What we might expect from the Budget 2010

We are all expecting tax to rise with spending cuts across the board in light of the current state of the UK economy, but many believe that Alistair Darling will be more concerned about losing votes and will not deliver any major giveaways in tomorrow’s (Wednesday 24th March) budget. The public are more likely to be left unclear on tax rises and spending cuts planned for the future.

The general opinion seems to be that Mr Darling will not want to lose voters by increasing taxes, however he has little room to manoeuvre especially with the government’s promise to halve the UK deficit within four years. With the general election so close, it is unlikely that tomorrow’s budget will deliver any serious blows and if they do it will be aimed at the wealthy with NI in the frame for an increase on top of the hefty new 50% income tax band.

Previous clampdowns, announced in Budget or pre-Budget statements affecting contractors have centred on their expenses, employment status and tax practices. So although unlikely to feature in the Budget speech all the usual issues will no doubt continue such as ‘income splitting’ and expenses at Umbrellas, although the latter could be too much of a political risk so it may appear as a consultation document at this stage.

The British Chambers of Commerce has already called for a three-year moratorium on new employment law to be a feature of the Budget, a move likely to be welcomed by IT contractors.

So we may see very little confirmed tomorrow, it may be a case of waiting until next year when the next government (whoever it may be) will be expected to sort everything out, meaning greater increases in direct and indirect costs for everyone when they do.

You can read the opinions from several contracting experts in a recent article by Contractor UK, please visit http://www.contractoruk.com/news/004801.html

And so, we wait with baited breath for a budget which may not actually deliver anything at this stage, other than political tactics, as we await the general election in May.