Wishes and predictions for Osborne’s budget
Business and accountancy advisers BDO has drawn up a wishlist for neglected middle-market firms, looking for a tax allowance for spending on factories and a reduction in employers’ national insurance for manufacturers.
BDO also believes that the chancellor could reform business rates in a revenue neutral fashion and announce a fresh review. BDO say that the burden of the rates could be spread more evenly.
To balance the tax cuts for manufacturers, BDO say the George Osborne could remove the higher rate income tax relief on pension contributions.
PwC is expecting fund managers and banks to be hit by a renewed focus on stamp duty reserve taxes in the budget, bringing more transactions under the levy.
Stamp duty reserve tax revenues have declined in each year since the financial crisis, and PwC believes that the Treasury will press for new ways to raise revenue.
The firm’s analysts say that the tax authorities may step up investigations into historic compliance and closer examination of instruments involving UK securities.
Another survey of businesses, this time by EY, shows that two-thirds of chief financial officers and heads of tax think George Osborne’s corporation tax rate has helped the tax system most of all, but 85 per cent say 20 per cent is about the rate to stick to.
A quarter say that uncertainty is the biggest threat to the competitiveness of the UK’s tax competitiveness, with some referencing the upcoming Scottish independence referendum.
The poll says Osborne should turn his attention to income tax: 45 per cent say rates are too high, and 29 per cent say allowances could be increased.
RBC Capital Markets give a number of expectations on the finance side to the budget, predicting that the Debt Management Office will be charged with selling £151bn from gilt sales in 2014-15.
It also projects that minor upward revisions to growth by the Office for Budget Responsibility will translate to deficit reduction of 0.2-0.4 percentage points of GDP each year, meaning £26bn less borrowing between this year and 2018-19.
Later in the year, RBC suggests that privatisation revenues could also boost the Treasury’s coffers, potentially from further sales of Lloyds shares.
Deloitte says that there may be a change in rules on income tax for internationally mobile employees, preventing inbound employees from escaping tax charges on awards made before getting to the UK.
A cut in employers national insurance contributions for under 21s could be pushed to under-25s.
Employers should be aware of the new employment allowance of £2,000 per worker, which works to reduce national insurance paid by the business.
The Centre for Policy Studies (CPS) has announced a mountain of supply-side measures that it would like the chancellor to implement in the budget.
On deregulation, the think tank advocates a sunset clause for all regulation, relaxed planning regulation, no-fault dismissal for under performing employees and the abolition of the working time directive. On tax, the CPS want simplification across the board, a guarantee that fuel duty and corporation tax will not be rise, and for low-paid workers to be able to keep performance-related pay tax-free.