George Osborne Budget 2015: Here’s everything we already know
Chancellor George Osborne is busily putting the finishing touches to his final Budget speech for this parliament, and while he's been keen to stress fiscal constraints mean it's going to be rather light on the ground, here's a quick round-up of what people think he'll pull out of the red box tomorrow:
"No giveaways, no gimmicks"
The chancellor has insisted there will be "no giveaways, no gimmicks" when he delivers this year's budget. However, as commentators have suggested, record low inflation has cut the government's borrowing costs, putting more money into the Treasury coffers giving Osborne a little bit more room to manoeuvre.
All eyes on the grey vote
Pensioners are most likely to go to the polls, and this alongside their increasing numbers, means the Tories really, really want their votes. This is probably why a number of Sunday newspapers reported Osborne will relax annuity rules tomorrow by letting pensioners trade fixed annual payments for cash.
Howard Archer, of IHS Global Insight, said: “It's been widely reported the chancellor is to extend his pension reforms by allowing pensioners to cash in their existing annuities for cash lump sums from April 2016."
The northern power house
There's been much discussion about the country's "two-speed economy" whereby the south outpaces the north.
But tomorrow Osborne is expected to announce measures that will whittle down the South's lead somewhat.
The chancellor also stressed on the Andrew Marr show on the BBC that this will be a budget in the “national interests” and for a “national recovery” and highlighted the government’s plans to build up a “northern powerhouse," Archer said.
Cheers to tax breaks?
Osborne is said to be planning to hike the tax-free allowance, already due to jump from £10,000 to £10,600 in April, by an additional £200 according to the Sunday Times.
A report by the Sunday People also said he could raise the 40 per cent tax threshold from £41,865 to £50,000.
Sian Steele, tax partner at PwC, says: “raising the personal allowance is a tried and tested way of offering a little extra something in the pay packets of the full-time working population, although at an annual cost to the Treasury of £2.5bn per £500 increase, such offers don’t come cheap".
"If he’s looking for an alternative approach, the chancellor might instead raise the threshold at which the 40% rate kicks in to appease some of the middle earners who have been dragged into the higher rate band as the threshold has dropped in recent years, although this approach would likely meet resistance from the Liberal Democrats."
Inheritance tax
Osborne is mulling raising the threshold for inheritance tax from £325,000 to £1m or abolishing the tax for a main family home.
The proposal attracted opposition from the Liberal Democrats, but if it isn't included in the budget tomorrow, then it's likely to appear in this year's manifesto according to a report by the Sunday Express.
But over at PWC they think "battle ground topics like raising inheritance tax thresholds are unlikely to feature."
North Sea tax regime
A key area of interest for business will be whether or not there are any changes to the North Sea tax regime. The sector has suffered amid plunging global oil prices, causing companies to cut investments and scrap jobs.
The BBC said the treasury is likely to announce a tax cut alongside more details about an "investment allowance" which will let oil companies invest at reduced rates.
"This would help to limit the number of oilfields that are becoming uneconomic and protect production," Howard Archer said.
Two pence cut in the beer duty
Beer drinkers rejoice! The price of a pint could get a little bit cheaper with the third consecutive year of tax cuts. Many expect that the chancellor will announce a beer tax cut between one pence and two pence per pint.
PWC sums it up nicely. "Crowd pleasers seem likely. Beer duty cuts anyone," it said.
Let's build more houses
Osborne is widely expected to announce measures that will encourage house-building and lower mortgage fees.
"The housing shortage in London and the South East shows no sign of easing, so we're likely to see changes to encourage private investors to keep building," PWC said.
"The Government could announce more incentives to encourage building more sustainable, energy-efficient properties."
"Also look out for incentives for local authorities to release more land or brown field sites for housing [and] VAT reliefs on repairs to residential investment properties could feature."