The Chancellor likes to surprise and to please, rather like a magician pulling a rabbit from a hat to the delighted gasps of the audience. We also know, and this is a harder truth, that he desperately needs to raise more taxes. In previous Budgets, we have seen tax-raising initiatives masquerading as giveaways, so can we expect more of the same this time around?
It’s difficult to remember a Budget where so much has been leaked in advance. Various contradictory but apparently authoritative briefings from ‘sources close to the Chancellor’ have finally confirmed that no pensions tax changes will be announced on Budget day. At the other end of the spectrum, we know that we should expect a plan for convoys of driverless lorries on the motorways of the UK.
Beyond all the speculation we know, with a high degree of certainty, what will be contained in parts of the Budget because those changes are the result of consultations undertaken by HMRC. As long-term tax practitioners, we also have a pretty shrewd idea what unannounced changes might appear. My colleagues summarise their thoughts on these areas in short pieces below. We’ve also compiled a Budget day predictions colour supplement which goes into more detail. We hope you find this useful.
This brings us back to the content of the Chancellor’s Budget day speech. We know that he likes to surprise and to please, rather like a magician pulling a rabbit from a hat to the delighted gasps of the audience. We also know, and this is a harder truth, that he desperately needs to raise more taxes.
When it comes to raising more taxes, the Chancellor has of course ruled out many possibilities by committing not to raise income tax, VAT or NIC. Many tax experts had expected that by now additional revenues would be raised through a shift from financially-based taxes to carbon-based levies. These would have sat alongside the general reduction of business taxes and a shift toward the taxation of employees and individuals. The government’s environmental policy means that carbon taxes will simply not be available to take up the slack in exchequer receipts.
So what might the Chancellor do? Two possible means of raising taxes present themselves:
- increase fuel duty while pump prices are still relatively low;
- use the new Digital Tax Accounts to accelerate the collection of tax from the self-employed. That could produce a one-off tax windfall of £6bn which we discussed in more detail in last week’s Tax Brief.
If you would like to discuss any of these points further, please contact George Bull or your usual RSM contact.