What we might expect to see in today's Budget
After an incredibly eventful 12 months, it is predicted, and very much hoped, that today’s Budget will be a slightly more subdued affair. It has not been an easy year for the Chancellor, not least after his defeat on tax credit reforms which evoked opposition not only from the Lords but also some on his own side. In addition, with the upcoming referendum on 23 June, George Osborne will be desperately trying to avoid controversy ahead of what may become a very difficult Spring for the government.
That said, there have already been some hints of controversy. On Friday the Disabilities Minister, Justin Tomlinson, announced changes to Personal Independence Payment that would see a reduction in support to people living with an illness or disability. And last night, the Financial Times reported that the Chancellor plans to scrap the Money Advice Service, something that will cause concern for many as a provider of free advice for those worried about their finances.
With a raft of benefit changes due to take effect in April, it is unlikely that further significant reductions are on the cards. Although confusion and uncertainty surrounding Universal Credit has previously given cover for some cuts and this is something to look out for. Turn2us will be live tweeting the Budget and providing analysis and comment throughout the day.
The Chancellor will want to continue to support the narrative that this is the government for working people and it is likely that we will see increases in the income tax threshold for basic rate taxpayers as well as for those in the higher 40p band. In addition to threshold changes, the Chancellor will not increase income tax, national insurance or VAT rates, having previously committed not to do so as part of his ‘triple lock’ guarantee.
In order to afford any changes to thresholds, it is likely that a number of more complex, yet smaller, tax raising measures may have to be put into place in order to balance the books. One rumoured change could be to the redundancy pay tax free allowance, which is currently exempt up to the first £30,000. There may also be moves to align capital gains tax, levied on second homes and other valuable items, with income tax rates which would see an increase of 2% for a basic rate taxpayer.
Pensions have been the a strong focus over the past few days with the Treasury confirming that it will not be pursuing plans to reform how contributions are taxed. This is despite the fact that such reforms have not even been publicly announced in the first place and is perhaps a sign that the Chancellor is keen to avoid a repeat of his ‘omnishambles’ Budget of 2012. However while major reforms may now be put on the backburner until after the European referendum, it is likely that there may be some announcements with regards to pensions.
It is a particularly complicated time for those who rely on support to cover the basic cost of living, with in-work poverty proving a particularly stubborn problem. Not only will today’s Budget add to those concerns should they include further cuts, but with the Welfare Reform Bill currently passing through Parliament, and the package of changes coming in this April, it is becoming increasingly confusing for those seeking help. This is a particularly serious problem for vulnerable groups who are most in need of support yet are least able to navigate the system. Our Benefits Calculator provides accurate and impartial information on what support is available, and we also provide information on a range of issues relating to the upcoming changes this April.