UK Tax News from TaxPenny

The chancellor has a tough schedule to keep to if he is making any major changes.

With the General Election around the corner he wants to keep votes and may find it easier to postpone any hikes until after the election, it would also be difficult to push through the new finance bill before the election.

A second budget is very likely to occur after the election, where the party in charge can be aggressive with any hikes without any immediate repurcussions to their vote base.

Our predictions on domestic income tax changes:

INCOME TAX

- Basic and Higher Rate tax bands may possibly remain unchanged.

- 50% tax rate for higher earners will be confirmed, as well as other rates and allowances changes from the pre-budget report. Although a  reduction of the banding of 50% tax from £150k to £130k is possible as an alignment with the pensions tax relief anti-forestalling removal band.

- Slight possibility of an additional tax rate of 60% on earnings over £1 million.

NATIONAL INSURANCE

- Rate rises for all classes were confirmed in the pre-budget report to take effect from the 2011/2012 tax year. This will be confirmed.

Full report will be available on Budget Day 24th March 2010.