Smith & Williamson says the PBR could prove to be a “Robin Hood” event where the Government tries to redistribute wealth from the rich to the poor.
It predicts increases in national insurance for higher earners as well as a possible increase in the 40 per cent tax rate or the introduction of a new top rate of tax on earnings over £100,000 for example.
Grant Thornton predicts that the Chancellor will have to break the golden fiscal rules as he made it clear that there are no plans to reduce public spending so any tax cuts will have to be funded by borrowing.
The firm predicts that a substantial cut in tax revenue in the region of £15bn a year could be on the cards and would benefit the most vulnerable sections of society including pensioners, low income families and the unemployed.
On the property front, commentators are urging the Chancellor to either reduce stamp duty tax or increase the thresholds by a significant amount.
BDO Stoy Hayward Investment Management property director Robert Walters wants the Chancellor to reduce the rate from 3 per cent to 2 per cent on properties worth up to £500,000 or increase thresholds to help the sticky housing market.
And other commentators believe that the stamp duty holiday for properties under £175,000 could become a permanent fixture.
Another measure aimed to ease the housing market could include providing assistance to landlords when their property falls empty by removing the need to pay business rates on empty property.
Chartered accountants MacIntyre Hudson says the Government should rethink its U-turn on allowing residential property to be held in pension schemes. Tax principal Patrick King says: “At a time when banks are not lending and repossessions are mounting, allowing pension schemes to
invest in residential property will introduce a new source of capital to support the housing market.”
The Association of British Insurers is in favour of another pensions initiative altogether. It wants the Government to bring forward the introduction of
auto-enrolment into workplace pensions by two years to 2010 in order to boost long-term savings.
It also wants the Chancellor to raise the ISA limit from £7,200 to £10,800 a year to give consumers an extra incentive to save.
MacIntyre Hudson also wants the Government to help Britain’s small businesses by scrapping the planned increase in the small companies’ rate of corporation tax and reverting to last year’s rate of 20 per cent.
The firm predicts the Government will go after the super rich by making capital gains tax chargeable on the disposal of all UK property regardless of the tax status of the owner. The exemption for a principal private residence would be unaffected.
VAT is another area in which experts are predicting cuts. Killik & Co managing director of financial planning Malcolm Cuthbert says cutting VAT from 17.5 per cent to 12 per cent would encourage greater consumer spending.
Cuthbert would also like to see a drastic cut in the small companies corporation tax rate to 12.5 per cent in order to stem the outflow of companies to low tax regimes.
He also wants the Chancellor to push up the income tax relief on Venture Capital Trusts from 30 per cent to 40 per cent to encourage investment in higher risk companies.
There is increasing speculation that HMRC plans to launch a new crackdown on those using offshore bank accounts to avoid paying tax.
Grant Thornton tax investigations director Gary Ashford says: “Given the current economic outlook, the Treasury is in need of extra revenue and encouraging people to come clean to pay tax on their offshore accounts is looking like a very real option.”
There has been some speculation over whether the official guarantee for UK depositors will be doubled to £100,000 after similar proposals were unveiled by the EuropeanCommission recently.
However, Grant Thornton believes this is unlikely to happen because the Government could not justify the extended expenditure at this moment in time. Other measures on commentators’ wish-lists include scrapping the £1m lifetime cap on capital gains tax for entrepreneurs, freezing council tax and cutting fuel and excise duties to encourage consumer and business spending.