What to expect from the pre-Budget report

Chancellor Gordon Brown gives his pre-Budget report on 5 December. With widespread speculation that taxes need to rise, here we take a look at his options.

1. Higher corporation tax would be a quick route to increased revenue, but may well be too radical a move.

2. Windfall taxes on oil companies, currently swimming in cash, would be politically easier. Banks are also a possible target.

3. A development land tax, also politically easier, would target the people who own land that has increased in value following being granted planning permission.

4. Real Estate Investment Trusts (REITs). Brown has already indicated that he will make a long-awaited announcement about REITs, which many expect to come into existence next year.

5. Research and Development (R&D). Some analysts expect an announcement about extra tax relief for businesses on R&D.

6. Expect anti-tax avoidance measures to be tightened. For example, Ernst & Young predict rules to prevent loss-making firms being brought up unless there is a clear commercial purpose to the transaction.

7. Increasing VAT would be politically unpopular, but Brown could bring rates more in line with our neighbours. In the UK, VAT is 17.5%, in France it is 19.6% and in Ireland 21%.

8. National Insurance. Raising this tax by 2% would raise £9bn and go a long way to close a hole in Government finances.

9. Fuel duty. Following the postponement of fuel-duty increases in September, it's uncertain whether the chancellor will commit to an ongoing freeze on duty, but he may do something for users of environmentally friendly fuel. 

10. Inheritance tax (IHT). The increase in property prices have caught many more under the IHT net. It is possible that the seven-year survivorship rule will be extended to ten years, thereby capturing even more inheritance tax.

11. Aim-listed companies. Current relief on the ownership of Aim-listed shares is generous perhaps too generous now that large-cap companies are now choosing to float on Aim.

12. Pensions. MacIntyre Hudson predicts a review of the new pension rules that come into effect in April as the Government attempts to shut down tax-avoidance loopholes.

13. It is likely that with Christmas approaching the Chancellor will want to show that he's not all take. Patrick Stevens at Ernst & Young says an increase in personal allowances for those over 65 may be set at an amount that is nominally higher than inflation.