Budget 2011: The early indications
With less than 48 hours to go until George Osborne presents his second Budget, we already have some early indications of what it is likely to contain.
Here are some of the hints that have been dropped ahead of the Budget:
-Speaking on the Andrew Marr Show yesterday morning, Osborne hinted there would be no tax rises or spending cuts announced in the Budget on Wednesday. With the Budget expected to be “relatively light” in terms of major policy announcements, the devil will be in the detail and we will be looking closely for hidden measures.
-Osborne has been suggesting since January that the government will do something to help with the rising cost of fuel. This could involve scrapping plans to increase fuel duty by 1p over inflation in April, although this move would cost the Treasury an estimates £1.5bn in lost tax revenue.
-We are likely to see the introduction of Enterprise Zones, where taxes for business are lower and there are fewer planning regulations. We are expecting to hear five Enterprize Zones named during the Budget, with councils invited to tender for a further 15 Zones.
-Sky News is reporting that Osborne will freeze the annual increase in flight duty which is scheduled for November, at a cost of £150m a year to the Treasury. If implemented, this freeze would save a typical family £36 on the cost of long-haul flights.
-We expect to hear about some tax simplification measures in the Budget, although it is unclear whether Osborne and the coalition government have sufficient political capital available to pull off the merger of income tax and national insurance contributions. We are likely to see the tax treatment of Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EISs) aligned as this was a recommendation made by the Office of Tax Simplification.
-One prediction we are making ahead of the Budget is that the personal allowance will be increased to a level higher than previously announced, as a sweetener for the Liberal Democrat coalition partners. The personal allowance is due to increase from £6,475 to £7,475 on 6th April 2011, as it continues to move towards an eventual goal of £10,000.
We will be blogging live throughout the day on Wednesday and you can also read our analysis of the main personal finance issues announced in the Budget on Twitter @informedbudget.
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