Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

PwC looks forward to Budget Nouvelle Cuisine

by
8th Mar 2005
Save content
Have you found this content useful? Use the button above to save it to your profile.

With just over a week to go before Budget day, PricewaterhouseCoopers has revealed what it expects to see on Gordon Brown's menu.

"Nouvelle cuisine is anticipated to be the order of the day, so those hoping for a hearty meal are likely to be disappointed," the firm said.

Tax partner John Whiting anticipates "modest changes to the inheritance tax nil rate band as a light starter followed by a more substantial dish of the economy, well garnished with the chancellor's golden rule".

He added: "For those looking to indulge in a dessert or two, tax cuts in the guise of enhancements to tax credits around childcare may provide the necessary sweetener, as might further incentives for businesses regarding training and skills.

"Some anti-avoidance side orders are always possible, served up on a base of the tax avoidance disclosure rules. And for those who like a tipple with their meal, expect possible inflationary increases to beer and wine duties though liqueurs will no doubt escape.

"If none of the above whets the appetite, how about an environment special? But things like congestion charging, carbon trading and recycling are probably for a future menu.'

Whiting continued: "Overall, the Chancellor's kitchen is hotting up for a 'steady as she goes' menu, favouring a lighter tax change diet - a welcome relief perhaps to some of the larger Budget meals we've had to digest in recent years.

"One cannot help wondering, however, whether Budget 2005 will merely provide a selection of hors d'oeuvres as a taster for the real main course of the likely election."

PwC's Budget menu is set out below.

Gordon's (established since 1997)

Starters - some simple dishes to whet the appetite
Inheritance tax changes - a modest increase in the £263,000 nil rate band.

ISAs - we could get confirmation that they will run at £7,000 pa until 2009.

Setting of the income tax bands - undercooked to give some more money to the Chancellor?

Main Courses - something to get the teeth into
The economy - it now looks likely that the Chancellor will narrowly meet his golden rule. However, tax rises may still be on the menu for the medium / long term. Expect a large portion of the Budget meal to be economy-related.

Corporate tax reform - the government could report back on the current consultation which has had a mixed reception. Will they tackle the issues for the property industry, is this really a revenue neutral exercise and does it offer real simplification?

Europe - the UK government, with many of its European colleagues, has been in front of the European courts over the last few years because of illegalities between UK tax legislation and the EU treaties. With more cases pending, which could cost the Treasury billions, will we see the Chancellor plug this potential hole in the government's coffers?

Small business taxation ' though the review announced with the December Pre-Budget Report has some way to go before reaching concrete proposals, we can expect further talk of encouraging enterprise and reducing complexity.

Desserts ' a bit of indulgence
Property - expect firm proposals on Real Estate Investment Trusts (REITs), a new form of investment vehicle to facilitate property investment.

Tax cuts - in the guise of enhancements to tax credits and probably directed towards childcare.

Training and skills - expect further incentives for businesses in this area.

Side Orders
Anti-avoidance - one of the Chancellor's signature dishes, particularly now it has the added ingredient of the tax avoidance disclosure rules which may lead to some VAT moves.

University spin-out companies - we've had the draft regulations, but there are still questions over the tax hit on this important sector. Will the Chancellor make further amendments?

Wines
Sin taxes - always a favourite one to watch at Budget time. Expect little movement in this area, probably just inflationary amounts on tobacco, beer and wine duties. Petrol duties are unlikely to see any further increases at present.

Specials
The environment - many would like to hear whether and how this area of tax will be developed. Could we have a sniff of congestion charging, another taste of progress towards carbon trading or encouragement to recycling?

Andrew Goodall
Editor, TaxZone

Tags:

Replies (1)

Please login or register to join the discussion.

avatar
By brian.mercer
10th Mar 2005 11:36

European menace
I quote from the 'menu' above : "Europe - the UK government, with many of its European colleagues, has been in front of the European courts over the last few years because of illegalities between UK tax legislation and the EU treaties. With more cases pending, which could cost the Treasury billions, will we see the Chancellor plug this potential hole in the government’s coffers?"

When will our M P's wake up to the realities of European intentions?

Thanks (0)