Live coverage

By GUY DRESSER
Updated: 19:00 EST, 3 December 2003

Tax advisers are predicting another grab on the nation's coffers when the Chancellor gets up to deliver his Pre-Budget Report.

The PBR, also known as the Autumn Statement or Green Budget, is Gordon Brown's opportunity to reveal the Treasury's latest outlook on economic growth and publish detailed consultation papers on new tax proposals. It is also a useful guide to some of the big tax measures that may be in the main Budget itself next April.

But despite the Labour Government's efforts to distance itself from its growing 'tax and spend' reputation, many economists still believe that tax rises and possible hikes in National Insurance contributions are on the cards because economic growth has lagged the Chancellor's predictions, causing a shortfall in the Government's finances.

Ian Luder, a tax partner with accountants Grant Thornton, suggests that spin is the reason the Government has chosen a date so close to Christmas for the Pre-Budget Report.

'We expect a bleak midwinter, hence why they have chosen this date for the report - there will only be one more weekend of press comment before Christmas.

'We are not expecting tax rates to increase for employers as the Government will fear an increased burden on employers could lead to more jobs disappearing.'

Although the Chancellor has many ways of raising revenues, tax experts have identified a 'top ten' of possible tax changes:

1. Increased National Insurance contributions for the self-employed to iron out disparities with those in full-time employment. This could include a possible rise in the NIC ceiling from £30,940 to £35,115. Such a measure could raise £1bn and cost those earning £35,000 or more another £3,417 from April next year. Any NIC increases would be opposed by business leaders.

2. A new White Van Man tax. The Government has decided to clamp down on the way many people use vans provided by their employer for their own personal use. We are also likely to see measures to tackle anomalies in the tax status of twin-cab vans that are increasingly being bought for personal rather than business use to get around the tight car tax regime.

3. More employer-provided tax and NI-free childcare vouchers - the Government wants to encourage more women back to work and sees improved childcare facilities as a means of doing this. Employers are more likely to act if the money put towards nursery care attracts some tax concessions.

4. A possible increase in the pension fund cap in line with earnings. The Government had imposed a limit on the amount people can put into a private pension fund before attracting higher rates of tax. Government-inspired leaks suggest there will be no increase in the limit. But tax experts say this is an effort to soften up public opinion so that people are grateful when they announce an increase to just £1.6m (rather than the £1.8m as industry wanted, but better than nothing)

5. A hike in VAT. A possible increase from 17.5% would be deeply unpopular. But the Government could try to portray it as part of a move to converge with European levels - in the Eurozone the average level of VAT is 20%. A raise to that level in the UK would bring in an extra £1bn a year for the Government's coffers.

6. Personal tax allowance could rise by between 1% and 5% from £4,615, taking it to around £4,725. This would be a modest increase which would not be outweighed by the fact that higher rate tax bands have not changed and that as people's salaries increase, more and more are falling into the higher tax bands.

7. Stamp Duty increases on house sales. There have been several attempts to calm the UK housing market, including major increases in stamp duty. Most tax advisers expect the Government to introduce a 2% band on sales of houses between £250,000 and £500,000 - but this may not be announced till April. Stamp Duty increases have brought in about £3.6bn in increased revenue for the Government and homeowners are now seen as fair game for further rises.

8. Capital Gains Tax on primary house sale. Homeowners are liable to CGT if they have a second property that they sell. Extending the tax to their main residence would be deeply unpopular with Middle England at a time when pensions are underperforming and many people are looking at the equity locked up in their homes as a means of funding their retirement. The Treasury has also denied it has plans to extend CGT in this way.

9. Simplify Isa rules to encourage more saving, perhaps also extend their shelf life as they're due to end in a few years' time. The Government is keen to encourage more people to save rather than spend. Individual savings accounts have not been as popular as the PEPs and Tessas that they replaced - some simplification of the rules could change that.

10. The Pre-Budget Report isn't traditionally where rises in duty on fuel, tobacco and alcohol are unveiled. But increases in all three seem likely in April. The Chancellor is also thought likely to want to play up his 'green' credentials by proposing the further extension of congestion charging schemes around the country.