Login
Been listening to a BBC podcast this week, ‘The Tax Conundrum’. Fairly common-sense stuff the summary is UK Tax Legislation is a mess, with 2,000 pages proving it apparently – Estonia’s tax regime is simpler. Sweden’s tax regime is generally seen as more expensive to the taxpayer, but, and I speak from recent experience, it’s a country where everything simply works so the taxpayers accept that the tax paid is appropriate for the services being provided. This is a real sticking point in the UK, people begrudge paying tax into what is so clearly such a broken system.
If I asked AI to summarise the podcast and the UK Tax system I’m pretty sure it would say ‘badly in need of reform, too much on the too difficult pile (winners keep quiet and loser make the noise), and there is no long term thinking as every five years the pesky public get to vote.
Anyway, with the podcast fresh in my mind and a budget around the corner, it’s time for my budget predictions. Slightly different this year as the Chancellor has already flagged it’s going to be bad news and apparently ‘we are all in it together’. So below are my predictions – and I will try and find a rabbit:
Pension reform
Always predicted, but to date only marginal changes. If fairness comes into it, we will see, I don’t think existing pots and contributions in should be affected as it would seem unfair to change the rules once you have entered the competition.
What I predict is an end to higher rate relief. Many are predicting a blended rate, but I don’t. I predict basic rate relief becomes the only relief available.
Stamp Duty / Property Tax / Mansion Tax
These areas will be changing, so the only question is how. Council tax is an antiquated system, which means you can pay less on a £5 million property in Westminster than a 3-bed semi in Stockport. That simple fact is an easy sell to the public and will be the way to make the following change.
I think there will be an extension to Council Tax bands, so that those living in say a £2.5 million property pay what might be considered a more appropriate amount, even if they still only have bins collected every other week. I think this might be as close as you get to a mansion tax. Politically, you can argue you have and have not introduced a Mansion Tax!
In regards to Stamp Duty, as the previous Deputy Prime Minister found out, Stamp Duty can be a complicated tax, and through no fault of the taxpayer the incorrect amount of Stamp Duty can be paid.
To laughs from the opposition benches, I predict an announcement that by the end of the current parliament, there will be a wholesale review of the Stamp Duty tax system.
In the short term, I don’t think there will be any reductions in stamp duty rates as it’s too complicated and the Government can’t afford it….at the moment.
Income Tax and National Insurance
It’s been so widely discussed it’s hardly a prediction …. but there will be a catch – not a rabbit.
Increases in income tax rates across the board of 2% ‘matched’ by a 2% reduction in employees national insurance. This will be sold as a change that doesn’t impact ‘working people’ but it will have to, if it doesn’t impact ‘working people’, it doesn’t raise enough revenue for the Government. Other changes to employees national insurance limits will be announced, which will impact on employed people, but apparently not ‘working people’.
Taxes on Fun
Some speculation around this and not an area that I am an expert on. I would expect some additional gambling tax to be introduced. The Government love to tax vices (alcohol, tobacco etc) and the revenue that gambling now seems to generate would, I think, make it ripe for attack.
I also predict some movements regarding electric cars. Diddly squat will be raised, but I can see it being quite popular amongst some ‘The Tesla Tax’ and it’s possible this could be announced at the same time as perhaps a smaller increase in the fuel duty on petrol cars.
In case you missed it a smaller increase (not a continuation of the freeze) in the fuel duty on petrol cars is as close as I can get to a rabbit.
Productivity
No surprises here, disappointing productivity or even the ‘productivity puzzle’ will be mentioned.
Someone might suggest ‘people simply can’t be bothered anymore’. Then because ‘people simply can’t be bothered anymore’ taxes will be increased on those that can be bothered.
Thoughts welcome as to how that might turn out.
Closing thoughts
I have been telling my clients for a while ‘brace yourself’ and nothing is off the table.
Post budget is always a time for consideration and thought, rather than knee jerk reaction. Easier said than done I know. As always …pop in for a coffee and we can chat things through to discuss the best course of action for you and your business. Reach out by calling 0330 058 6559 or emailing hello@scruttonbland.co.uk
Join us at our budget breakfast the morning after the Budget on Thursday 27 November, for expert analysis from our team of specialists. We’ll break down the key announcements and explore how the Budget will affect both personal and business finances.
Back