This morning’s papers were awash with predictions on how the chancellor is set to charm the nation’s voters with economic incentives, like ending annual tax returns and promising multi-billion pound windfalls.
The most eye catching apparant leak was reported by the Independent, which said it had ‘learned’ that the tax on income from savings will be abolished, as Mr Osborne woos pensioners and “hard-working taxpayers” ahead of the May general election.
The paper said the move would be the biggest “rabbit” in the chancellor’s Budget, with the Coalition likely to remove the tax for most except the wealthiest in a move which it will present as compounding its efforts for tax fairness and rewarding savers.
Savings tax is deducted at source by banks and building societies and applied at marginal rates.
Elsewhere The Telegraph led with the suggestion that George Osborne will use his Budget this lunchtime (18 March) to announce the end of the annual tax return within the next five years.
Apparently HM Revenue and Customs will automatically collate the tax affairs of millions of Britons from employers, banks and investment firms into a single digital tax account, which can be checked at any time online.
The move will reduce the time it takes to deal with HMRC from an average of 40 minutes a year to 10 minutes.
Other papers stated that Mr Osborne will take advantage of a relatively healthy economy to ‘outdo’ Labour’s attack on public spending cuts with a large windfall.
The Guardian said he is hoping to use a £6bn windfall to wrongfoot the opposition, while offering modest tax cuts for the middle class and low paid.
Lower-than-expected inflation will give Mr Osborne wriggle room, as the Treasury now needs to set aside less money to fund interest payments on debt, or to cover the cost of uprating welfare payments.
The Times went even higher, with a £10bn windfall on the back of upgraded GDP growth figures from the Office for Budget Responsibility from 2.4 per cent to 2.7 per cent for 2015 and 2.2 per cent to 2.5 per cent for 2016.
The scale of his spending cuts could also be ratcheted back in the final year of the 2015-20 parliament, after prime minister David Cameron supposedly warned Mr Osborne that more austerity could jeaopardise the Conservative’s campaign.
Yesterday, The Sun stated that Mr Osborne is set to cut the lifetime allowance of tax free pension savings from £1.25m to £1m, while earlier in the week leaked documents suggested that the government will tweak the rules to allow parents to pass a main property worth up to £1m to their children without coughing up for inheritance tax.
peter.walker@ft.com
