Measures likely to catch the industry’s eye include removing IHT on primary residences, slashing stamp duty on shares and removing tax-free employee benefits.
The Tories do not want to be caught up in a Labour tax trap and Shadow Chancellor George Osborne was quick not to commit the Party to any of the proposals although he had warm words for the commission’s work.
Osborne is trying to navigate around any potential Labour attacks on tax cutting that harmed the Party so effectively in recent elections, although Ed Balls was quick to tour the TV studios to emphasise the line that the proposals will give most benefit to the rich.
Although Osborne was non-committal on explicit cuts he did pledge to rebalance the current tax system in favour of reducing personal taxes on families and – along with everyone else it seems – said he would hit polluters with new green taxes.
Elsewhere, Ed Balls told a Financial Services Forum he would introduce a new rule in the pre-Budget report to clampdown on what he sees as an abuse of the Asp rules.
It seems certain Asps will scrapped or hit with a spoiler charge high enough to deter any clients from using the product after Balls warned of the ‘danger it contradicts the view we have taken on forced annuitisation at 75’.
Balls seems to believe it is all the industry’s fault for marketing the product outside its original intention, although it would have had to have seen a very short-sighted Treasury that did not see this coming ever since the rules were first conceived.
Some in the industry say this statement should be used as a rallying call to try and convince the Treasury of the potential benefits of allowing Asps an audience outside the Plymouth Brethren, both in terms of Treasury revenue and incentivising saving.
But Balls’ comments show the Treasury looks extremely unlikely to budge on its principal of forced annuitisation at 75, no matter how strong the lobbying is.
‘Bring it on’ seems to be the sentiment coming from Tory sources if, after the PBR, the political debate moves squarely back to a straight argument on forced annuitisation.
The Tories have long favoured a full relaxation in this area through the retirement income fund and also have the LibDems on their side after their tax commission called for the scrapping of forced annuitisation.
There are also forces eager to hit the Treasury with a religious discrimination charges if the Asp approach is shut-off completely – as a way of bringing the forced annuitisation debate to court – so the Treasury will be very wary of meandering down this route.