Darling To Deliver UK Budget On 12th March

by Robert Lee, Tax-News.com, London

04 February 2008

The UK Treasury's early announcement of the 2008 Budget date (12th March) has been welcomed by tax advisors Ernst & Young, for allowing taxpayers time to prepare for any new changes to tax laws.

"The Budget is the key date in the tax calendar. But, for many years taxpayers and their advisers have been forced to wait in limbo for an indication of when the Report will be given. This resulting uncertainty can mean that business transactions and even house purchases are rushed through in anticipation of tax changes on an unnamed date," commented Paul Davies, Ernst & Young's Head of Tax, in response to the announcement of the Budget date.

Davies continued:

"This year, taxpayers will have a clear indication of the date on which tax changes will be announced and will be able to make an informed decision as to the course of action to take."

"The announcement of the Budget Report date comes at a time when the operation of the tax regime is going through a sustained period of change, particularly with regards to the capital gains tax regime. Some time ago, the Chancellor outlined his intention to focus on simplification. But, the challenge will be to simplify it enough such that the effort of learning the new rules does not outweigh the alleged benefits."

Davies concluded that: "Perhaps this early announcement heralds a new era in certainty and simplicity for taxpayers. It is still early days but what better way for a new Chancellor to distinguish himself."

However, against the backdrop of a deteriorating economy, and with little room for fiscal manoeuvre, Darling's first Budget since taking over from Gordon Brown last June will perhaps be the most challenging for the Labour government since it took office in 1997.

“This is the most difficult budget background since Labour came to power, as the public finances are out of phase with the economic cycle," observed KPMG’s chief economist, Andrew Smith, in response to the Treasury's Budget date announcement.

He added that: “The Chancellor should be tightening policy to stay within the fiscal rules; but tax increases or public spending cuts would reinforce the economic slowdown expected this year."

With so few options open to Darling this year, Smith concluded by suggesting that perhaps his best strategy would be to avoid making any dramatic new announcements.

“Given current uncertainties it may be best to opt for a neutral package. Cutting taxes looks dangerous on public finance grounds but raising them carries economic risks," he noted.

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