There will be at least two UK Budgets in 2015, one in March and one after the general election. I’ve been busy putting together my predictions for the chancellor’s March 18 2015 Budget statement, but I’ve also been thinking about what won’t be in the Budget.
Changes to company tax
We’re pretty sure that the chancellor won’t make direct reference to one of the big trends in taxation, namely the move toward reducing company tax rates while shifting the burden of taxation towards individuals.
That trend has been consolidated with the UK’s success in offering the lowest corporate tax rates in the G20. Tax competition by any other name, if you ask us.
For its part, the Labour party has promised to offer the most competitive business tax regime in the G7. That may be a coded message that we could expect a 2 per cent rise in corporate tax rates if the Labour party forms the next UK government, but we will have to wait and see.
Whatever the case, it’s notable how few complaints there have been as individuals pay an ever-increasing proportion of taxes, whether through payroll, on their investments or as VAT.
Another big trend which the chancellor won’t be mentioning is the shift from money-based taxation to carbon-based taxation.
Many economists, scientists and other commentators regard this as inevitable if greenhouse gas emissions are to be reduced.
However, whereas governments may have got away with shifting the burden of taxation from companies to individuals, any suggestion that carbon taxes should be increased dramatically is greeted with loud protests so exchequers are very cautious to develop this trend.
Catch up on what the chancellor announced in his 2014 Autumn Statement:
Finally, let’s consider an oddity. When George Osborne was a member of the opposition front bench, the then-Labour government proposed a number of pensions tax changes.
He spotted that these would give the opportunity for families to create “family pension trusts”, passing wealth down through the generations in a way which provided income for those who needed it while protecting the family’s wealth.
Before the Labour proposals became law, they were changed to exclude this possibility. Now, with the liberalisation of the pensions regime which is to take place on 6th April 2015, and the abolition of the 55 per cent death tax on pension pots, it seems that family pension plans are once again on the agenda.
What goes around, comes around!
George Bull is national chair of the professional practices group at Baker Tilly.
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