George Osborne could choose to reform stamp duty on Wednesday - a crowd-pleasing policy that wouldn’t have to hit Treasury coffers hard. The most likely option for the chancellor would be to change the slab-like structure of the tax by only charging a higher rate on the amount spent over each threshold, rather than the whole sum. For example, any property between £125,000 and £250,000 costs one per cent in stamp duty; over that limit up to £500,000 costs three per cent. If you buy a house for £255,000, you pay three per cent on the whole amount. Osborne could bring in a new rule where you would only pay the higher rate on the amount over the threshold.
Cutting inheritance tax is a core Tory idea, and something that the chancellor hasn’t mentioned since the 2012 Autumn Statement when he announced that the threshold would increase from £325,000 to £329,000 next year. Before the 2010 election the Conservatives pledged to increase the threshold to £1m, to take into account rising house prices, so it seems likely this policy could form part of the final financial statement of this parliament. The Office for Budget Responsibility has laid some groundwork for the move, revealing earlier this year that the number of people hit by the tax will double in the next four years.
CAPITAL GAINS TAX
Capital gains tax is the least likely area for a giveaway, but it is still possible. Currently the tax is paid above an allowance limit, which the chancellor increased by one per cent in the 2012 Autumn Statement to £11,000 by 2015/16, but he could choose to increase the tax-free limit again this year. One thing is more likely. The chancellor is expected to increase the rate of tax paid by overseas property owners who buy in the UK. He may also choose to tighten up the rules for those who own more than one property in a bid to counter plans by both the Labour and Lib Dems for a mansion tax for expensive properties.
OSBORNE'S PREVIOUS BUDGET HIGHLIGHTS
2010: THE EMERGENCY BUDGET
The chancellor announced a range of deep cuts and freezes, including a two-year public sector pay freeze, housing benefit cap and a VAT increase to 20 per cent. The bank levy was introduced and corporation tax cut from 28 per cent to 24 per cent.
2011: THINGS ARE LOOKING TRICKY
In the 2011 Budget George Osborne increased the personal allowance and cut corporation tax again. He also launched a review into the 50p rate of tax. Later that year he capped rail fare increases and announced additional government borrowing would be needed.
2012: THE OMNISHAMBLES BUDGET
Who could forget the pasty and caravan taxes? This was a bad week for Osborne who had to row back on a number of key pledges. The 50p tax rate was cut to 45p, personal allowance increased again and departmental budget cuts were revealed.
2013: TINKERING AROUND THE EDGES
Continuing with his cuts to corporation tax Osborne announced a new low of 20 per cent for 2015 and scrapped planned fuel and beer duty rises. In the Autumn Statement that year the welfare cap was announced and rail fare rises were curbed.
2014: THE PENSIONS REVOLUTION
In perhaps his biggest overhaul of any financial statement so far, the chancellor unveiled sweeping changes to the pensions sector including annuity reforms. The ISA limit increased and a new garden city was announced in Ebbsfleet.