With the referendum on the UK’s EU membership now set for 23 June, the Chancellor is coming under increasing pressure not to rock the boat with more tax hikes on Budget Day.
However, with reforms to pensions tax relief now seemingly off the agenda, RSM is warning that Mr Osborne may be looking at other options for balancing the books.
Commenting ahead of the Budget on March 16, Stephen Hay, RSM’s head of tax in Scotland said: ‘Recent policy initiatives such as the introduction of the dividend tax ‘allowance’ and the ‘liberalisation’ of the pensions regime have created the impression of government largesse but in reality have been significant tax-raising measures. This approach is becoming something of a George Osborne trademark, so we will be going over this year’s figures with a fine toothcomb to see if any ‘giveaways’ are all that they seem.
‘One area that we’ll be keeping a particularly close eye on is the development of the government’s plans for personal digital tax accounts, announced in last year’s March Budget. This will impose an obligation for individuals to file up-to-date information on their income with the taxman every three months. While attention has so far focused on taxpayers’ filing obligations, the changes could also be a cover for introducing in-year collection of tax payable – essentially bringing forward payments which would usually be payable in the year ahead. These changes could have a significant impact – particularly on the self-employed.
‘However, one group of people who could be in line for a giveaway are middle income earners. The latest figures show that there are over half a million Scottish taxpayers earning between £30-50K, who collectively pay almost £3bn in income tax – over a quarter of all income tax collected in Scotland. George Osborne has already indicated that he wants to raise the higher rate threshold to £50K by 2020. If, as has been suggested, he decides to speed up his plans to reach this target, many thousands of middle income Scots could stand to benefit.’
A full list of RSM’s considered predictions is available online at www.rsmuk.com