Shortly after the Conservative Party won May’s General Election, giving them the first Tory majority Parliament under David Cameron, the Chancellor of the Exchequer, George Osborne, announced that 8 July would see an interim Summer Budget. With his annual Budget having only taken place in March, it is difficult to predict what Wednesday’s announcement will hold and how they will match up to the promises made in the Conservative manifesto. However, our Tax Specialists have made the following predictions of what we all could expect to hear in this interim Budget.
The two main economic tasks our Government have to face are eliminating the budget deficit and reviving productivity. This means that Wednesday’s announcement should outline how Mr Osborne plans to meet his previous promises to reduce the country’s debt, and make cuts to public expenditure. In order to raise productivity we can expect more announcements regarding the Northern Powerhouse and how the Government expects to grow the economy and support businesses in the north of England.
We can expect to hear how the Chancellor plans to cut welfare spending by the £12billion he promised. We will hear how the Government plan a reduction in the benefit cap and more details on how they will remove subsidies for social housing.
We expect to hear how the Government will raise the promised £5billion through tackling tax evasion and tax planning.
The abolition of the tax return
We can expect more details on the abolition of the tax return. As announced in the March Budget, the Government plans to abolish the current system of the Self Assessment tax return replacing it with a new digital account system. We can expect further details on the submission of digital tax accounts and how this new data will be provided.
Help to Buy ISA
We expect to hear more information on the March Budget’s Help to Buy ISA which offers Government funding to match savings made by first time buyers. This scheme is to be introduced from Autumn this year but the announcement is expected to outline further details on how and when this scheme will be put in to action.
From April 2017 we can expect changes in Inheritance Tax (IHT) from which we will see the end of IHT on family homes worth up to £1million. Currently IHT is payable at 40% on the value of an estate which exceeds the tax free allowance of £325,000. As part of the new plans parents and grandparents will also be offered a family home allowance of £175,000 enabling them to pass their properties on to children or grandchildren. When both parents add their IHT allowances together with the new family home allowance, there will be a total of £1million transferable tax free allowance available from both parents who are married or in a civil partnership.