Budget 2012 predictions

This year's Budget will take place on 21 March and rumours are already circulating about what Chancellor George Osborne will announce.

"There is a limited scope for manoeuvre as the economy has not grown as the government had hoped, but there may be a few ways in which the Chancellor can help families and individuals in the Budget," says Stephen Barrat, spokesperson for James Cowper accountants.

Moneywise will break all the news and views when the 2012 Budget is announced. Sign up to our newsletters or follow us on twitter  to get live updates and analysis.

Here are the experts' Budget predictions:


"I think it's likely tax relief on pensions will go. I suspect they will scrap the 50% tax relief on pensions, perhaps not the 40% relief as well. We're suggesting to clients to contribute to their pension before the Budget.

"And you never know the government could suddenly say 'everyone has their money in Isas and we're not getting any capital gains tax'. So it might suddenly cap it at £50,000, so a lifetime allowance for ISAs.

"I don't think there will be many big announcements, as we have a fragile economy."


"We hope to see the chancellor announce a strategy that will, in particular, get the one million or so unemployed young people into work.

"We would also be keen to see the government introduce tax cuts and the abolition of the 50% tax rate on higher earners. The coalition government has committed to retaining this higher rate but we feel it acts as a deterrent to foreign investment and entrepreneurs. Instead, more should be done to encourage new business ideas and start-ups and we hope to see the government provide incentives to entrepreneurs such as tax relief to encourage new ventures and new employment.

"We also hope that the chancellor doesn't bow to coalition pressure and introduce a levy on homes worth £2 million plus, currently advocated by the Liberals, as it stands to further depress an exceedingly fragile housing market."


"The mansion tax has been mooted for some time and is an election pledge for the Liberal Democrats. The idea is that properties worth over £2 million face an annual charge. This would be a new departure, but with recent talk of the government looking to encourage older people living alone in large properties to downsize, it is perhaps more of a realistic possibility than it has been before.

"Also of interest to older people, the Office of Tax Simplification - which was set up to see what taxes should be changed, abolished or enhanced - has recommended a review of inheritance tax. This is due to start this year and whilst no detailed announcements are expected, the Budget may give us some sense of where the chancellor would like the review to focus, with the detail following in a future budget.

"The personal tax allowance rises to £8,105 from April 2012 and the government has an ambition for it to reach £10,000 during the parliament, so we may see an announcement of another increase greater than inflation from 2013.

"Another idea that's been suggested is whether the childcare voucher scheme, which gives a tax break to working parents, could be extended to cover the self-employed and domestic help beyond Ofsted-registered nannies. Both of these initiatives would help achieve "fairness in the middle' with parents who might like to return to work.

"From April 2013 child benefit will be abolished for those households with one person earning more than £42,475. This is not popular amongst the "squeezed middle' but is unlikely to be reversed unless the higher rate of tax goes up. The 50% higher tax rate is also likely to remain."


"We still hope the government will reconsider the decision to remove the stamp duty holiday - as although the evidence suggests it has done little to stimulate activity - its removal creates unnecessary confusion as some buyers will be trying to complete before the deadline expires and may abandon their purchase if they don't think they will be able to complete in time."


"It is unlikely there will be any reduction in higher-rate tax from the 50% top rate but I would anticipate an increase in the personal allowance, as this helps the lowest paid.

"Increased taxation of luxury goods is certainly possible as is increased excise duties.

"We would hope to see increases in allowances for investment into Isas above the £10,680 and extensions to the relief for pensions, currently effectively capped at £50,000.

"We already have increased relief for investment in business - enterprise investment scheme's 30% tax relief on £500,000 investment to be increased to £1 million from 6 April - but we would like to see the rate of relief increased as well as the maximum amount; these schemes help smaller companies struggling for finance.

"Reduction in the national insurance burden on small firms would be welcomed and increase employment opportunities.

"Government could consider introducing an incentive to students to provide for pensions, through write off of student loan debts.

"It could also introduce incentives to small business to occupy high street commercial property and take on more staff, through business rate relief/tax incentive on purchase of commercial property by individuals/small companies/improve public transport provision to smaller towns away from out-of –town stores.

"Tax relief on commuter fares for journeys over 20 miles to place of employment would help those struggling with rising travelling costs.

"Encouraging further charity giving by enhancing relief would help funding perhaps by giving a credit at a higher rate for all, say at 50% irrespective of the amount of tax paid.

"Abolition of stamp duty on commercial property and replacement with VAT would simplify the process and give relief to companies investing in brick and mortar, at the same time stamp duty land tax on private properties should be applied only on properties over £500,000 to help move the lower end of the property market."

This article was written for our sister website Money Observer


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