News - How will the pre-Budget report affect me?
What does the Chancellor have in store for us in the pre-Budget report? A leading accountant offers her top tips.
Put 10 December in your diary. It’s the date of the pre-Budget report, a sort of .
The Chancellor normally reserves his big announcements for the Budget which takes place in the Spring.
But the pre-Budget review can be a good way of breaking unwelcome news, the idea being that by next year we will have either forgotten or got used to it.
This year the announcement is very close to Christmas, but I doubt the Chancellor will be giving away few presents.
So what will be in his pre-Christmas stocking? And how could it affect you?
Childcare
Childcare provided by your employer has always been free of National Insurance (NI).
However it’s currently only tax-free if your employer both pays for the childcare and manages it.
The good news is the government is expected to announce that other childcare, not just childcare in work-based nurseries, but also vouchers, could be free of tax and NI.
But the bad news is that financial support could be capped at 50 a week.
This low ceiling could lead to a NI increase for many people and a tax bill for some parents.
I also fear that it could increase complexity for employers, and some could stop providing childcare altogether.
Vans
The government has been consulting on plans to change the way vans are taxed.
The Inland Revenue currently classes company cars and vans differently. Cars are heavily taxed, while vans get off more lightly.
If your employer provides you with a van you can use to go to and from work, and/or use at the weekends, you could be in for a big surprise.
The government has woken up to the increasing popularity of vans in recent years.
It plans to treat vans like company cars, so people could see their tax bill increasing by more than 100%.
Pensions
The complex pension tax rules are due for a shake-up.
Obscure regulations are going to be swept away, but other problems could appear.
For instance, if your pension savings fund does really well, so that its value exceeds 1.4m, the Chancellor is expected to confirm that any excess will no longer be tax-free, but will be taxed at the rate of 60%.
Stamp duty
For most people, having such a large pension is as likely as living in Lapland. Owning a valuable house is much more likely.
But Will Mr Brown catch you there too?
Although there has been lots of speculation about whether stamp duty should be changed to reflect booming house prices, it is likely the government will be preoccupied with two major reports on housing, the Miles report on fixed term mortgages and the Barker report on increasing the supply of housing.
And with the housing market finely balanced, it may not want to increase stamp duty this time.
Domicile
This issue has been simmering in the background for years - but is definitely one to watch in this year’s pre-Budget review.
Generous tax breaks are available to people who live in the UK, but do not regard Britain as their home country.
This rule is very beneficial for wealthy foreigners, because they can avoid paying tax on non UK income and capital gains, as long as they do not bring the money into the UK.
These “domicile” rules are likely to change, increasing the tax bill for these individuals.
There is a political argument that the rules could be fairer, but I think too harsh an approach will make rich entrepreneurs less likely to set up businesses here.
National Insurance (Nics)
NICs stands for National Insurance Contributions.
In April this year NICs went up by 1% on earned income.
In my view, it is unlikely the Chancellor will put them up again so soon this side of a general election.
The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain , professional advice for your own particular situation.