The governments' emergency budget has been set for the 8th July 2015. To keep you informed of all the news from this emergency budget we will be communicating in the following ways;
-When it starts we will be live tweeting on two of our twitter accounts (Alliotts and AlliottsTax)
-Once it is over we will be recording a brief podcast summary with our International Corporate Tax Partner, David Gibbs, which will be available on our website.
-David will be producing a blog article that contains everything you need to know about the emergency budget from a tax perspective.
So please come back and check out our website or twitter feeds on the 8th July to see how you may be affected by George Osbornes' emergency budget.
What to expect in the Emergency Budget on July 8th
The focus will certainly be on cutting the deficit and balancing the books. There won’t be any wide ranging tax increases, but more likely some targeted areas to ‘even out’ the tax system. Perceived areas of tax avoidance will be ‘clamped down on’ – that was a manifesto pledge – and expect some repeated promises of increasing the personal allowance and basic rate tax band over the life of this parliament.
Our hot tips are:
-Pledge to increase personal allowance to £12,500 and the 40% threshold to £50,000 by 2020. This has already been promised, but no doubt it will be repeated.
-Cut pension tax relief for anyone earning over £150,000. This could be cut to 20%, or even worse 0%!
-To go a step further, tax relief on pension contributions for anyone paying 40% tax could be cut to the basic rate (20%). This would be simple to implement and although controversial, it is after all five years until the next election.
-Increase in the Inheritance Tax nil rate threshold to £1m for married couples and civil partners. The conservatives don’t like inheritance tax, and it accounts for less than 1% of all taxes raised, but it won’t be abolished.
-Some tightening on the rules for non-domiciled individuals, who currently only have to pay UK tax on income brought into the UK. The Chancellor wont abolish the system altogether but may tighten the rules for those born in the UK.
-Introduce the ‘tax free minimum wage’. So anyone working up to 30 hours per week on the minimum wage won’t pay tax. This is aligned with the personal allowance and likely to link future increases in the minimum wage to personal allowance.
-Announce a continued review of the tax rules for multi-national businesses that are in the UK. The government want to manage a delicate balance of making the UK attractive to do business in, but ensure business pay UK tax on profits generated here.
-Continue the trend of offering employer tax incentives to take on young workers and train them.
-Some further tax breaks for businesses starting up in selected areas of the UK where unemployment is high.
-Could look to increase council tax bands on expensive homes. This is nowhere near a mansion tax but could be seen as a fair measure to levy higher property charges on those with very expensive homes. The Chancellor could argue there is already an established benefits system to help those on low incomes whose house has grown in value around them.
It’s unlikely there will be any ‘rabbit out of the hat’ policy to appeal to the voters, there’s no need so early on in a government. The focus and most of the headlines are likely to be on spending cuts and where from within the welfare budget £12bn of savings will be achieved.