Money Marketing panel give their pre-Budget predictions

Money Marketing’s pre-Budget report panel will be in the office tomorrow offering analysis on the Government’s last pre-Budget report before the general election. The Money Marketing newsdesk, alongside our expert panel, will be providing all the PBR news and commentary you need on our website tomorrow afternoon and in a special 12-page supplement free with this week’s Money Marketing. Below, some of the panellists offer up a few predictions for tomorrow.

Skandia head of tax and financial planning Colin Jelley says: “Capital gains tax, income tax for people with high incomes and pension tax relief are likely to be some of the areas under the microscope tomorrow as the Government will aim to demonstrate that its plans to ensure national debt is reduced are clear and realistic. CGT could be raised to 30 per cent, which is midway between the basic and higher income tax rates, and the new 50 per cent tax rate may be introduced at a lower level than the current proposal of £150,000. Another possibility is the introduction of an even higher rate of tax such as 60 per cent for those with very high income. There are certain areas of our taxation system that stick out like a sore thumb, and look to be strong candidates for amputation.”

First Action Finance head of communications Jonathan Cornell says: “It will be a tepid pre-Budget tomorrow. There will be some degree of banker bashing and there could well be a smash-and-grab from the rich. In terms of the housing market, I can’t imagine any good announcements will come tomorrow – according to the Government and the mortgage lenders, the housing market is in a great state. The lenders are saying they have lots of money to lend and no one wants it. Also, the mortgage support scheme announced in the last Budget has performed appallingly – we are barely into double-digits of those people who have actually benefited from it. I can’t really see any good news for the housing market.”

Standard Life head of pensions policy John Lawson says: “With regard to pensions tax, a consultation on the 2011 permanent regime for high earners will be published. Also expect regulations to follow up the anti-forestalling rules, allowing scheme-to-scheme transfers to protect their regular and irregular ongoing contributions. Since the budget in April, pension tax relief is no longer sacred, and further cuts may come tomorrow, with the high earners limit perhaps falling further to £100,000.  I also think the 0.5 per cent national insurance contribution hike for 2011 could be brought forward. Darling might also outlaw the NIC gains that can be made by employees and employers using salary sacrifice arrangements.”

Technology & Technical director Kim North says: “Darling will have to do something quite significant with regard to public spending. From a financial services point of view we might see a restructure of Real Estate Investment Trusts, so as to be able to declare dividends as part of the income – Reits have to distribute income and have never really counted the dividends in a pure sense. If that were to happen it would be a good move, as it would make the whole regime fairer. For IFAs’ high net worth clients there will be little good news tomorrow overall, the Chancellor will be favourable to those on low incomes. But as always, IFAs will need to make sure their clients are maximising higher rate tax relief while it still exists – I think there will be very few high rate tax reliefs left after tomorrow’s announcement.”

Mac Consulting chief executive Mark Chilton says: “Darling has a nightmare job tomorrow. I think he will try to put the ‘super tax’ on bankers, but they will find it incredibly hard to define and I doubt it will ever happen. I also think they will raise the marginal NI rates for those earning more than £50,000 and I also think they will increase capital gains tax as it is a fast-win tax now the markets have recovered. But the real killer will be the taxes on pension fund themselves – essentially this is a divisive Budget because it will be the ‘tax the rich’ budget with the only electioneering being not increasing taxes even further, like VAT to 20 per cent. But the kicker is these cuts will not work – the rich will disappear out the UK and that’s madness. Also, the revenues will be short because there have been so many pay cuts over the last year, income tax revenues are falling well short.”


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. How about Tax Free Cash from pensions to be reduced from 25% to 20% overnight ??…wins by hitting the fat cats most and has the side effect of driving up pensioner incomes. It has an appeal from a Treasury perspective.

  2. Don’t put ideas into their heads.

  3. Why not have a flat rate 30% tax relief on pension contributions. Will encourage both Higher and Basic rate tax payers to save for retirement – but then again this Government isnt really committed to pension saving is it?

  4. 30% tax relief is too sensible and fair for it to be introduced!

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