Budget predictions from Wbg
Independent professional services and accounting firm, Wbg, predicts that Chancellor John Healey’s first Budget, on 28 October, will be a battleground between head and heart.
Catherine McManus, Wbg partner and head of tax, said that the Chancellor has been clear that he aims to maintain fiscal discipline while at the same time having a desire to spend and invest.
She believes this presents him with something of a quandary, given that manifesto pledges remain, in relation to maintaining income tax and national-insurance contributions for employees, as well as VAT – so that the likelihood is that he will increase capital-gains tax (CGT):
“I would predict that the Chancellor will announce his intention to raise CGT,” she stated: “Setting it up for next April would generate market activity, with deals being struck earlier – with consequent cashflow coming into the exchequer earlier than might otherwise have been the case, albeit at a lower rate for a limited period,” she said:
“Consequently, I would advise clients to get prepared so that, in the event of a rise in CGT from the new fiscal year, those who anticipate involvement in sales transactions should be readily enabled to crank up activity quickly.”
Catherine also said that she does not foresee changes to headline rates of income tax but noted that income-tax rates could still change in Scotland when the Scottish Budget is announced in December.
“We will need to see how the Scottish government responds to the UK Budget announcements in terms of our flexibility on income-tax rates and what other changes it might make in relation to other devolved taxes, such as land and buildings transaction tax, when compared to the stamp duty land tax,” she added.
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