Osborne's Autumn Statement: what can we expect?
Filed under: Pensions
It looks like bad news for the wealthy, those on low incomes, those on benefits, and anyone who pays tax. Oh, and the economic figures aren't going to offer much light relief either.
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Autumn Statement 2012
The economyOsborne is expected to open with a round-up of the desperate and dire state of the economy - and his predictions for how much worse it's going to get. This isn't going to be pretty. Richard Stevens, Fixed Income fund manager at Threadneedle Investments believes that GDP forecasts will be revised down significantly for 2012, 2013 and 2014. Whether he goes as far as to mention a triple-dip recession remains to be seen.
The Institute for Fiscal Studies also suggests that he may have to abandon one of his fiscal targets - that debt should be falling in 2015-16. He may also need to announce yet more spending cuts or tax increases for the next parliament in order to continue to meet his other fiscal target.
Pension tax changesElsewhere in the announcement, the big prediction is that tax relief on pensions will be less generous - and that we could see a lower limit on the annual amount you can put in tax-free, or a removal of higher-rate tax relief.
The experts agree that an attack on tax relief on pensions is likely - and that it would be a horrible mistake. Andy Bell, Chief Executive of AJ Bell says: "Altering the fundamentals of tax relief rules on pension contributions is a temptation that no Chancellor can ignore in times of weakness. This short term sugar rush will lead to the disengagement of long term savers."
"It's a reckless Chancellor that instigates a smash and grab policy that would relegate Gordon Brown's £5 billion a year raid on the pension's industry to the minor misdemeanour of petty pilfering".
Benefit cutsThe TUC has pointed out that there's still much cutting to be done to hit the £10 billion target for cuts in working age benefits. It points out that: "Out-of-work families look likely to be the main target in the Chancellor's Autumn Statement, but the TUC research shows that working families will lose out too. Working lone parents would lose over £300 a year if the Chancellor's £10 billion cuts go ahead."
Stamp Duty anti-avoidanceThe mansion tax has been something of a hot potato, and after ruling it out at the party conference, Osborne will be under pressure from the Liberal Democrats to target wealthy homeowners in some way. Clamping down on stamp duty avoidance may be the answer. Alternatively, he may fiddle around with council tax bands so that those in bigger homes pay more.
A General Anti-Abuse RuleOsborne is widely expected to bring in a rule that makes tax avoidance illegal - to make it easier to close schemes down. The recent press coverage of individuals and businesses exploiting loopholes in current rules would make this a popular move.
Tax thresholdsOne easy win for the Treasury would be not to announce any changes to tax thresholds - which would essentially use the effect of inflation to collect more tax without having to announce anything nasty.
Raising personal allowanceIf Osborne has any scope at all to announce the next step in increasing personal allowances, it would surely go a long way to lift the gloom, and provide some comfort to lower earners hit by welfare cuts.
But what do you expect? And what would you like to see? Let us know in the comments.