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Do you agree with our Budget predictions?

George Osborne holding up the budget briefcase

Here’s your chance to be Chancellor! George Osborne will deliver the Budget next week, and fierce speculation about what it will include is mounting. We weigh up the rumours and ask what you’d put in the budget.

Budget Day is a big one in the world of money. A single speech by one person, which usually lasts for just an hour or so, contains announcements that will affect millions of people’s finances.

Decisions on tax, public spending and benefits are all unveiled at speed – leaving experts scrabbling to work out what the measures really mean, and who will be the winners, and losers.

But even before the excitement of the Budget kicks off (which you’ll be able to watch live on Which.co.uk next week), rumours about what the Chancellor is planning begin to swirl and fill countless column inches.

So, here’s a quick round-up of some of this year’s speculation…

Five big Budget predictions

The rumour: The 50% income tax band, introduced by Labour, might be abolished to appease top earners and some think tanks.

The reality: While some backbench Conservative MPs would no doubt like to see this happen, it doesn’t seem likely that the 50% tax rate will be scrapped next week. With the government focusing all its efforts on eliminating the budget deficit, cutting taxes for the wealthy would be difficult to justify.

The rumour: A VAT ‘loophole’ allowing cheap DVD, CD and game imports from the Channel Islands will be closed.

The reality: It’s certainly possible that George Osborne will change the rules surrounding VAT-free imports from the Channel Islands, preventing firms such as Asda, Tesco and Amazon from selling DVDs, CDs and computer games via the internet at rock-bottom prices. This might please big high street retailers such as HMV, but it’s likely to annoy some consumers. (You can read more about this issue in our news story on cheap DVDs and albums.)

The rumour: A ‘fuel duty stabiliser’ will be introduced to help stop petrol prices spiralling out of control.

The reality: With unrest still rocking parts of the Middle East and prices at the pumps already high, the government might decide to introduce the much-mooted fuel duty stabiliser. This would be designed to rise or reduce the duty payable on petrol and diesel in line with how much it costs consumers – and it would be a popular measure among motorists. It also seems possible that the Chancellor might cancel the scheduled increase in fuel duty for the coming tax year.

The rumour: National Insurance and income tax will be combined to simplify the tax system.

The reality: A pre-Budget report from the Office for Tax Simplification recently suggested that George Osborne might want to consider combining National Insurance with income tax, to make people’s tax affairs easier to understand and cut employers’ administrative costs. While it seems possible this step might be taken at some stage, it’s a big decision. While the Chancellor might announce his intention to move towards a combined system of taxation, it’s unlikely that this measure will feature in his speech next week.

The rumour: Means-tested pension benefits will be stopped, in a move to create a ‘flat-rate’ state pension that pays £140 per week.

The reality: Iain Duncan-Smith recently talked about the benefits of creating a ‘flat-rate’ pension system but stopped short of revealing any figures – so the jury’s out on this one!

What would you do?

So, what do you think about these five Budget predictions? Would you be glad to see any of these measures brought in, or are you staunchly against them?

What other secrets do you think might be lurking in Mr Osborne’s red briefcase, to be revealed next Wednesday?

And what would you do if you were Chancellor of the Exchequer? Where would you trim – or fatten up – spending, taxes and benefits?

Please share your thoughts with us below – and be sure to tune in to our live blog next Wednesday and find out whether your Budget wishes come true!

kasper says:
16 March 2011

Re the flexibiity changes in the pension rules.

Daylight robbery to deduct 55% death tax when the majority of folks who have only enjoyed standard tax relief on premiums.
Middle England will be subsidising fatcatpensions i..e. for the wealthiest pension savers , their death tax rate will DROP from 82% to 55% . They’ll be laughing, whilst the majority of the rest of us will see a 20% standard tax rate INCREASING by 35%. Talk about inequality! We need to stand up and be counted concerning such gross unfairness which lines the pockets of the rich virtually at Joe Public’s expense.

1. Make all ‘non-doms’ such as Lord Ashcroft, pay their full share of tax. Non-doms in the UK enjoy a generous-tax environment, shared by only a handful of other countries, where they do not have to pay UK tax on foreign earnings kept overseas.

