Deloitte preview of Budget 2015
11 March 2015
Bill Dodwell, head of tax policy at Deloitte, considers what tax measures the Chancellor is expected to focus upon in the Budget on 18th March.
Bill Dodwell comments: “Chancellor George Osborne delivers the final Budget of this parliament on 18 March. What can we expect next week? There will be very limited ability to legislate for anything announced in the Budget, since the final Finance Bill will be subject to the ‘wash-up’ procedure, which requires the positive cooperation of the Opposition as the Bill will be debated and passed in a single session. A very full Finance Bill is already planned with many new measures taking effect from April 2015, including the new Diverted Profits Tax levy on some multinationals.
“The Budget will focus on the policy of both coalition parties - and the one major policy on which they agree is increasing the personal allowance to £12,500 by 2020. We could well see an increase in the allowance – although lifting the allowance by £100 costs over £500 million.
“There has been speculation we might see a further cut in the annual and lifetime pension allowances – to £30,000 and £1 million respectively. This would raise significant funds but would clearly affect many more individuals – potentially those earning over £50,000.
“Changes in the peer-to-peer lending tax rules may also be announced in two areas where the Government have already made commitments. The Government have also committed to allowing peer-to-peer loans to be held in ISAs and have issued a consultation document on this subject. We may see the result of the consultation, and a timetable for this change at the Budget.
“A consultation on introducing a tobacco levy based on market share was issued last year and the outcome could be announced in the Budget. The perceived advantage of a levy – as opposed to a simple increase in tobacco duty – is that it is not immediately clear whether the tax ends up being borne by manufacturers or consumers. The levy might raise some £150 million annually.”
Ian Stewart, Chief Economist at Deloitte, adds: “This is the pre-election Budget the Chancellor always hoped to be able to deliver. Growth is coming in faster than expected in December, inflation is far lower and consumer incomes are, at last, heading up. Stronger growth and lower inflation means that public borrowing should fall rather faster than expected.
“The current plan for public borrowing significantly over-achieves on the target for eliminating the deficit by 2019-20. Coupled with a better outlook for public borrowing this gives Mr Osborne the scope to announce some easing of the pace of cuts in government spending.
“With the election looming the Chancellor may well pitch his last Budget of this Parliament as offering the prospect of long term gains in incomes along with more spending on key public services.”
Notes to editors
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Deloitte’s Budget coverage will be on our dedicated website www.ukbudget.com. You can also follow us on Twitter: @ukbudget where Bill Dodwell, head of tax policy at Deloitte, gives regular views.
The following experts from Deloitte are available now and on the day of the Budget for comment. From 12pm on Wednesday 18th March, please call the Deloitte Budget Press Hotline on 020 7007 3333, where you will be directly connected to one of our spokespeople:
- Bill Dodwell - Business taxes and general topics
- Daniel Lyons - Indirect and green taxes
- Patricia Mock - Personal taxes
- Mark Groom – Employment taxes
- Wayne Weaver – Banking
- John Cullinane – Banking
- Gavin Bullock – Asset management
- David Clissitt – Insurance
- Julian Small - Oil and gas
- Thomas Evennett - Entrepreneurial Business and SMEs
- Phil Nicklin - Property taxation and REITs
Other Budget spokespeople:
- Ian Stewart – Economics
- Jack Kelly – Infrastructure
- James Thompson – Business rates
- James Pargeter – Residential housing
- Mike Turley – Public Sector
- Ian Stewart – Economics
- Fiona Tait - Exports
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