Gordon Brown’s Last Budget - Update On Expectations
As we approach the UK budget on 21st March, Gordon Brown has a difficult balancing act in what is widely expected to be his last budget before moving to the role of Prime Minister. While he has to be seen to be staying in line with his economic objectives of the past, he also needs to ensure that the UK voter is on his side - no mean feat.
As we approach the big day, rumours are rife about what may happen. Some of the rumours include :-
· There is strong speculation that student loans will be bulked together, and sold off to commercial loan companies. If anything, this will increase the burden on students as commercial companies would be tougher on late payments, etc.
· Income Tax bands are expected to rise, but less than the current rate of inflation. While this maintains Labours pledge not to increase taxes “to the wordâ€, the fact that tax bands are effectively falling against inflation has seen many people ultimately pay higher taxes.
· VAT - Many observers are expecting more categories to be brought under the VAT regime, and there is scope to increase the basic rate from the current 17.5% which is lower than many of our European partners.
· Green Issues - The Chancellor is not expected to make any major tax changes, as any increases would turn the voters against him, just when he needs their support. There may be some small incentives for energy efficient housing, etc, but no major changes are expected.
· Alcohol and Tobacco - These areas of business have always been easy targets for the government, and this is expected to continue. Cigarettes are expected to rise by about 9p, a pint of beer by 1p and a bottle of wine by 4p. Whisky is expected to be hit even harder.
· Inheritance Tax - The government have announced the structure of changes in the IHT band up to 2010. However, the Chancellor is expected to announce more taxes on secured pensions, etc, in the advent of the holders death.
· Stamp Duty On Housing - As house prices have increased dramatically over the last few years, we should see a rise in the starting point for Stamp Duty to be payable on house purchases. There is also strong speculation that a higher band rate will be brought in for houses changing hands at over £1 million.
· Pensions - This is a very tricky area for the government and while we should see some changes, nobody is quite sure how these will shape up. An interesting area to monitor.
· Capital Gains Tax - We should see a small increase in the bands, in line with inflation.
All in all the 21st March may be a very important day in the life of Gordon Brown, who will need to show toughness, together with an appreciation of the UK voter, who’s support he will be seeking in the near future. More to follow as we approach budget day……
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