Vince Cable (and also Lord Oakeshott, formerly a Lib Dem Treasury spokesman) used to make a lot of noise about this before he became a Minister, but has gone strangely silent ever since, as a member of the Goverment and a policy maker, he started meeting the ‘rich and famous’.

2. Close down offshore tax havens – Gordon Brown promised, but didn’t deliver. We ALL pay extra tax because these tax avoiders don’t pay their fair share.

Closing down the channel island loophole is probably a good thing – after all they stopped being a better deal a while ago and now just act as a margin booster for the retailers (although I acknowledge the loss of that margin may increase costs from normal channels).

TBH the biggest thing for me is still the loss of child support – or rather the lack of fairness removing it from a single earner over 45k while keeping it for a couple each earning 40k.

Short-selling should be banned in the U.K.

Off-setting losses against profits should not be allowed to continue. Banks can afford generous salaries and bonuses – they can afford to absorb their own losses. The 50% top rate of tax should remain.
Banks and all companies should declare their earnings in the U.K. and pay tax on them – Barclays paid just 1% on £11.4 billion! Such should pay tax on profits before any bonuses are paid. And they should pay back tax they have avoided in past years.

Politicians and business work too closely together for these to be accepted. But the flat rate pension is a good idea. Nuclear weapons should be abandoned altogether and Britain should pull out of Afghanistan. I would like to see those responsible for building two aircraft carriers which cannot take aircraft to be accountable.

Phil says:
16 March 2011

As the Channel Islands VAT “loophole” only applies to goods worth less than £18 I would’ve thought most games and a lot of DVDs wouldn’t be affected.

My guesses? Personal allowances up, duty on drink and tobacco up.

Quote”As the Channel Islands VAT “loophole” only applies to goods worth less than £18 I would’ve thought most games and a lot of DVDs wouldn’t be affected.”

The UK tax authorities will close this very small loophole, which provides a little benefit to UK households, yet ignore the trillions, yes trillions, of wealth held in the Channel Islands by wealthy individuals and which is beyond the reach of the UK tax authorities. Why? – Because non-doms and offshore wealth finances UK political parties. Remedy: State finance for UK political parties, subject to the same regulation as MPs expenses. Once the politicians have no reason to protect their rich party financiers, they’ll very soon see the benefit of taxing them to provide better health and social services.

Osborne should ignore his elitist Eton teaching and do the right thing – ensure that those able to pay (based on disposable income) pay all of the amount to clear the deficit. He should also stop treating bank bonuses as a cost but as a dispersion of profit – which it is. Bank profit tax would rise, there would be additional tax for the parasitc bankers.

He should also cancel the trust which syphons off his income and pay tax like the rest of us. Try honesty for change, Osborne, it may make you feel better.

Former senior bank executive (reformed)

The standard rate of income tax was 33% when Mrs Thatcher came to power, if the rate was raised now to maybe 25% then at least some of the cuts could be avoided. Why is it in a country which is far wealthier than it was 25 years ago, that libraries and Post Offices are closing and university students are having to pay large sums for tuition and get no grant from the government. When 25 years ago tuition was free and for lower income parents grants were available to assist in student living expences. In those days politicians seemed more honest, were paid at a rate much closer to the average wage and had far fewer perks, sorry expences.

My only prediction is that directly the ConDems actually publish the real cuts to come – There will be a large damaging outcry – from pensioners to public servants through the middle class – hopefully leading to the dissolution of Parliament . I will certainly partake in any and all protests.

They are a disaster heading the UK into a 1930s style economic ruin.

He should admit that the banksters, ie the financial terrorists, are untouchable and continue to rule the world. They gamble in a global casino whose rules are heads we win, tales they lose.
Current googol-sized losses (look it up – it’s a big number) are no problem for them: they will be paid for by pensioners (RPI becomes CPI); the sick (NHS cuts); the police (jobs); the disabled (the ConDems have cut local government payments) and many others who for one reason or another cannot fight back.
Students are right to take to the streets as it is the only way left. Aged 63, I’ve never been on a demo, but I might now as I share their justified outrage at the ‘business as usual’ for the spivs.

Natalie says:
17 March 2011

Against #1 but For #3 and #4. Undecided about #2 and #5.

tony says:
18 March 2011

Those of us who are retired don’t pay NI, so if he combines IT and NI he must give us a compensating allowancs.