Several journalists have called me this week asking for our Budget predictions, ahead of the Chancellor of the Exchequer delivering his Budget to parliament next Wednesday afternoon.
Speculation is always rife ahead of each Budget, particularly when it comes to pensions.
With the UK economy entering a period of sustained recovery, George Osborne perhaps has a little more scope to relax his programme of austerity, but we are more likely to witness another ‘fiscally neutral’ budget, where any tax cuts or gifts to the taxpayer are offset by other measures.
Here are five Budget predictions ahead of next week. It will be interesting to see how many of them prove to be accurate.
On pensions, we don’t expect to see any attacks on tax-free cash.
This is something that is often paraded by those who like to scaremonger for their own commercial ends, as it can sometimes encourage people to take unnecessary action with their pension funds.
We might well see some additional restrictions on pensions tax relief however.
On 6th April, the annual allowance for pension contributions is being reduced from £50,000 to £40,000. It would not be a big surprise to see further reductions in this annual allowance, perhaps to £30,000 within a couple of years.
Our second prediction is a further increase to the personal allowance for income tax.
This is a big priority for the Lib Dem coalition partners in government, and relatively low cost for the Treasury to implement as higher earners will end up paying more in income tax.
Budget prediction number three is a reform of the capital gains tax system.
On 6th April 2015 we see the introduction of capital gains tax on a main residence for non-resident property owners. Bringing the disposal of other assets into the capital gains tax regime is a likelihood for this Budget.
Back to pensions, our fourth Budget prediction is that Osborne will announce a further increase to the State pension age.
Former FSA chairman Lord Adair Turner, who chaired the Pensions Commission in 2005, has recently called for the State pension age to be raised to 70 by 2040, going further than current plans.
We are all living for longer and State benefits in older age are becoming increasingly expensive, so anything to slow these rising costs is a possible Budget measure.
Prediction number five for the Budget next week has a Scottish flavour.
With the independence referendum coming up in September, we might expect to see the Chancellor including something in his Budget to appeal to voters that side of the border, making them more inclined to vote ‘no’.
This might involve a carrot and stick approach, with negative news about the ability of Scotland to go it alone combined with a sweetener for Caledonians.
Here at Informed Choice, we will be watching the Budget with interest and blogging live as it takes place.
Immediately following the Budget, we have plans to prepare a short briefing note covering the main personal finance developments, which we will distribute to our local professional connections and business owners in Cranleigh.
Do let us know if you would like one of these briefing notes and we will add you to our list.
What are your Budget predictions?
