Tax is never far away from peoples’ minds, and with the leaking of the so-called Paradise Papers, tax avoidance may be foremost in the mind of the Chancellor of the Exchequer Philip Hammond when he delivers his first Autumn Budget on 22 November.
But it is the wider theme of intergenerational fairness that we predict will top the Budget agenda.
We’re expecting the over 45s to shoulder most of the pain in this year’s Budget. Below are our predictions.
Pension auto enrolment
The gig-economy has seen a phenominal increase in the number of self employed people in the UK, and with it the number of people with no pension provision – estimated to be a third of the adult population. We would not be surprised to see the introduction of compulsory pensions for all working adults, with for the self employed contributions taken through the annual self assessment forms at the end of each financial year.
Loss of pension tax relief
That higher rate tax payers receive greater tax breaks on pension contributions is looking increasingly difficult to justify. We would expect to see the introduction of a flat 30% relief introduced irrespective of how much an individual earns. Higher rate tax payers may want to top up their pension before the 22 November to take advantage of the higher reliefs available.
A blow for Mrs Brown’s Boys
HMRC has done a good job on tax avoidance. This year, it has increased the tax take by 6.75% - the fastest increase in a decade. And then Mrs Brown’s Boys popped onto our screens via Mauritius. Its stars, it appears, have paid themselves in a way that echoes comedian Jimmy Carr. It is almost inconceivable that the Chancellor will not announce further avoidance measures.
Student loans and fees
We are close to the tipping point when it comes to student finances. High fees and the eye-watering 6% interest rate on student loans is already deterring some students from going to university. The Chancellor is in a difficult position. Student loans are largely out of his control – the cost of reducing the interest rate might be too high. And whilst he could reduce university fees, it would really be nothing more than moving the deckchairs.
And wouldn’t it be nice…
… to give further help to under 35s looking to get on the housing ladder. A reduced rate of Stamp Duty for those under 35 would be very easy to introduce and administer, and would make a real difference. Extra funding for the Help to Buy scheme would also not go amiss.
As always, we take no responsibility for these predictions if they do not materialise, but will of course take every credit if they make the Chancellor’s speech on 22 November.
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