With the next Budget just over a week away, on Wednesday 20th March 2013, we asked the team at Informed Choice for items on their Budget 2013 wishlist.
Here are some of the most popular answers.
Please don’t tinker with pensions again, George
Ahead of every Budget we seem to get speculation about changes to pensions legislation.
These predictions rarely become reality, often instead looking like scaremongering designed to encourage higher rate taxpayers to make large pension contributions or withdraw their tax-free cash ahead of an arbitrary date.
Predictions this year seem to be based around a severe restriction on the total amount of tax-free cash available for pension funds, and possibly the removal of higher rate income tax relief on pension contributions.
We have heard this rhetoric before. What we hope the Chancellor does not implement next week is further tinkering with the pension system.
Pensions are designed as long-term savings vehicles. Pension policy needs to be long-term also.
Making regular changes to the rules associated with pensions does little for the UK economy and causes massive damage to investor confidence in pensions as a method of producing an income in retirement.
Introduce a married couples tax allowance
Something that could ease the burden on hard working families (that most favourite of political expression) and simplify taxation at the same time would be the introduction of a married couples tax allowance.
Enabling a working spouse to use any unused income tax personal allowance from their husband or wife would offer a big boost to family finances, without necessary costing the Treasury very much, particularly if it was limited to basic rate taxpayers.
Scrap capital gains tax
We agree with the calls from former cabinet minister Liam Fox who believes Osborne should take the radical step of scrapping capital gains tax.
Such a move, assuming it was introduced for a fixed period of time, would encourage individuals to sell investments and should also kick-start the property market.
We recognise that Fox is at the right wing edge of the Conservative party, and such a move is unlikely in the Budget, but it is one we would love to see.
Double the ISA allowance
We would like to see the Individual Savings Account (ISA) allowance for 2013/14 increased from the proposed £11,520 to £23,000.
A higher ISA allowance comes with very little cost to the Treasury and would encourage tax-efficient saving and investment, particularly at a time when savers are being punished with low interest rates due to Bank of England monetary policy.
Abolish VAT for one year
This is a radical one, but would certainly encourage spending on the High Street.
Since the standard rate of VAT was increased from 17.5% to 20% on 4th January 2011, we have no doubt that this has contributed to the demise of some well known High Street brands.
Abolishing VAT for one year, or even cutting it to 15%, would stimulate consumer spending and help economic recovery.
Give every taxpayer £1,000
We like the idea of a so-called ‘helicopter drop’.
Giving each taxpayer £1,000 to spend would be a much more effective use of printed money than the current policy of quantitative easing, or even the Funding for Lending Scheme, both of which appear to be helping nobody other than the banks.
If Osborne is really serious about UK economic recovery, he will urge the Bank of England to start the helicopter.
Photo credit: Flickr/HM Treasury
