Firms make 2001 Budget predictions

PricewaterhouseCoopers has stuck its neck out on a number of key issues including predicting changes to income tax rates, while KPMG forecasts a number of changes to the tax legislation.

In contrast, Big Five rivals Arthur Andersen has made only general predictions across broad issues, while Grant Thornton has followed PwC’s lead and made a number of bold predictions, including the exact value of the increase to children’s tax credit, and the value of concessions on sulphur fuel duty and PKF has predicted a range of tax-cutting measures.

PricewaterhouseCoopers predicts:

• an increase in the 10% income tax rate band
• an modest increase in tobacco duty
• tax-free payments for volunteer work
• a reform of betting profits tax
• a move towards establishing the basic income tax rate at 20%
• full steam ahead with stakeholder pensions and minor pension reforms
• the reform of stamp duty in preparation for e-business
• further amendments to capital gains tax
• a marginal increase in the 40% tax threshold

Deloitte & Touche predicts

• changes to double tax relief
• relief for disposals of companies? large shareholdings
• reform of intellectual property from April 2001
• abolition of withholding tax on interest and royalties
• reform of the treatment of foreign exchange gains and losses, financial instruments and loan relationships
• an extension of the 10p rate band, raising the personal allowance, or cutting the basic rate
• business asset taper relief extended to employees’ shares in non-trading companies.
• changes to the enterprise management incentive
• integration of national insurance with income tax?
• some kind of tax restriction placed on LLPs
• a tightening up of the inheritance tax regime
• relief for developers converting residential properties into flats
• a zero-rating for renovated residential property
• simplified VAT accounting for small and medium enterprises
• a review of UK betting duty
• the excise duty on spirits, to remain unchanged
• above-inflation increases in the excise duty on cigarettes and tobacco
• clarification on VAT recovery for museums and art galleries

Arthur Andersen predicts:

• ‘voter-friendly’ tax cuts
• extra tax credits for working families
• measures to assist e-commerce
• some further encouragement for investment
• changes to simplify VAT for small and medium-sized businesses
• the possibility of other surprise tax cuts

KPMG predicts:

• an extension to the Pounds 30,000 limit on executive remuneration schemes to Pounds 100,000.
• an increase in the rates of stamp duty on land and buildings
• the introduction of the working families tax credit/children’s tax credit
• a switch from taxing intellectual property under the existing complicated and inconsistent capital allowances regime to an accounts-based system.
• a tax on bookmakers’ gross profits, rather than turnover, in return for abolition of off-course betting duty.
• an extension of tax credits for R&D spending by small-medium sized companies last year, to larger companies
• a number of measures to stimulate urban regeneration
• clarification of self assessment deadlines
• enhanced capital allowances as much as 100%
• the chancellor may be tempted to increase capital gains tax reliefs to promote the entrepreneurial culture.

Grant Thornton predicts:

• an increase in the children’s tax credit from Pounds 8.50 to Pounds 10 per week.
• the introduction of integrated child credit
• confirmation that the pension credit will be available from April 2003
• an injection of public cash to boost the public transport system
• a further 3p discount off the duty on low sulphur fuel
• an injection of money to improve national health infrastructure
• the introduction of the R&D tax credit for enterprise
• an extra allowance for people with personal pension schemes to organise their affairs
• a simplification of the capital gains tax business taper relief
• the abolition of stamp duty on shares

BDO Stoy Hayward predicts:

• a giveway of Pounds 2bn ?3bn in tax cuts
• cuts in stamp duty and business rates
• an extension to capital gains tax relief
• an extension of the 10% income tax relief tax band
• a widening of the scope of the enterprise management incentive scheme
• changes to taxing of forex/financial instruments/loan relationships
• simplification of the NI contributions for employers
• capital gains relief for companies selling substantial shareholdingstax reform of intellectual property, intangibles and goodwill
• an extension of tax credit for R&D
• an announcement that employment tax credit and integrated child credit to start in 2003
• cuts in stamp duty and business rates
• the modernisation of stamp duty
• a climbdown on IR35 legislation
• reform of company car tax
• changes to the climate levy
• future changes to pension investments

PKF predicts:

• an extension of the Enterprise Management Initiative to include small companies
• a cut in red tape that restrains growth in SME sector
• a reduction in the tax on high mileage cars
• amendments to double taxation rules
• clarification of the role of the National Confiscation Agency
• the introduction of anti-avoidance legislation for limited liability partnerships

Links

Budget 2001