UK Pre-Budget Report Set For December 5th

by Robert Lee, Tax-News.com, London

22 November 2005

The government's pre-Budget report will be presented in the House of Commons on December 5, and according to accounting firm Ernst & Young, the 2006 Budget could be the "most challenging" that Chancellor of the Exchequer Gordon Brown has faced during his eight years in charge of the Treasury.

“The economic circumstances aren't playing into the Chancellor's hands as they did in previous years and he's already had to agree that Treasury growth estimates will be downgraded," observed Aidan O'Carroll, National Head of Tax at Ernst & Young.

According to Mr O'Carroll, the most interesting aspect of the next Budget will be whether Brown admits that he must pull on the fiscal reins to prevent the government's finances falling dangerously into the red, or if he will fudge these difficult questions and maintain that no adjustments are necessary.

"Either way, we can expect him to raise taxes," he predicted.

“As shown in recent announcements, we can expect any tax rises to be expressed either as ‘reform’ of the tax system or as ‘tackling anti-avoidance’" Mr O'Carroll added.

Although Brown is not expected to announce overt changes to income tax or National Insurance rates, Mr O'Carroll is of the belief that businesses of all sizes will bear the brunt of any new revenue-raising measure, most likely through further anti-avoidance campaigns.

"Owner-managed businesses are still living under the threat of a ‘review’ and larger businesses are unlikely to be left alone," he warned.

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