UPDATE: - Read the updated Budget 2018 summary here.
Around 10 days to go until Philip Hammond has to get the Budget sums to add up in order to fulfill promises made by the Prime Minister, but how will he do it?
PM Theresa May vowed to keep fuel duty frozen for another year from April 2019, a promise that, if removed, would provide the Treasury with an additional £9 billion per year.
Chancellor Hammond is reportedly struggling to fill in the gap made by Theresa May's promise to inject an additional £20 billion per year for the NHS. Party insiders believe the threshold for personal allowances and higher rates will be frozen rather than increased with inflation as usual. We previous reported that allowances would likely be frozen after 2020, but this may be brought forward to April 2019.
VAT is currently mandatory for businesses if their turnover exceeds £85,000. Reducing this threshold to force more businesses to register and pay VAT would easily bring in money for the Treasury. The Chancellor is reported looking into this option as a drop in half to the turnover limit would raise over £1.5 billion from an additional 500,000 VAT paying businesses.
Every budget goes by with predictions of a cut to pension tax reliefs, and although the Chancellor has been tempted by the near £40 billion haul a cut/removal to reliefs would provide, no action has yet been taken. The 2018 Autumn Budget could be the first time we see a reduction to either the annual contribution limits or the rate of relief.
Hammond has previously stated that he is a 'low-tax Tory' and tax rises will be kept to the bare minimum but everything so far points toward a cash grab from somewhere - and this is before contemplating the hit to finances with the prospect of a no-deal Brexit - a scenario that has thus far raised only £15 billion in contingency funds.
Read our other predictions for Budget 2018:
- Dividend Allowance To Be Removed Altogether Next April
- Landlords To Be Given Tax Break For Selling To Tenants
Before you go, we have recently launched a service for Amazon Alexa device users that voice-enables getting a quick tax calculation or reverse tax calculation, or the latest tax news. Read more about Salary Bee for Amazon here!