on a series of anti-avoidance moves, and the cash being spent on a
range of political projects.
So what can we expect from the chancellor’s tenth budget? Here’s
AccountancyAge.com’s rundown of the likely runners for Brown’s speech.
A general tax avoidance clampdown is an inevitability. Possible moves could
- Stamp Duty Land Tax planning arrangements following the extension of the
disclosure rules are thought likely. Some comment has focused around offshore
trust arrangements and stamp duty.
- Moves to close loopholes in the A-day rules on pensions, ahead of their
introduction at the beginning of the next financial year.
- Will he close the Jersey/Guernsey VAT loophole?
- Some statement on the M&S decision, which the Revenue has spun as a
potential area for tax leakage. See below.
On corporation tax, business would like to see a statement of policy, or
cuts, going forward. The move doesn’t look likely at present, however.
- Private equity firms are nervous that the chancellor is set to make their
capital gains position significantly less advantageous.
- New rules on loss relief more generally are anticipated, after the
government’s loss against Marks & Spencer at the ECJ. Will there also be a
more general response to the European threat from global multinationals?
- Some have speculated that the chancellor is interested in the idea of a
taxpayers’ charter, suggested by the Chartered Institute of Taxation.
- The Carter review into online filing may finally be published, though it is
more likely to appear after the PAYE filing deadline passes in May.
- Possible response to the Arctic case – the government could move to change
the law to rule out husband-and-wife structures like the Jones’.
- Some of the tax breaks on Venture Capital Trust investments are expected to
cease, although the hot money, according to Smith & Williamson, is not on a
Budget Day announcement but on information slipping out after the end of the tax
- Red tape reduction is expected to be a major theme of the speech. Will the
chancellor drop another OFR-style clanger? Changes to tax return and accounts
filing deadlines could be one option for Brown, though many have said it is a
- The chancellor is expected to announce a new initiative with City
institutions aimed at increasing competitiveness.
The chancellor always likes to appear environmentally friendly, and with
David Cameron focusing on this area, now could be the time to establish his
environmental credentials. Possible changes include:
- Changes to the capital allowances treatment of company cars. The chancellor
is expected to introduce an allowance that is based on the CO2 emissions of the
- New incentives for renewable energy and a higher rate of road tax for 4x4s
an outside possibility?
- Further details of a possible renewable transport fuels obligation
consultation. This would require transport fuel suppliers to ensure a percentage
of their sales are from a renewable source.
- The Government currently incentivises expenditure on energy saving
technologies through enhanced capital allowances. Qualifying expenditure
currently receives 100% allowances in the first year. We may see additional
types of capital expenditure qualifying for this allowance.
- Increase in fuel duty.
Changes may be made to the powers of HMRC, as the review continues as to how
the existing ring fenced powers of the old Inland Revenue and Customs &
Excise will be eventually combined.
- The formal launch of tax efficient real estate investment trusts (REITS) is
expected after outline rules set out in the PBR
- A final update on tax rules for leasing is expected, which apply from 1
- General insurance companies tax changes are expected after an informal
consultation, potentially raising tax on the companies.
- A change in the amusement machine licence duty may be brought in, to align
it with the Gambling Act. An announcement on the rate of taxation for remote
gaming is also expected.
- Details of R&D tax credit specialist units are thought likely to be set
out, with other changes to the troubled incentive focused on smaller companies
- There have been rumours that people will not be allowed to hold shares in
private companies inside a self-invested pension scheme.
- In the wake of the planning gain supplement, it is expected that there will
be a reduction to the scope of so-called ‘section 106’ agreements, which require
developers to contribute to local infrastructure expenditure as a condition of
- Further rules on the taxation and modernisation of trusts are expected after
a long-standing consultation on the subject.
Finally, there’s always one or two odd proposals floating around, too. PwC
has suggested that, as Britain prepares to host London’s 2012 Olympics, the
chancellor could award grants for aspiring athletes.
Log on to accountancyage.com tomorrow for live coverage of the speech and
responses to it.