At 12:30 today the Chancellor George Osborne will unveil his first official budget. Last year, after the general election, an emergency budget was held, but this year the Chancellor will get the chance to officially “commend this budget to the house”. As always on budget day there are number of rumours and supposed leaks filtering through Westminster and Fleet Street, regarding the contents of this year’s budget.
Income Tax and NI
In last year’s budget the Chancellor announced that an additional £1,000 would be added to the personal tax allowance for low earners, the government also announced that another 1% would be added to employer and employee NI contributions – according to sources this is unlikely to change, although additional money may be added to the personal allowance and employers may not face the additional 1% rise on NI.
The government is also believed to be considering a merger between NI and income tax following recommendations recently made by the Office of Tax Simplification.
Additional Tax Measures
As per usual the government will continue its pricing war on smokers, drinkers and publicans with a further tax rise on cigarettes and alcohol. A pint is expected to go up by 3p-7p depending upon who you listen to. Cigarettes are due to face somewhere in the area of a 17p increase and a bottle of spirits is due for a 50p hike.
VAT is unlikely to change, but there are rumours of a change in inheritance tax and 50% super rate on estates worth more the £1m may be introduced. Capital gains tax may also increase from its current state of 28%.
Due to the developing situation with Libya the Chancellor is expected to praise UK troops already in action, the Chancellor is also likely to curtail some of the £4bn cuts experienced by the MoD during the strategic spending review.
According to a number of sources the government is keen to tackle Britain’s developing housing problem. Sources suggest that the government will unveil a new £250m scheme allowing 10,000 first time buyers to purchase newly built flats and houses.
The government is also under pressure to deal with record youth unemployment figures; a new £300m scheme will allegedly be created, enabling 100,000 new work experience places, alongside 50,000 apprenticeships.
An announcement on benefits is also expected and the government is likely to reduce the number cuts previously advocated in last year’s emergency budget.