The Chancellor should use next week's Budget to raise the threshold at which people begin to pay National Insurance says accountancy body ACCA (the Association of Chartered Certified Accountants).
ACCA is urging the Chancellor to use his final Budget of this Parliament to make a real difference to the both individuals and businesses. At the top of his list should be to raise the National Insurance threshold. Chas Roy-Chowdhury, head of taxation at ACCA said:
"Since the election in 2010 the government has taken steps to take many of the lowest paid out of income tax, with the threshold scheduled to potentially reach £12,500. However anyone earning £153 a week, equivalent to less than £8,000 per year, still has to pay NICs (National Insurance Contributions).
"If the government is serious about helping the lowest paid they should raise the level at which they start paying NICs. At present those earning between £7,956 and £41,865 pay 12% of their earnings in NICs, making the amount potentially saved by the lowest paid extremely significant.
"In addition, raising the threshold could actually save the Government money in the long term as many of the lowest paid would be entitled to less in benefits such as housing support."
ACCA is also calling on the Chancellor to use the budget on 18 March to remove the principle private residence from inheritance tax, as Chas Roy-Chowdhury explains:
"House prices in the UK have become almost recession proof. They keep rising year on year, but the point at which inheritance tax is paid has risen little in the past decade. We are now at the point where, in many areas of the country, the average house price is far above the threshold, and despite paying the taxes and charges that are associated with owning a property your loved ones are left with a hefty tax bill when inheriting the property."
The Chancellor should also take this opportunity to extend the Government growth vouchers scheme before the General Election says Chas Roy-Chowdhury:
"Under the scheme small businesses can get up to £2,000 worth of free finance advice, offering a lifeline to many at a time when a lack of available finance is often cited as the main barrier to growth for small businesses.
"The growth vouchers scheme is due to end on 31 March and has helped up to 20,000 UK small businesses. Extending the scheme would send a clear signal that this Government backs enterprise ahead of the General Election in May."
Alongside the progressive reforms outlined by Chas Roy-Chowdhury; ACCA's head of public sector, Gillian Fawcett is calling for greater clarity in terms of public sector spending:
"The Chancellor must lay out in clear terms how the Government plans to protect the core public services relied upon by the most vulnerable in society from further swingeing budget cuts.”
"If the rumours of another £70bn of cuts turn out to be true they could have a devastating impact on the financial viability of some public services. The Chancellor needs to take this opportunity to set out credible plans on how he proposes to ensure financial sustainability to 2020 and beyond while continuing to bring down the tax burden, as he has promised.
"The demands placed on the public purse by an ageing population have the potential to burst the public sector financing bubble unless the Chancellor acts quickly and decisively to address the situation."