15 March 2016
In the last few years the way the Budget is delivered has changed somewhat, or rather it has increased in frequency. Traditionally, we could expect a Budget in the Spring and an Autumn Statement in the Autumn (well the winter actually). But today, it’s quite hard to spot the differences between the two.
The Budget has always been the time for new ideas and policies, whereas traditionally, the Autumn Statement has always been more of an update on the economic state of play. It is also often when we hear why things have not gone quite to plan since we last saw the little red briefcase. While debate and controversy have always gone hand in hand with the Budget, the timetable was well established.
When the Coalition came into power we received their first Budget in place of the Autumn Statement. As a new Government, and considering the global wide economic state at the time, this was no surprise. However, few realised that this was to become the new format, where the Chancellor would regularly use the Autumn Statement as another Budget. That said; when you consider that last year saw George Osborne effectively deliver three Budgets, maybe this is not set in stone either.
Today it seems we are as likely to be surprised with bombshell announcements in the Autumn Statement as in the Budget. This Chancellor has become known for pulling dramatic ‘rabbit out of the hat’ announcements when we least expect them, the new Living Wage being last years. While it is fair to say that nobody saw that one coming, quite often these revelations are shocking because historically rumours, leaks and predictions have always told us what is coming before the Chancellor gets near his despatch box. You have to wonder how much influence this has on what is actually announced on the day.
Gauging public opinion before the Budget makes sense but this year the Treasury seemed to take it into the digital age, though few noticed this. In January, via Twitter, the Treasury invited the UK public to say what they wanted to see in the Budget via Survey Monkey….Yes, the Treasury decided to crowdsource ideas for the Budget. Some would say this wasn’t a bad plan, however, others might ask if Mr Osborne needed inspiration.
Until a week ago, we all thought we knew what tomorrow would bring. We all expected the big news to be drastic changes to tax relief paid on pension contributions. It seemed certain that the Chancellor would be announcing moves to an ISA style system, but apparently not. After seemingly endless public debate on the subject, the Treasury revealed that “the time isn’t right”. So there we have it, the news that a policy which was never announced, would never be announced, made the headlines.
So what will we see tomorrow? Well, I’m sticking to the safe ground here because these days you can never be 100% sure.
You can be confident that some changes to pensions are still on the way. That might include reducing the Annual Allowance, cuts to the Lifetime Allowance level and restrictions to salary sacrifice.
Capital Gains Tax does not get the same spotlight as other taxes, but last year it was worth more to the Treasury than Inheritance Tax. It is a tempting target and changes here are less likely to meet with resistance. Currently, gains above £11,100 are charged at 18per cent for basic rate taxpayers or 28 per cent for higher rate payers. This may not remain the case for much longer.
The Chancellor has also had his eye on redundancy payments. Currently, Income Tax and National Insurance is not collected on redundancy payments up to £30,000. This is a generous allowance which could change on Wednesday.
Tax avoidance has been a constant element in every Budget and Autumn Statement for some time, and this week will be no different. The crack down on multinationals and creative tax strategies is never out of the media and public’s focus. It is a certainty that the Chancellor will have his eyes fixed on them too.
The EU debate must be addressed. To do otherwise would effectively mean the Chancellor was ignoring the herd of elephants in the room but ultimately, we are all still wondering if Mr Osborne has any new tricks up his sleeve.