Brexit & EconomyPoliticsBudget 09: What to expect

Budget 09: What to expect

The 2009 UK Budget is expected to be one of the most keenly observed and scrutinised yet

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and the implications for firms whose cover has been withdrawn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?

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