Budget tax predictions

The Budget could be a time for decisive tax action to restore business confidence – unless the government bottles it, says Baker Tilly’s George Bull.

Alistair Darling will have to deliver a strong and clear tax agenda in the forthcoming budget if he wants to repair public confidence in the parliamentary system, according to George Bull, tax partner at Baker Tilly.

While much of what’s delivered in this Budget is unlikely to make it into the statute books, it is an opportunity for the government to make a powerful statement of intent ahead of the general election - and the way it approaches this challenge will be a measure of how confident the government is in its prospect of being re-elected. Although no official date has yet been given for when the Budget will be delivered, tax experts at Baker Tilly have set forward their predictions for what it could contain.

VAT
The widely predicted increase in the standard rate to 20% is ‘most likely’, says Bull but “on the VAT front, nothing is certain!” he cautioned.

 “The UK currently has the third lowest rate of VAT in Europe (behind Cyprus and Luxembourg, both at 15%), and increase to 20% would raise an estimated £12bn a year without causing insuperable electoral pain, so it’s probably quite an attractive prospect for the chancellor”.

Business taxation
The key issue for businesses in this year’s Budget will be access to finance. In order to restore business confidence, the government will have to show that it is committed to providing investment incentives. Trying to fund a reduction in the corporation tax rate by reducing investment incentives you would be a ‘grave mistake’, according to Bull.

Personal tax
The main battleground for private clients in this year’s Budget is likely to be the new 50% rate on income tax and the increase in capital gains tax.

What's on your Budget wish list? Share your thoughts and ideas on what the government might/should do in the forthcoming Budget below.

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