UK Releases Date Of Pre-Budget Announcement

by Robert Lee, Tax-News.com, London

14 November 2008

Chancellor of the Exchequer Alistair Darling will make his pre-budget report (PBR) speech to the House of Commons on the afternoon of November 24, the UK Treasury announced on Wednesday.

The 2008 PBR promises to be the most significant that a government has announced for many years given the ongoing crisis in the banking system and the economic fall-out that has ensued. What's more, with the Treasury's coffers rapidly emptying the government has little option but to borrow its way out of the crisis, and Prime Minister Gordon Brown has already dropped a heavy hint that he is prepared to sanction unfunded tax cuts to inject a fiscal stimulus package into the economy.

Speculation has been mounting in recent days among tax experts as to how the Chancellor will react to the challenges in front of him, but there seems to be an emerging consensus that he will announce some degree of relief from value-added tax, perhaps by temporarily cutting the tax from its current rate of 17.5% or by expanding the list of goods and services which qualify for the lower 5% rate. It is also anticipated that Darling will announce further measures to support the depressed housing market, and may improve stamp duty rules to encourage more participation in the market by property funds.

Some form of temporary tax relief for individuals could well be on the cards, but many tax experts consider that the Chancellor's top priority should be restoring some semblance of confidence back to the business sector with new measures to support small businesses in particular.

“The Chancellor of the Exchequer must use this year’s pre-budget report to provide further guidance and reassurance that the UK economy will get back on track and so give business the boost of confidence it needs to ride through and beyond these tough times" said Barry Marshall, UK head of tax at PricewaterhouseCoopers LLP, in response to the Treasury's PBR announcement.

PwC suggests that the government could help small firms meet their cash flow needs by suspending HM Revenue & Customs’s debt enforcement procedures for some businesses and postponing due dates for income tax, corporation tax, pay as you earn, and national insurance contributions. Extending loss carry-backs to three years would also help temporarily loss making businesses, the firm argues.

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