Here’s a list of things we’d like to see in the Budget. We aren’t really expecting any of them, but we are hopeful of being proven too cynical (this doesn’t happen often). Do add any of your own in the comments.
1) The abolition of pension tax relief to be replaced by a £30,000 a year Isa allowance. Easy and cheap. You can see our arguments on this here.
2) Failing that, the removal of the lifetime allowance (LTA) and the introduction of contribution allowance – this removes the punishment of good investors and encourages early investment up to the contribution limit – make it, say, £300,000 over a career and everyone has a target.
3) A large rise in the minimum wage. You can see our arguments here. But in a nutshell we’d prefer companies to pay their employees directly rather than have the taxpayer make up for low wages via the benefits system
4) The abolition of the ludicrously dishonest distinction between National Insurance (NI) and income tax. The distinction between the two, says Brewin Dolphin, is so “blurred as to be meaningless”. I think that’s generous given that in tax-and-spend terms there isn’t actually a distinction at all. Everyone says they want simplicity and transparency, so – apart from the fact that a shift would alert everyone to the fact that the UK’s basic rate of tax is 32% and its top rate 52% – there seems no reason not to get on with abolishing the NI label.
5) The reintroduction of indexing on capital gains tax. It is currently little more than a tax on inflation (and so a wealth tax). And given that the government appears to be devoted to the creation of inflation, that’s just not nice.
6) The abolition of stamp duty on property transfers, and the introduction of a capital gains tax on primary homes to replace it. You can read our arguments on this here but it is worth pointing out that with the average house price around £250,000, the average stamp duty payment is around £7,500. That’s a hell of a lot of money for someone moving house to come up with*.
7) Failing that, the abolition of the slab system for stamp duty whereby the highest rate is applied to the whole purchase price rather than just the part of the price over any given threshold. This is a nasty stealth tax.
8) A genuine attempt at tax simplification – perhaps even a nod towards a location value tax (LVT) or the flat tax system George Osborne used to say he liked so much.
*Interesting stat from Ian Cowie in the Sunday Times: house buyers in the southeast pay 63% of all stamp duty, the Scottish pay a mere 3%.