Predictions for 2012 Budget
The budget always creates a sense of unease amongst businesses and taxpayers. Will the Budget bring changes that will benefit you? Or will the Budget spell tax increases, smaller allowances and less financial support?
With most of the country waiting in anticipation, many of the UK’s best chartered accountants have come together to offer the following predictions:
- Personal allowances – many top accountants expect the budget to focus on raising personal allowance to £10,000 by April 2015, although there is some speculation that the government would like to do this sooner rather than later.
- Wealth/mansion tax– a hot topic in the press at the moment, experts feel the budget will open the doors to more discussions about introducing some form of ‘wealth tax’ on pensions or taxpayers mansions.Currently there is a 50p tax rate on earning over £150,000, but some of the government want to ditch this tax and replace it with a mansion tax. However with many MPs arguing over these taxes, a final decision is not expected until after the budget.
- Stamp duty – to clamp down on tax avoidance, rules surrounding Stamp duty Land Tax are expected to be tightened on UK properties held by offshore companies and on properties whose ownership has been transferred by sales of shares in the company.
- Pension tax relief – many chartered accountants believe that the government is planning to form some sort of tax raid on pensions. For example they may further cut allowances on tax-free pensions from £50,000-£40,000.
- Tax Avoidance – there have been reports that the Chancellor plans to introduce a general anti-avoidance rule to prevent abuse of avoidance schemes and tax planning.
- Capital Gains – in a bid to relax rules surrounding entrepreneurs’ relief, top business accountants expect the government to raise the top rate of Capital Gains Tax from 28%.
- Statutory Residence Test – this is not set to start until April 2013; however accountants expect a draft of this new legislation to be available at the Budget.
- Corporation Tax – keeping with the Chancellors previous plans to cut corporation tax by 1% a year over 3 years until it reaches 23%, accountants feel that the Chancellor will announce an even deeper cut to this rate than anticipated.
- VAT– there are 2 theories about how the Budget will tackle VAT. Some top accountants feel the government will introduce a cut in VAT on labour intensive services i.e. building, instead of a general reduction in indirect tax.Others feel the Chancellor will introduce a 25% rate of VAT on luxury items to create extra revenue.
- Green Initiatives – many tax advisors expect the government to announce an update on the Green Investment Bank including the projects it may support. At the same time, there will be discussions about potential tax breaks for energy intense industries.
It is important to note that these are only predictions; however they do paint a clear picture on where the government will be heading in the next tax year.
So if you’re keen on the idea of staying ahead of the game, make sure you speak to a clever business accountant who can help to build your business and ensure you are equipped with the best strategies to deal with these tax changes.