What will the budget have in store for accountants?

It is widely believed that George Osborne will announce plans to merge National Insurance and Income Tax when he delivers the budget tomorrow. The OTS has already suggested that such a merger would make it easier to administer tax and cut the costs of collection, although it would be hard to implement.

This intention was leaked to the press at the weekend as the Chancellor sought to define his budget for growth. In particular Osborne wants to reduce the costs faced by small and medium sized firms.

However, there is a danger that the merged tax will be seen as a tax increase that pushes the marginal rate for some people to more than 50%.

Under the current system there are different thresholds and regulations and these would need to be aligned. Having a single tax would make it easier for contractor accountants, some of whom are trapped in the IR35 debacle.

The Chancellor will probably raise the threshold for basic rate income tax faster than the inflation rate in order to placate the Lib Dems who want people earning less than £10,000 a year free from the burden of taxation.

The Budget is billed as being a Budget for growth but with no spare cash to play with, it is unlikely to be groundbreaking.

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