On Wednesday 16 March the Chancellor of the Exchequer, George Osborne will deliver his annual Budget to the nation. This announcement will be Osborne’s eighth as Chancellor and in it he will set out the Government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility, along with any tax change proposals for the next financial year.
Although we do not have a crystal ball and cannot be certain of what will be announced, especially as the Chancellor has surprised us with shock Budget announcements in the past, our Tax Specialists have put together some predictions on what might be announced…
We’ve all heard mention of the famous Northern Powerhouse, yet we still have very few details as to what it actually means and how it will affect us (if at all) in Cumbria and our surrounding areas. Hopefully Wednesday’s Budget will clear up some of the uncertainty.
The Northern Powerhouse has however promised better connections between the North and the South, but recently there have been a number of rumours in relation to the testing of driverless lorries on Cumbrian motorways. Reports are suggesting that the Chancellor’s announcement will confirm the funding for these driverless lorries and their testing; putting the speculation to rest as to whether the M6 will soon be the home of convoys of automated vehicles.
Funding for flooding
The December 2015 floods caused devastation across parts of the UK including Cumbria and South West Scotland. In November’s Autumn Statement the Chancellor set aside £2.3 billon for flood defences, yet cut the Environment Agency’s funding by 15%! There have been a number of campaigns for more funding to prevent further destruction. With the topic of dredging rivers featuring highly on many agendas; we could finally hear whether this funding and support will be available in his speech.
We could expect to hear details of a cut in the Income Tax for the middle classes after it was revealed that cuts made to the top rate of tax, from 50% to 45% back in 2012, raised an additional £8 billion for the exchequer.
The Chancellor could also bring forward plans to raise the threshold for the 40% rate of tax to £50,000, raising the level at which people will pay the higher rate of tax.
The personal allowance, (which is the amount you can earn before you pay tax), has been a favourite of the Chancellors, featuring as a carrot in many of his addresses to the nation. There is the chance that he will bring forward the planned increase to the personal allowance which is set to rise to £11,000 from 6 April 2016 and due to rise to £12,500 by 2020.
It had been expected that in the Budget the Chancellor would change the rules surrounding pensions tax relief, however it has been widely reported that these changes have now been postponed. The plan was expected to either cut down, or remove tax relief for higher paid workers, but allow people to withdraw from their pensions tax free on retirement.
This doesn’t mean that pension regulations will not feature in the Budget announcement at all; we might hear announcements on the reduction of the annual lifetime allowance and the limit on the amount of pension benefit that can be drawn from your scheme without triggering extra tax charges, which will drop to £1 million in April.
Public spending cuts
We should expect announcements on further and deeper cuts to public spending after the Chancellor has admitted that ‘storm clouds are gathering’ in the world economy. Economic growth in the UK has been weaker than expected and after slowing his pace of public spending cuts in previous financial reviews, we should expect unprotected budgets, such as cash for local authorities and the justice and transport departments to be cut.
Unfortunately for motorists a rise in fuel duty for the first time in four years may also be on the cards. With world oil prices reaching new lows the duty could be increased without too much impact on drivers’ pockets, but an announcement like this would be an unpopular one to say the least. Further to fuel duty increases we may also see a new strategy for company car taxation; leading the way in a move to more support for low emission and electric vehicles.
No matter what is announced we are here to support you and your business. Our team will be tweeting live throughout the Budget announcement so make sure you follow our Twitter account @DavidAllenDA to find out everything you need to know, as it happens.
Following the announcement we will be dissecting all of the important information and creating easy to understand summaries on the matters that affect you. Keep an eye on the dedicated Budget area of our website to stay up-to-date.