Top 10 coalition Budget predictions

An extension of the taper on higher rate relief for pensions and punitive non-dom taxes could surface in the first coalition Budget on 22 June, according to tax experts.

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by William Robins on Jun 08, 2010 at 11:43

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On 22 June Chancellor George Osborne (pictured) will deliver his first Budget as one half of the coalition government. Prime Minister David Cameron has already warned of an age of austerity and a ‘bloodbath budget’ similar to that proposed by Canada in the 1990s.

You can read Citywire's gudie to surviving the government's austerity measures here.

Experts have started to predict the changes to the tax code the Conservative-Liberal Democrat government will bring in, including punitive measures for non-doms and the extension of the tapering of higher rate relief on pensions.

1. Pensions

Eric Williams, tax director at Grant Thornton expects to see the threshold for the taper higher rate tax relief lowered from £130,000 to £100,000 effective from the next tax year, giving more people less relief.

‘I do not think we will see a reduction of relief to the basic rate for everyone, the taper has been a very unpopular policy,’ said Williams. ‘However, nor will we see a reduction of life time allowances that was lobbied for.

He added: ‘It allows people to build substantial savings over the course of their lifetimes but few people really ever reach the current upper limit.

‘Reducing the threshold would have a much bigger effect and giving high earners less relief is consistent with the policy cutting the deficit.’

2. Capital gains tax (CGT)

CGT is the most hotly disputed topic at the moment and there is no doubt that it will be increased, but the question is to what level.

'I think it very likely that it will rise to 40% equal to income tax,’ said Aegon tax expert Margaret Jago (pictured above).

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8 comments so far. Why not have your say?

I am surprised at the comment that the budget may allow the proposed 1% rise for NIC on employer contributions, whilst stopping the increase for employees.

As the Conservatives were arguing against this "tax on jobs", surely the opposite would be more likely? Employees would have to pay 1% more (equal to an increase in Income Tax, really) whereas employers would not be disincentivised to take on new staff, if employer Class 1 rates were kept at current levels.

I thought this had already been mooted by the Tories - or did I dream it?

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Pointless speculation. Apart from #7 already commented on.which appears to be a$$ backwards!

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"It is likely capital gains tax will rise to 40% equal to income tax", says Margaret Jago. But basic income tax is only 20% and does not rise to 40% until one's income is £41000 plus a year". There are people like myself who do not earn enough to pay higher income tax but nevertheless may be hit by c.g.t. if we sell shares which haven risen in value. Could Margaret Jago or someone else explain the anomaly?

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Dont you lot understand.! You are the top ten percent , the other ninety are more interested in the world cup and dont give a shit about the econony. We are being overcome by idiots who put more value on getting something out than putting it in.Why dont we shoot all the politicians and do gooders and get back to basics. "If you cant do a proper job you starve. No benifit No tax credits. Treat everyone the same. Dont get pregnant if you or the father cant support you all. We are supposedly in the biggest ressesion ever. How is it then that millions who arnt working, some have never done a days work in their lives are loaded with loot?

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Why did I bother to vote tory, they are hitting the poor more than the rich.

Why is Cameron following the LibDems tax proposals, if the country wanted them, they would have voted for the LibDem.

On one point, I have been proved right, in three blogs to this site over the last 12 months, I have stated that in my opinion, in truth, Cameron is a LibDem not a tory, I think events are proving me correct.

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Let us bring some personal accountability back into the equation. Reward the workers, we need incentives in order to pay for the truly sick, the old and infirm, but those that over eat, get drunk and have endless children out of wedlock and generally abuse themselves and life in general do not get my support. The NHS can't afford self abusers. Discipline, education, personal responsability and a strong family commitment is what we should all aspire to.

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Anonymous 1 needed this 'off the record'

Jun 10, 2010 at 11:12

Totally agree with Brain A Johnson.

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