Rumours are flying around the City about what George Osborne will say in his budget on Wednesday. His objectives (often conflicting) will be to come up with measures which foster enterprise and innovation and make the UK a more attractive place to do business whilst increasing tax revenues and clamping down on tax avoidance (and evasion). We think that the following are possibilities:
- Companies – a cut in the rate of corporation tax to 20% to match the small profits corporation tax rate, for tax year 2014/15.
- Small companies – an opt in/opt out system (like in the US) for corporation tax/income tax has been suggested by various commentators; possibly a consultation exercise.
- Tax avoidance – the Government will want to be seen as cracking down on corporate tax avoidance. This might include tightening the rules on transfer pricing given the UK’s G8 presidency in 2013; or at least an announcement of a consultation exercise.
- Jobs – implementation of the shares for employee rights scheme will be deferred until the Autumn.
- Property – a “bash the rich” area recently, this will, most likely, be left alone, although further tightening of the SDLT rules is likely.
- VAT – after the disastrous “pasty tax”, major changes to VAT are thought to be unlikely.
- Income tax – a hike in the personal allowance to the magic £10,000 figure is possible. Reintroduction of the 10% band is thought to be unlikely. Restrictions on the income tax loss carry back rules are a real possibility.
- Capital gains tax – there have been various speculations about a change in the top rate of CGT, anticipating either an increase from 28% to 30% or even 35% or a reduction to perhaps 25%. Our prediction is the latter and/or a widening of entrepreneurs’ relief and perhaps other reliefs to encourage continued business investment.
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