Quantcast
Channel: Leicester Mercury Latest Stories Feed
Viewing all articles
Browse latest Browse all 9894

Budget 2013: what to expect tomorrow

0
0
All eyes will be on the Chancellor George Osborne tomorrow when he updates the nation on the state of the economy in his 2013 Budget speech. His statement, which will determine how taxpayers' money will be spent in the coming years, takes place against a backdrop of poor opinion poll ratings, backbencher discontent and the embarrassment of credit downgrade. But what can we expect from the Chancellor's fourth Budget? Spending cuts Whitehall departments will face another round of spending cuts over the next two years, George Osborne today informed his colleagues. At Tuesday's pre-Budget cabinet meeting he said departments without special protections will have to trim an extra one per cent off their spending in 2013/14 and 2014/15. The savings - £2.5 billion over two years - will go to large-scale infrastructure projects designed to boost economic growth, the Chancellor says. Health, defence, HM Revenue & Customs budgets and education and international aid will be unaffected. Pensions There is speculation the Budget could further reduce the annual pension allowance to £30,000 and cap the tax-free lump sum savers are entitled to receive when they take out their pension. The annual pension allowance has already been cut from £255,000 to £40,000 and the lifetime pension allowance – the total size your pension can grow to – reduced from £1.5m to £1.25m. But there is good news on the horizon – earlier this month the Chancellor announced the £144-a-week state pension will now be available from 2016, along with a slightly lower £72,000 cap on maximum social care costs. Both measures were not due to be introduced until at least 2017 but will be brought forward in tomorrow's Budget. National Insurance contributions (NICs) An increase in NICs for self-employed people could be announced tomorrow. Self-employed people currently pay a much lower rate than employed people because they receive fewer pension benefits. Meanwhile the Government has already announced it intends to close a loophole which allows firms to dodge an estimated £100m a year in National Insurance. The move would end the use of offshore payroll services in tax havens such as Jersey and Guernsey which have left around 100,000 people ineligible for some benefits, the Government claims. Income Tax rates The Government has already announced there will be a five per cent cut in the top rate of tax for those earning £150,000 or more to 45 per cent. There is speculation the personal allowance income tax could increase to £10,000 in 2015/2016. Tax-free allowances It is possible the basic personal allowance for under-65s – the amount you earn before you pay income tax – could rise to £10,000. The Coalition aims to bring in this change before the proposed 2015 deadline. The personal allowance rose by £630 in the current tax year to £8,105 and is due to increase again to £9,440 next month. VAT Many believe the rate of VAT – currently 20 per cent - will be left alone after the "pasty tax" saga of last year. In 2012 the Government was forced to make a humiliating U-turn on a proposed VAT on food which cools down, after a backlash by bakers. MPs from all three main parties criticised Osborne's proposals, arguing they were unenforceable and would have an adverse impact on jobs and businesses. But some commentators say there could tomorrow be an increase in the number of items which are subject to the reduced rate of VAT of five per cent. The rate currently applies to some goods and services such as children's car seats and home energy. The deficit The deficit - or budget deficit - is the gap between the amount the Government spends in a year and the amount it raises through things like tax. It is the amount the Government has to borrow in a year. Tomorrow the independent Office for Budget Responsibility (OBR) will provide new forecasts as to how much the Government has borrowed in 2012-13 and how much it expects to borrow in the years to come. The Chancellor may be forced to announce borrowing is rising, which risks damaging the Government's political credibility, the BBC reports. Growth As part of its forecast the OBR will say whether or not it thinks the UK will slip back into recession this year for the third time. Married Couples' Allowance Opinion is split over whether the Chancellor will announce a Married Couples' Allowance. Some say it will happen, although it may be available only to basic-rate taxpayers, but last month a senior government source said the tax break won't be in the Budget but it will be in this parliament. Fuel Duty It is thought the Government will postpone the planned increase in fuel duty until fuel prices stabilise. There is a planned fuel duty rise for autumn but some say it could tomorrow be scrapped by the Chancellor. Cigarettes and alcohol It's almost certain the price of a pack of cigarettes or a bottle of wine will rise, but it remains to be seen by how much. Taxes on alcohol and cigarettes, known as "sin taxes", are now subject to automatic increases called an "escalator", due to rise by at least two per cent over inflation until 2014. Last year, duty on alcohol was raised by two per cent over inflation, while duty on tobacco products rose by five per cent above inflation, adding 37p to the price of a packet of cigarettes. The Metro yesterday reported beer tax is not expected to be scrapped in the Budget despite a high-profile campaign by industry groups. Childcare vouchers Some parents in the UK will be able to claim back up to £1,200 a year for each child - or 20 per cent of childcare costs - from 2015, it was today announced. Under government plans parents will be able to use an online voucher system, which will mean up to a fifth of childcare costs are paid for by the state. This will be up to a value of £1,200 per year per child. Initially parents of children under the age of five will benefit but this will rise over time to cover households with children under the age of 12. Households where both parents work will qualify, but those where one stays at home to focus on childcare will not. Single parents must also be working to get the help. Housing The Council of Mortgage Lenders has urged the Chancellor to use tomorrow's Budget to extend the NewBuy scheme, which allows buyers into the new housing market with a five per cent deposit, to 2015. This would be a welcome measure amid the current housing crisis, whereby rents are extremely high and many would-be home-owners cannot afford to buy. A reform of stamp duty looks unlikely. Mansion Tax Opinion is divided over whether Osborne will announce a mansion tax. Some say it has been virtually ruled out, despite pressure from the Liberal Democrats, while others say its introduction is inevitable. Dominic O'Connell, head of tax, trust & estate planning at Coutts, told the Daily Telegraph: "Many believe that it would be exceptionally difficult to efficiently administer such a policy and it is also often argued that any such tax could have an unfair impact on some living in certain property 'hot spots'." Corporation Tax The majority of UK business owners expect further corporate tax cuts in tomorrow's budget to stimulate the economy, new research revealed today shows. Nearly 60 per cent of business owners in England and professional advisors are confident of further corporate tax cuts, a survey by FRP Advisory showed. The rate is due to fall from its current rate of 24 per cent to 21 per cent in April 2014. Some say it could fall to 20 per cent. Capital Gains Tax The Government has played with CGT in recent years but we are unlikely to see any major change until research has established what impact it would make, commentators say. Small business tax relief The Chancellor could extend tax reliefs offered by the Enterprise Investment Scheme (EIS) to investors in smaller, higher-risk companies, in order to help them raise finance.

Budget 2013: what to expect tomorrow


Viewing all articles
Browse latest Browse all 9894

Latest Images

Trending Articles





Latest Images