So what can Spear’s readers expect from the Budget on Wednesday? Theoretical gain and a whole lot of pain, I would say.
So what can Spear’s readers expect from the Budget on Wednesday (which we’ll be liveblogging on spearswms.com)? Theoretical gain and a whole lot of pain, I would say.
First, the theoretical gain of the 50p top rate of income tax. Although the papers have been reporting many different scenarios over the past week, a consensus is emerging that George Osborne will reduce the rate to 45p, probably in 2013, and then possible abolish it by the next election.
The reason this is theoretical is because a) it’s going to take some time to emerge; and b) most of our readers are probably not paying the 50p rate at the moment. The tax rise was only ever going to catch low-hanging fruit – those on, say, £250,000 for whom it’s not worthwhile hiring an expensive lawyer or accountant to mitigate the tax. Anyone with a vastly greater income will have managed to avoid it.
Related
The whole lot of pain is going to come in the form of unavoidable tax rises and relief cuts.
Start with the won’ts: There won’t be a tycoon tax, mainly because Nick Clegg’s idea was unworkable, and although it would be the most ‘equitable’ of all tax rises, we won’t see a new council tax band because it would emerge just before the next election.
However, one of the first measures trailed was a clamp-down on stamp duty land tax: buying homes through offshore companies may be a minority pursuit, but when you consider the houses purchased – some of Ken & Chelsea’s finest – there is a significant amount of stamp duty being avoided.
Higher-rate pensions may have their relief cut too, although given that the Economist had a gloomy article on the equity risk premium, this oughtn’t to be that worrying. Who’s going to have a pension worth anything in a few years?
Content from our partners
Will we have a general anti-avoidance rule (GAAR), as discussed by our new legal columnist Martyn Gowar? The rule, which means that tax avoidance schemes will be judged by the spirit of the law, would clear a path through the thicket of complex measures lawyers and accountants have sewn over the year.
So it’s no jam today, maybe some jam in the distant future.
