Predictions for Darling’s first Budget

As Alistair Darling presents his first Budget this afternoon he will be doing
his best soothe the anger that his October pre-Budget unleashed.

Business and advisers are still fuming over Darling’s decision to scrap taper
relief, introduce a flat 18% capital gains tax rate and oblige non-doms to pay a
£30,000 levy to keep off-shore income tax free.

Experts believe his first priority will be to try and rebuild relations with
business by either delaying or making some concessions to the non-dom changes
announced last year.

There is even greater certainty that Darling will announce concessions on
controversial income shifting rules, which were introduced in response to the
House of Lords victory for husband and wife business Arctic Systems against the

The rules have been described as incredibly onerous and complex by advisers
and there is growing expectation that Darling will react to these complaints by
easing the compliance burden.

Darling will not only be offering concessions to taxpayers and is set to find
extra revenue from somewhere as he attempts to meet the Treasury’s golden rule
and fill the gap that is likely to be left by falling corporate tax receipts
following the credit crunch.

There is a general consensus that Darling will increase national insurance
contributions for top earners to increase tax revenues, but there is also talk
of more radical measures such a windfall tax on electricity and gas companies or
increasing VAT.

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