Chancellor urged to cut waste and taxes in Budget
George Osborne must declare a "war on waste" by cutting unnecessary spending as well as cut taxes to ease the cost of living, a leading pressure group has said.
The TaxPayers' Alliance is urging the chancellor to make the changes in his forthcoming Budget on 19 March. It wants the government to reform public sector pay and pensions, reduce NHS spending and scrap the high-speed rail network upgrade (known as HS2).
The group also said Osborne should take the opportunity to cut employers' and employees' National Insurance to 11%, cut the corporation tax rate to 20% a year earlier (on 1 April this year instead of in 2015), cut fuel duty, abolish the alcohol duty escalator and scrap stamp duty on property transactions.
The organisation is also demanding the government completely dissolve the Department for Culture, Media and Sport and the Department for Business, Innovation and Skills, claiming their responsibilities could be transferred to museums, universities and other departments.
It said these measures combined would help "hard-pressed taxpayers", stimulate investment and create jobs.
Last chance saloon
Jonathan Isaby, chief executive of the TaxPayers' Alliance said: "The chancellor is in the last chance saloon when it comes to helping taxpayers before the next election. If he wants to ease the burden on family finances and secure economic growth then he has to cut waste and cut taxes in this Budget.
"Promises of help after 2015 will not be enough - he must take this opportunity now to deliver a Budget for taxpayers."
With the Budget only a week away, a range of campaign groups and business organisations have begun urging the government to make reforms that would benefit their members or interests.
Housing firm Springtide Capital, for example, wants the chancellor to raise the stamp duty threshold on property sales to £600,000 to get more first-time buyers on the property ladder. It also wants the government to make amendments to its Help To Buy scheme.
Professional services firm Deloitte says it is not expecting any major announcements on business rates or the personal income tax allowance, beyond previously-announced increases.
But it said there could be announcements on or tweaks made to: tax relief for people investing in social enterprise; a change to the way inheritance tax is levied on assets held in trust; and the tax treatment of gains made on the sale of someone's main home, where they haven't lived in it for the last three years.
Some measures due to be introduced this year have already been announced. These include the personal allowance for 2014/15 rising to £10,000 (from £9,440) and the higher rate income tax threshold increasing by 1%, from £41,450 to £41,865.
Similarly, forthcoming tax-year changes to Isa rates, state benefits and tax credit rates have all been previously announced by the government.
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
A scheme originally established in 1944 to provide protection against sickness and unemployment as well as helping fund the National Health Service (NHS) and state benefits. NI contributions are compulsory and based on a person’s earnings above a certain threshold. There are several classes of NI, but which one an individual pays depends on whether they are employed, self-employed, unemployed or an employer. Payment of Class 1 contributions by employees gives them entitlement to the basic state pension, the additional state pension, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement benefits. From April 2016, to qualify for the full state pension, individuals will need 35 years’ of NI contributions.
The tax levied on the total value of your estate after you die. IHT has to be paid by the beneficiaries of your estate before they can receive any of the money from it. The money can’t be taken from the value of the estate _– it has to be paid before any money can be released. There is an IHT threshold – known as the “nil-rate band” – below which no tax is levied (£325,000 in 2011/12). Any amount above the nil-rate band is subject to tax at 40%. If your estate totals £600,000, there is no tax on the first £325,000; however your estate will pay 40% tax on the remaining £275,000, a total of £110,000. Prudent tax planning can reduce your IHT liability, so always consult a specialist solicitor.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.