With the next instalment of the Budget due on 15th March I have been giving some thought to what I hope will happen. I should say that I have no inside track and can only speculate but I have tried to provide some balanced views to avoid a repeat of the late September melt down:

1. Change the name of the Pension Commencement Lump Sum (PCLS) back to tax free cash. Since the change in April 2006 I can’t remember a single Budget which hasn’t included speculation around PCLS being scrapped. Changing the name back could be one way of mitigating these fears as it will be back to doing ‘what it says on the tin’.

2. Scrap the increase in Corporation Tax. Currently we have a rate of 19% and the proposal is that this will increase to 25% from the new tax year or 19% if your profits are below £50,000. There will be a tapered rate for profits between £50,000 and £250,000. With the state of the UK economy surely we want to encourage business to grow, taxing profits at these penal rates is surely not incentivising growth. Perhaps as a compromise we can agree to a flat rate of 20% or even 21% to provide a little more to the treasury but without huge increase for businesses to suffer.

3. Simplify income tax rates. What I mean here is that we get rid of the loss of certain benefits / allowances based on earnings. The child benefit reduction between £50,000 and £60,000 and the loss of personal allowance after £100,000 are two such examples. You can also add in the loss in tax free childcare for incomes above £100,000. My simple mind thinks something along these lines would be much simpler and could work:

£0 – £12,500                –           Personal allowance

£12,501 – £50,000       –           20% income tax

£50,001 – £100,000     –           40% income tax

£100,001 +                  –           45%

This would mean those earning more than £100,000 pay the additional rate amount but the quid pro quo is they keep their personal allowance and things are much easier to understand.

4. Scrap the Lifetime Allowance. We have limits on what people can pay / accrue in a pension each year so why should there be a limit on pot size? If people can build a substantial pension fund but within the contribution framework it seems unreasonable to then tax them on success within their pension. The Lifetime Allowance has and continues to be a reason many people exit the work force so again scrapping this potential tax charge could encourage more skilled workers to stay in work longer.

5. Less London centric Government departments. I would like to see the Government start moving more ‘state funded’ departments out of the City. London has a huge premium in terms of rent and wages so how about looking at moving these away from London and reducing costs. It may take a while for this to feed through but it could also be really beneficial to other parts of the country.

6. My final wish is for some better long term planning and perhaps some of the decisions being taken out of the hands of short term politics. We are not too far away from a general election and already the current incumbents will be starting to think of incentives they can give out in future Budgets to win votes. If some of the decisions around the fiscal side of the economy were taken away from the elected politicians this could potentially give some better long-term policies rather than short term politics!

 The above are a very simplified view of matters but here’s hoping for some good news come 15th March.

Thanks for reading.