The fog is lifting – and the shape of tomorrow’s Budget is becoming more clear.
My expectation is that this will not be a time for huge giveaways or takeaways given the extraordinary spending review we had last October. (Here is a reminder of the upcoming tax and benefit changes, with 16 alone in April – as illustrated by our Austerity Calendar).
Leaving aside the inevitable surprises, here is what we already know – or expect – in the showpiece event.
UPDATE on Wednesday morning:
i] £250m for housebuilding. The government will replace its old Homebuy Direct (£275m) – which effectively ended last autumn – with a new Firstbuy Direct (£250m) which will help 10,000 first-time-buyers. (The old scheme also helped 10,000 first-time buyers.). The housebuilders are delighted but others may simply see this as filling a vacuum in the shared-equity market.
ii] Rumours on corporation tax. The government is due to cut the rate from 28 per cent to 27 per cent next month (as part of a plan to lower the rate to 24 per cent by the end of Parliament) but could go further – or signal its intention to go faster.
iii] George Osborne will announce a further £600 rise in the tax threshold from April 2012 to £8.045 – on top of the £1,ooo rise taking effect next month. Bear in mind, however, that this threshold should have risen by inflation (4.4 per cent) anyway.
1] George Osborne will signal his medium-term intent to merge National Insurance and income tax. The idea is to convince the British public that they pay too much tax – preparing the way for a more low-tax future.
2] Fuel duty escalator. The chancellor is set to reduce or cancel the 5p a litre rise. But a “fuel duty stabiliser” – being considered by the Treasury – seems unlikely after being criticised by the OBR.
3] Aviation tax:
a] The government has cancelled plans to shift aviation duty from a per passenger to a per plane duty which would have stopped half-empty planes paying less tax. Officials claimed that the change would have been thwarted by the Chicago Convention from 1944.
b] Air passenger duty will be frozen, according to reports – instead of being raised in line with inflation.
c] Lear Jet levy – passengers in private jets will pay duty for the first time in a small but symbolic hit on the rich.
4] Employment tribunals. Could change rules so that staff at SMEs must work at a company for two years – up from one – to be eligible.There are also plans to charge for visits.
5] More support for apprenticeships, including 100,000 work placements.