Recent news has been awash with what the chancellor may reveal in his next Budget, and the most debated topic revolves around tax.
The Guardian has revealed that Osborne may be looking to raise the level at which people start paying the higher rate of tax after scrapping plans for a raid on pensions tax relief.
It has also been reported that Osborne is “examining a quicker increase in the personal allowance”, which is due to rise to 10,800 from April and 11,000 in 2017.
However, Chas Roy-Chowdhury, ACCA’s head of taxation, explained that while the chancellor has set in motion several mechanisms to improve the UK economy, he needs to break from his usual delivery of the Budget.
“The chancellor should not risk progress by chasing headlines in Thursdays papers,” Roy-Chowdhury said.
He added: We already have a review of business taxes and business rates underway, as well as a review of the entire tax system by the OTS (Office of Tax Simplification). In past budgets hes circumnavigated such work by announcing surprise changes before the OTS has had chance to complete their review and report back.
During his time at No.11 Downing Street hes made many pledges to make the tax system simpler, now he has the chance to make good on those promises. Let the reviews happen and take time to study the recommendations.
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The ACCA has urged the chancellor over the past five years to stop the changes to the pensions system in search of tax revenue. It suggested that while pensions are about long-term planning, you can’t make long-terms plans if the system keeps being changed.
If he wants to make one change ACCA would like to see him begin to redress the fiscal drag created by raising of the income tax personal allowance. Too many middle income earners have been drawn into 40 per cent income tax. He should now start to raise the 40 per cent threshold to ease the burden on this group.
It goes against he preferred way of operating at budget time, but with a fragile UK recovery, and a volatile global economy ACCA hopes the Chancellor is brave enough to be boring this month.
But it’s not the only topic of Osborne’s that people have opposed. Pick up a paper and open it to the property section and theres probably an article saying that buy-to-let landlords are the newest victims of the governments housing policy but here’s why you don’t quite need to fear Osborne yet.