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Pre-Budget report and CSR to be presented next Tuesday

The Chancellor Alistair Darling will present the pre-Budget report and the outcome of the Comprehensive Spending Review to the House of Commons next Tuesday at 3:45pm.

Aegon is predicting tax and trusts, IHT, non-domiciles and pensions will be the major issues covered in the pre-Budget report.

The provider says it is not clear whether the Conservative party proposals to substantially raise the nil rate band for inheritance tax will provoke a knee jerk reaction from the Chancellor.

If the government does want to make further changes, Aegon says the possibilities include a big increase in the nil rate band while leaving the home within the tax net, a reduction in the nil rate band coupled with taking the home outside the net and a change to the period for which IHT can apply to gifts.

For non-domiciles, Aegon says the PBR could introduce ‘deemed domicile’ for income tax and CGT purposes, so that non-domiciles who are long-term residents pay tax on their worldwide income and gains.

Aegon also suggests the Government review into the annuities market could be brought forward and there may be a relaxation of the requirement to buy joint annuities with protected rights funds.

And the results of the Revenue’s consultation on the difference between death benefits under alternatively secured pensions and scheme pensions may be announced, including whether new tax rules for scheme pensions are needed.

Aegon head of pensions development Rachel Vahey says she’s hoping that the PBR will close some loopholes.

She says: “It’s all still only speculation as to whether it will happen next week or not, but it would be an opportunity for the Government to tie up a few lose ends.

“We expect something on scheme pensions. It seems likely that they will announce where they’re up to with that.”

The Tax Incentivised Savings Association has called on the Government to implement group pensions auto-enrolment prior to 2012, suggested improvements to Child Trust Fund policy and for the creation of a ‘Savings for Life’ account.

TISA director general Tony Vine-Lott says: “TISA has been at the forefront of the development of CTF policy and we have looked to our 2007 PBR submission to call for more changes to make the scheme even more successfully.

We are also keen to see further ISA policy changes to allow for a systematic uprating of ISA allowances and hope the Government will use the Savings Gateway as a route into tax incentivised savings.”

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