You are here

Osborne set for pre-election budget; vows end to paper tax filing

OSBORNE5.jpg
Britain is to end annual paper tax returns by 2020 and switch to digital accounts under proposals to be announced by Chancellor of the Exchequer George Osborne in his budget on Wednesday.

[LONDON] Britain is to end annual paper tax returns by 2020 and switch to digital accounts under proposals to be announced by Chancellor of the Exchequer George Osborne in his budget on Wednesday.

The move, which would affect 12 million taxpayers, is aimed at improving efficiency and cutting costs for consumers and businesses, the Treasury said in a briefing note. Osborne will outline his budget plans to Parliament in London at 12.30 p.m.

While he has pledged "no giveaways," speculation is mounting that Osborne will use his last fiscal event before the May 7 general election to seek support for his Conservative Party, which is running neck and neck with the Labour opposition in opinion polls. After years of austerity, an improving economy and low inflation have given the chancellor some room for maneuver without sacrificing his message of fiscal prudence.

"The critical choice facing the country now is this: do we return to the chaos of the past or do we say to the British people, let's work through the plan that is delivering for you?" Osborne will say in his budget speech.

Details of how the shift to digital returns will be delivered will be set out later this year, with 5 million small businesses and 10 million individuals predicted to have access to their new accounts by early 2016, according to the Treasury. By 2017, taxpayers with simple affairs will no longer have to do an annual tax return.

Osborne and Prime Minister David Cameron head into the election with cheaper oil putting money in the pockets of consumers, unemployment at a six-year low and the return of real wage growth for the first time since the financial crisis.

The economy will grow 2.6 per cent this year and 2.4 per cent in 2016, 0.2 percentage point more in each year than the Office for Budget Responsibility forecast in December, the median forecasts in a Bloomberg survey show.

Osborne has said the budget will include some help for North Sea oil and gas companies, which are slashing jobs and investment in response to the fall in oil prices. He has also said he'll extend pension freedoms announced a year ago by allowing retirees to sell their annuities for a cash. There will be further details of infrastructure investment in northern England to boost the creation of a so-called northern powerhouse.

The budget will also include more support for lower earners. Cameron said on Tuesday the minimum wage will rise by 3 percent - 10 times the current rate of inflation - and there has been speculation Osborne will announce a further increase in the amount people can earn before they start paying income tax to 10,800 pounds.

BLOOMBERG