Top 5 predictions for Budget 2016 – Were we right?

It’s that time of year again when the tax industry look into their crystal ball and attempt to predict what the Chancellor might announce in his Budget next week.

This will be George Osborne’s eighth Budget and our main predictions as well as whether we were right are as follows;

Tax Avoidance

Tax avoidance continues to be hot topic and we’re expecting the Government to continue toughening up the legislation to catch tax avoiders.

Over recent years HMRC has been given more resources to tackle avoidance and we’re starting to see the mood change with large companies such as Starbucks publicly committing to pay a “fair” amount of tax in the UK.


Yes – there was an emphasis on tax avoidance, particular on companies paying their fair share on tax, such as making sure large companies can’t artificially shift profits out of the UK (perhaps following on from companies such as Starbucks and Amazon appearing in the press recently).

Income Tax

We could see a cut in the top rate of income tax from 45% to 40%. The previous cut from 50% to 45% back in 2012 actually increased the overall tax take so the Chancellor could look to do something similar this time.

There is also some speculation that Mr Osborne will accelerate his plans to raise the higher rate threshold to £50,000 by 2020.


Not on this point. However, the personal allowance has increased to £11,500 and the higher rate threshold to £45,000 from April 2017.

Pension Taxation

An area that has received a lot of coverage in the press is tax relief for pension contributions.

The BBC have reported that a Treasury source has said “it’s not the right time” to make changes to pensions following last year’s changes allowing people to withdraw their pension funds.

We’d be surprised to see an immediate full scale cut to higher rate tax relief on pension contributions but the Chancellor could announce his longer term vision for reform. We could see changes to the annual and lifetime contribution limits.


Yes we were right with this prediction; there were no cuts to tax relief on pension contributions.

Capital Gains Tax

Last year the Government announced a “triple lock” where they vowed not to increase the income tax rates, national insurance rates or VAT rates during this parliament. A notable absence in this was Capital Gains Tax so we could see changes to the rates of Capital Gains Tax and changes to the annual exemption.

We could also see further changes to Capital Gains Tax reliefs, such as Entrepreneurs Relief. Entrepreneurs Relief is perhaps the most valuable of the CGT reliefs and there has been commentary amongst the tax profession for some time that it is a very generous relief.


Yes, although not in the way we envisaged. Capital Gains Tax rates will be cut from April 2016 but gains made on residential property will still be taxed at the current rates. The higher rate of CGT will reduce from 28% to 20% and the basic rate reduced from 18% to 10%.


It’s likely that Mr Osborne will use the Budget to highlight the issues should the UK vote to leave the EU in the referendum in June.

Given the changes in Corporation Tax rates announced in previous budgets aimed at encouraging international businesses to set up in the UK, we’re sure the Chancellor will use the opportunity to stress that whatever the outcome of the referendum, the UK will be a great place to do business.

If the UK does vote to leave the EU, then the Government may want to hold an emergency Budget in the summer.


Yes the Chancellor took the opportunity to comment on a potential vote to leave the EU, saying:

“Citing a number of external reports, the OBR say this – “There appears to be a greater consensus that a vote to leave would result in a period of potentially disruptive uncertainty while the precise details of the UK’s new relationship with the EU were negotiated”. Mr. Deputy Speaker, the house knows my view”

How does Budget 2016 affect you?

Over the next few days we will be digesting the contents of George Osborne’s Budget announcement, before releasing a guide on how the updates will actually affect you and your business. Sign up to our newsletters to get your free copy.

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