What will it all mean?
On Wednesday 18 March, the Chancellor will deliver his last Budget speech of the current Parliament. With the election less than 2 months away, what can we expect?
PKB’s Partner and Business Strategist Don Blackwell explains all:
“The Chancellor has already announced his spending plans for 2015-16 in his Autumn Statement. He set out his intention to generate a surplus in current government spending by 2017-18, which will entail £30bn in either spending cuts or tax rises in the first years after the elections in May. Labour have accused him of forcing the next parliament into unsustainable cuts in all the services in order to meet his targets for balancing the Government’s spending plans.
The highlights of the Autumn Statement
The highlights of the Autumn Statement which we know will become law (or already have) are:
Residential property stamp duty was reformed so that rates apply only to that part of the property price that falls within each band. These changes came into effect at midnight on Thursday, 4 December:
- Spouses will be able to inherit their partners’ ISAs tax free upon their death;
- ISA threshold increases from £15,000 to £15,240 next April;
- Tax free annuities for dependents of people who die under 75;
- Personal tax allowance to increase to £10,600 next April;
- Inheritance tax to be cut for families of aid workers who die in course of their work;
- 55% death tax passed on to loved ones abolished.
What can we expect now?
We expect that bankers and multinational companies will be hit with additional taxes and restrictions on “profit management”. How this will impact on the attractiveness of the UK from an international business perspective is yet to be determined.
Further revisions to Inheritance Tax (IHT) are anticipated to complement those already announced.
Non-Doms will see an increase in the tax cost of retaining their non-dom status – e.g. capital gains tax to become payable by non-residents on the disposal of UK residential properties.
Pension schemes are anticipated to have major changes imposed on them. It is widely expected that the Government will remove the right of Public Sector workers to transfer their pensions out of the state schemes into their own (SIIPs) or another private pension provider. This is to counter the growing unrest caused by the Government both raising the retirement age and reducing the benefits for Public Sector workers. The new change is to stop a mass exit from the Government schemes which it cannot fund!
There will be further measures announced to tackle tax evasion, which is illegal and will almost certainly further erode the scope for individuals and businesses to enter tax planning arrangements, i.e. avoidance which is legal.
On the personal front we already know that the personal allowances are to increase to £10,600 with the 40% rate threshold raised to £42,385.
The question on all our minds is – will we get any further increase on these in the budget? Very unlikely, however, with the election only a few weeks after the budget there is no certainty that the current Government will still be in power after the election. In which case Ed Balls will almost certainly want to have another budget before the Autumn Statement.
What we can expect from that, even I dare not guess at!”