The sixth budget to be delivered by the current Parliament will be addressed to the nation on 18th March 2015. Having delivered his first Autumn Statement during the economic crisis, this is the Chancellor’s latest attempt to reinforce confidence in his party’s efforts at reducing the deficit. In the words of George Osborne “our long term economic plan is working”. The focus in this statement is perhaps not one of functionality, but one of time.
On the whole, recovery has improved. The media are constantly reminding us of falling inflation, lower unemployment, and rising property prices – all wholly positive factors.
That being said, figures at the end of 2014 showed that the tax take has failed to keep pace with government spending; the promised target of a reduction of the deficit by £12bn in 2014-15 ever creeping out of reach.
“Anyone expecting unaffordable pre-election giveaways will be disappointed because we will stay on course to prosperity”, the message from Osborne, reinforcing the commitment to recovery. So Mr Chancellor, what can we expect from this year’s budget address?
The tax-free personal allowance is set to rise from £10,000 to £10,600, a generous £100 more than it was originally proposed to rise to, and unlike previous increases, this is being passed on to the higher rate tax payers in full with the higher rate threshold set to rise to £42,385. This will potentially mark the first increase in the higher rate threshold in line with inflation for five years.
Having drastically reformed the Stamp Duty Land Tax (SDLT) regime with effect from 4 December 2014 (perhaps a planned move to jump the gun on what could have resulted in quite a shock in the 2015 budget), there is much doubt that this will be toyed with further. With high value properties having to absorb the cost of stamp duty, this move has arguably brought a sense of stability to the market, after seeing a rapid decline in growth in recent months.
Another poke at tax avoiders wouldn’t go amiss. Consultation on GAAR specific penalties is currently underfoot in order to tackle serial tax avoiders. There is some debate as to whether HMRC should be more actively applying existing penalty regimes under current legislation rather than introducing something entirely new. Given the theme of morality and ‘paying a fair share’ which we have seen in prior budget speeches; expect an update on avoidance, even if not specifically about new legislation.
Perhaps the biggest announcement that may come out of the 2015 budget will be the government’s decision on the withdrawal of tax relief on travel and associated subsistence for individuals engaged by employment intermediaries, on travel from their home to a client’s workplace. A crack down on abuse of a tax concession when certain contracts are operated in such a way as to obtain a tax advantage. With the consultation closed as of 10 February, this proposal will have been undoubtedly met with opposing force from umbrella companies in the temporary labour market.
To conclude, recover we have and recover we shall, will undoubtedly shine as the reinforced message come budget day, with no risky quick-fix surprises in the bank. However, it would not be the first time I have been proven wrong.