PBR 2008: What the pundits predict

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As you might have noticed, the PBR is unusually late this year, but then it has an unusual amount to deliver. Will shrewd government be able to save us from the worst of the coming recession? Now that Mondays pre-budget report drawing near, Britains accounting firms are now making tentative predictions for the chancellors next move. Heres what PricewaterhouseCoopers, Baker Tilly and MacIntyre Hudson have to say on possible policies:

A reduction in VAT

Consumer spending could receive a boost from a cut in VAT, although any reduction would almost certainly be limited to 2.5% thanks to European statute. PricewaterhouseCoopers calculate such a move would cost the Treasury about 12 billion, but it would deliver a big bang that helps those on low incomes as Christmas approaches. But not eve...

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23rd Nov 2008 18:03

Book early
So those small firms currently benefiting from the differential when using the flat-rate VAT scheme should ensure that they get all their eligible invoices on full-rate in before any rate cut - I presume.

I also presume that the flat-rate percentage would drop by the same "percentage points" as the main rate, on the changeover date ?

By my calculations, those previously on a flat rate of 13% and benefiting by the differential will be down nearly 20% on that "benefit" under the new 11.5% rate:

Ratio = (0.15 - 1.15 * 0.115) / (0.175 - 1.175 * 0.13) ~ 79.77%

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24th Nov 2008 08:30

One should never..

..ass[***] u me.

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By Anonymous
21st Nov 2008 22:16

Wish List?
Some suggestions:

To bring back tax relief on mortgage interest, might be one idea. Do you miss this? I do. Why should BTL landlords be the only ones to benefit from this when they are the (sorry) parasites who have helped to fuel this current crisis. Give basic rate tax relief to all - and this should help (at least a little) to stimulate the housing market. It would also put more money in our pockets. And, with falling interest rates, it may not be too costly an exercise for HMRC(?).

A withdrawal of interest relief at higher rate for BTL landlords might help balance this; but how many BTL landlords pay higher rate tax? Don't know - but there's an idea, anyway.

Working Tax Credits for the under 25s - someone else mentioned this and I have to agree. Why is the Government allowed to discriminate against a 'minority' group (the 16 - 25s) in the way that they do? No State help unless you stay on at school/university. Why???? What are we trying to achieve here? I can't be alone in having to support non-academic children struggling to make a life away from home and struggling to pay an exorbitant rent on a minimum wage? (Those BTL's again)!

Increase weekly child benefit. This wll help all families.

By all means, increase Tax Credits - but these are so open to manipulation: am I alone in thinking that the already wealthy benefit most from these as they have agents (us) helping them understand (or at least take advantage of) the 'quirks' in the system.

But, possibly better to increase the personal allowance (again) or, at least stick with the current £6035 and build on that for next year. Let's get more people out of the tax net.

And why not increase the minimum wage and drastically?

And make State Pension tax exempt! Give our elderly more money to spend. And give us a (slightly) better retirement to look forward to. HMRC must waste a lot of resource trying to deal with small amounts of tax because of this - so take it out of the loop and save those costs.

As to businesses/companies and so on; with consumers spending more, the fortunes of these taxpayers should (hopefully) improve but that is probably more long-term. In the short-term, paying their tax in monthly installments throughout the tax year and without interest charges should be available to all ( becomes similar then to PAYE for employees). This shouldn't be too difficult to administer. should it?

Getting off from high horse now...

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21st Nov 2008 21:54

My predictions...

- Big increase in nil rate IHT band
- SDLT thresholds increased
- No SDLT on VAT element of property purchases
- Postponement of increase in SCR to 22%
- Further postponement of income shifting rules
- Reduction in rate of employers NI

Paid for how?

- Increase in higher rate NIC'ees from 1% to 3%
- NI applicable to close company dividends (but not to be announced until March budget in order to reduce ability to start paying out massive dividends in advance of proposals becoming law).

You heard it here first folks!!

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By TC1
21st Nov 2008 18:51

Tax Cuts for the Self-Employed
I read Mark Lee's comments with interest, but does it need to be that bad for the Self-Employed? Tax rate(s) going down is surely a good reason why you would be allowed to reduce your Payments on Account for the CURRENT year.

And if the Self-Employed are still disadvantaged - why not go Limited? Then you can get all the advantages that the employed get.

P.S. As long as any tax changes are rate or band-size changes only, then there's no "programming" to be done - it's all data. We just need an instruction from our software suppliers to tell us what to change, and a message from HMRC to tell us what to do to people's tax codes. This COULD be done very quickly. (And I make no comment about all the poor, big companies who are apparently still struggling with a global instruction to add 60 to all L codes).

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By aburt01
21st Nov 2008 17:01

Category D Employees National Insurance is already set to increase for some from April 2009, (Introduction of Accrual Point to start the process of removing the contracted-out rebate) for all those in contracted-out pensions. Teachers, Police, Govt Ministers etc. (mostly decent salary related pensions mind you)
It's just another disguised tax hike/pensions related hit on our pockets.
I have come to expect that from this Govt.
So in this PBR, as ever, await the small print.

Whatever he chooses to do, I hope it is simple to implement, because in my experience, large companies (and HMRC) are still catching up with what happened on 7th Sept. I refer to the mid-year tax code uplift by 60 points (603L etc.)

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By TC1
21st Nov 2008 15:39

Minor but useful suggestion?
How about increasing the "Higher Paid Employee" limit of £8,500? It's been that as long as I can remember, and is now clearly nonsense.

This would help small businesses who could give (genuinely) lower-paid workers benefits without having to pay any Er's NI, and hence would help the lower-paid workers themselves.

Paul Clark, earlier today: I didn't get your bit about the 40% disallowed salary costs for CT: am I missing a good point here?

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By Anonymous
21st Nov 2008 14:18

Other possibles
Reintroduce MIRAS

Bring back 10% starting rate.

Cut or withdraw ISA allowances (rather than increase)

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By Anonymous
21st Nov 2008 14:48

Why not apply some common sense and help the companies where the CIS gross status is being removed because of the new regime. These will really suffer with the current climate plus gross status removed.

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21st Nov 2008 14:23

out of left field but...
APR and BPR for IHT to drop to 50% from 100%

Service companies to pay CT at 30%

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By lpwcs
21st Nov 2008 13:43

Ltd Co Contrators
You can res assured we at the PCG are watching events very carefully indeed, and continue to press for the abolition of IR35 and for the Family Business Tax (aka Income Shifting) to be totally forgotten. Hopefully, we will be listened to for once. It would be nice for the Treasury actually to deliver on its promise to help small businesses rather than just saying they will!

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20th Nov 2008 14:07

It can't all be good ?
Well my two from a few months back were
1) 10% starting rate
2) reduction of small co.s CT rate
(i.e. Groundhog day)

Any chance some allowances (e.g. private car mileage, relocation) could be reviewed/index-linked on from their ?2001 levels

But what has happened to Income Shafting - I can't believe this has vanished when there's so much "unfair tax avoidance" out there !!
Come on, "Arctic" monkeys !

And the poor Ltd Co contractors - they are starting to feel neglected without another "loophole" being closed this budget !

(OK, OK - be careful what you wish for ...)

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