The Chancellor’s spring budget arrives on Wednesday 16 March. It’s the last one before the nation goes to the polls for the referendum on EU membership, so it will be interesting to see what emerges.
Many of us are likely to be affected in different ways, from income tax to benefits, from housing to savings. What have the experts been predicting for the Budget 2016 headlines?
As promised in last year’s summer budget, personal allowance (how much you can earn tax-free before you start paying income tax) will rise from £10,600 in 2015/16 to £11,000 from April, while the 40p tax threshold rises from £42,385 to £43,000.
Some experts suggest that personal allowance will rise a further £200 in 2017/18, with the 40p rate going up to £43,600. The Chancellor is likely to speed up attempts to increase the 40p rate to £50,000 by 2020, saying that lower taxes bring in more incentives – he claims that cutting the 50p tax rate to 45% has brought in £8bn since 2012.
Plans to cut pensions tax relief for higher earners are set to be postponed indefinitely, due to fears of a backlash from affluent savers. The amount that would have been saved ranges from £6bn to £21bn, depending on sources, but this is now no longer likely to feature.
A new ‘Help To Save’ scheme is set to be introduced to top up savings for low-paid employees on in-work benefits, who put aside up to £50 a month.
On one hand, the chances of unpopular cuts in public spending may have been reduced by the need to build support for the Government’s position in the upcoming referendum on EU membership.
However, the Chancellor said on live TV on Sunday 13 March: “I need to find additional savings equivalent to 50p in every £100 the government spends by the end of the decade, because we’ve got to live within our means to stay secure.” which might hint at significant cuts in public services like councils and transport, in order to pay for tax increases and the non-action on pensions.
Another area where prices may rise in order to balance the books is duty on petrol and diesel, though there are a number of motorist organisations keen to prevent this from taking place.
Plans were afoot for some time to relax Sunday trading laws – at present restricted to no more than six hours – for larger shops such as supermarkets, as part of the Enterprise Bill. However, significant opposition from many MPs made this measure hard to implement, and it was rejected in the House Of Commons on Wednesday 9 March.