Tomorrow the Chancellor will deliver his annual Budget statement.
Against the backdrop of a potential return to recession, the government is keen to appear in control. They have done their level best to prepare the ground for a ‘boring’ Budget - but it is still certain to contain measures that impact your business.
So what might we expect from tomorrow’s announcement?
The government has already signalled that it intends to reduce the rate of corporation tax to 21p by June 2014. Some commentators believe that the Chancellor may take the opportunity to make further reductions, perhaps to 20p.
The Chancellor may choose to extend some of the existing tax reliefs on offer to small businesses. If he does so, it seems likely that he will concentrate on firms in so-called ‘high risk’ areas. The government might choose to do this through an expansion of the Enterprise Investment Scheme.
Less likely, but still a possibility, is an announcement that the blighted Funding For Lending scheme is to be overhauled. The programme has been controversial since its inception, and came in for further scrutiny after it was revealed that some of the banks participating had actually reduced their net lending.
The government has already pledged to increase the personal allowance to £10,000, and some commentators believe that the Chancellor may make this jump tomorrow. The personal allowance is already set to rise to £9,400 from 1 April. Meanwhile the top rate of tax will fall to 45p.
Tax avoidance has been a key political issue over the last year, and it seems probable that the Chancellor will announce further measures to curb it. This could take the form of, for example, further taskforces like the ones already established, or an expansion of the controversial Business Records Check system.
The government has already announced that it intends to close a loophole that it says companies to avoid paying National Insurance for as many as 100,000 employees. The loophole involves the use of off-shore payroll schemes.
It is also possible that the Chancellor may announce an increase in the flat rate of National Insurance Contributions, in light of the improved retirement benefits to which the self-employed are now entitled. This is far from a foregone conclusion, though, as the self-employed pension changes do not take effect until 2017.
It is thought that the government will postpone the planned increase in fuel duty until fuel prices stabilise.
It remains to be seen how the Chancellor will react to the growing calls for infrastructure investment. The government has already indicated that it intends to make available funds for investment in railways, specifically through the installation of WiFi on more trains. But there may well also be more significant infrastructure projects announced, possibly including further support for the construction sector.