Philip Hammond, the Chancellor of the Exchequer, will be delivering the Budget speech on 29th October, but as always certain things that are likely to be announced have already started leaking out.
So what can we expect to hear from the Chancellor when he stands up in the House of Commons?
The Chancellor recently described the tax relief on offer on pensions as “eye-wateringly expensive” so there’s little doubt that he would like to make some changes here.
When you contribute to your personal pension, you get tax relief on it from the government based on your income tax band. So for a basic-rate taxpayer to add £1 to their pension pot, they only need to pay 80p - the rest comes from the government.
This falls to 60p for higher rate taxpayers and 55p for additional rate taxpayers, a good illustration of why pension saving really is one of the most tax efficient things you can do. While many have called for a flat rate of tax relief, this may prove difficult for Hammond to get through parliament.
Perhaps more likely is a change to the annual allowance, which is the maximum that you can pay into a pension in a year and still receive tax relief. It’s currently £40,000 but this could be trimmed right back to £30,000 according to Royal London.
A common feature of recent years has been the Chancellor ditching planned increases in fuel duty, the tax we pay on petrol and diesel. In fact, it has been frozen for eight years in a row.
This year appears to be no different - Theresa May announced at the Conservative Party conference that it would once again be frozen for the next tax year.
It’s a move that will be welcomed by motorists, with pump prices currently at their highest level in four years according to the RAC.
Stamp Duty is a property tax, paid by the person buying a property. It has been subject to a number of changes in recent years, including people buying a second property having to pay an extra 3% than those picking up a home in which they will live.
This is another tax which featured in the Prime Minister’s speech at the party conference, when she said that foreign buyers of British properties will be subject to the same 3% surcharge as landlords and property investors.
Insurance Premium Tax
Insurance Premium Tax isn’t exactly the most well-known of the many taxes that affect us, but it’s proven fruitful for the Treasury in recent years. It’s a levy charged to insurers for each policy sold, and they generally pass the cost onto us, the consumers.
It’s been hiked repeatedly over the last couple of Budgets, from 6% back in November 2015 to 12% today.
There are murmurings that it could be increased once again, which has outraged the Association of British Insurers, which described the idea as a “raid on the responsible”.
Another rumoured tax change covers Income Tax, and when we all have to pay it.
Everyone enjoys a personal allowance, which is how much you earn each tax year before you start paying tax on your income. It’s been increased steadily in recent years, and currently stands at £11,850, though the Conservatives pledged in their manifesto last year to ramp it up to £12,500 by 2020.
The income threshold at which workers move from the basic rate to the higher rate was also promised to increase from its current £46,351 to £50,000 by the same point.
However, it seems possible that the government may delay these increases, if not scrap them entirely, in order to help with funding the extra £20bn that the government is giving to the NHS over the next five years.