The invention of the pre-budget report by Gordon Brown gives Chancellors two bites of the cherry each year at making headline announcements on Government spending policies and tax. With the election 17 months away and the agenda having been shifted to the cost of living there will undoubtedly be a focus on benefitting “hard-working families”. If as anticipated the growing economy means that there will be an undershoot of £15 billion in Government borrowing then we can expect some “eye-catching announcements”.
There is cross party agreement on the desirability of raising the personal allowance. One can expect that it will be raised beyond £10,000 before the end of this Parliament and potentially towards £12,000 and then linked either to the minimum wage or more ambitiously to the living wage.
After years of squeezing the middle by reducing the real value of the threshold at which individuals pay higher rate tax we may see some movement on this.
Corporation Tax is already planned to move down to 20% by 2015, the Chancellor might wish to spike the Scottish Nationalists’ guns by announcing the intention to reduce CT even further.
There may be some reform to stamp duty as it has become an even more important revenue earner. Capital Gains Tax may well be imposed on non-residents making gains on UK property.
The Government is already committed to spending an extra billion on the extension of free school meals and the re-introduction of the married couples allowance further spending increases would seem unlikely apart from perhaps a further emergency injection to help troubled A&E departments.
Overall we cannot expect too much intellectual coherence in the announcements as the Government moves towards election mode in May 2015.
