George Osborne will deliver his second Budget of the year on 8 July, but what little gems might we expect to see in there?
In their party manifesto the Conservatives outlined the need to make £12 billion of cuts to the Welfare Budget but did not specify any details where the cuts would be made. Its expected that the Chancellor will reveal the full extent of the cuts to each departments spending in his Budget.
The manifesto also promised no rises in VAT or income tax during the next 5 years so we should expect to hear more about this.
There may be good news for home owners concerned about Inheritance Tax. It is widely predicted that there will be an increase in the IHT nil rate band for people who wish to leave their homes to their children meaning that a property worth as much as £1 million could be left to a deceased couples children.
Could we see an increase in the rates of capital gains tax? Currently at 18% and 28% respectively these are lower than income tax rates and might be seen as an easy target for a cash strapped Chancellor.
Pension contributions currently attract tax relief at the taxpayer’s marginal rate of tax meaning that a 45% taxpayer could save 45% tax by paying into a pension. Consequently, some might argue that pensions are being used not so much for their intended purpose of saving for retirement but instead are being used as tax shelters. It’s possible that the Chancellor might restrict the tax relief available to a lower rate.
Interesting times! We shall be watching closely on 8th July.