The countdown to Budget 2013 is just about to kick off with the usual claims and counter-claims circulating in the rumour mill of Westminster as the last of the big party conferences comes to a close.
By the time Chancellor George Osborne stands up in the Houses of Parliament at precisely 12.30pm on Wednesday, December 5, most of what he has to say will already be known.
The statement is supposed to provide an update on the government’s plans for economy during the next financial year, based on on forecasts from the Office of Budget Responsibility (OBR).
The OBR will publish volumes of statistics around the same time. If the OBR report comes to the conclusion that Osborne and the Treasury have got their sums wrong, then the country may see some big policy changes announced in his speech.
If the report concludes the government has around a 50:50 chance of hitting spending targets, then no doubt the Chancellor will engage in some window dressing, but little will change in the economy.
The likelihood is the report will come down on the government’s side, mainly because official figures say less than half of last year’s austerity measures have been implemented and their effect has yet to filter through the different financial layers of the economy.
Besides what the Chancellor has to say in the House, the publication of The Finance Bill 2013 immediately after his speech will come under close scrutiny.
In previous years, this bill has contained the real meat of government policy – last year two of the big changes were the introduction of the seed enterprise investment scheme (SEIS) and a raft of tax breaks to encourage entrepreneurs to invest in start-up businesses and the rule changes to qualifying registered overseas pensions (QROPS) which closed a series of tax abuse loopholes.
Is a UK FATCA on the way?
This year, one idea floating around the corridors of power is a UK-style Foreign Account Tax Compliance Act (FATCA) based on the US template which comes in to force on January 1, 2013.
FATCA demands US taxpayers and their foreign financial institutions reveal all about their earnings and assets. Britain has led the charge to join the US at the forefront of tax compliance and is known to be keen to crackdown on those hiding their wealth overseas.
Expect some tidying up of loose ends for investors with the Financial Services Authority (FSA) assault on unregulated collective investment schemes (UCIS) unintentionally trapping venture capitalists and a loophole in Seed Enterprise Investment Scheme rules barring off-the-shelf companies from the scheme.