Budget 2015 Predictions

George Osborne is preparing to deliver his final Budget speech before the general election

George Osborne is preparing to deliver his final Budget speech before the general election, and political watchers are already scrutinising media reports to find out what the Chancellor might include in his final Budget of this Parliament.[1]

The Chancellor has insisted that there will be “no giveaways, no gimmicks”, but analysts have suggested that the growing economy and low inflation may give him some room for manoeuvre.
There are several main points that have emerged about the likely content of Wednesday’s pre-election Budget.

The first main point concerns pensions; it is predicted that up to five million people will be able to sell their retirement annuities for cash without facing a large tax bill. The move follows the extensive pension reforms announced last year that allow working people to cash in all or part of their defined contribution pension when they retire.[2]

Pensions minister Steve Webb said extending the freedoms was an important election issue and urged the Chancellor to act swiftly.

According to the Sunday Times, it is expected that George Osborne will announce further steps to tackle tax abuse by multinational companies. It is anticipated that the Chancellor will introduce a plan designed to stop these firms from diverting profits offshore in order to avoid corporation tax by granting more powers to HMRC.

Following the radical shake-up of ISAs last year, Emma Simon at the Daily Telegraph suggested there might be similar amendments this year, such as allowing ISAs to be transferred to any beneficiary- nor just spouses or partners- free of tax. The government has also said that it plans to allow savers to invest in “peer-to-peer” lending through an ISA.[3]

The Financial Times reports that the Chancellor will relax the £30 billion spending cut targets, as low inflation and a rise in tax receipts has given the Treasury more fiscal breathing space than first assumed.[4] However, finding slightly less than £30 billion of additional spending cuts would still remain challenging, as departments have endured years of squeeze already and welfare savings are notoriously hard to deliver.

The Sunday Express has conjectured that the Conservative election manifesto will include a pledge to raise the inheritance tax threshold from £325,000.

[1] Telegraph Staff, The Telegraph
[2] The Week
[3] The Week
[4] Telegraph Staff, The Telegraph