Ian Stewart, Deloitte’s chief economist, said: ‘Hammond’s deficit reduction rules give him some headroom for more spending. I think he’ll modestly raise spending in key areas and stick with his key target for getting the deficit below 2.0% of GDP by 2020-21.

‘But anyone expecting fireworks from this Budget is likely to be disappointed. Politics and economics dictate that there’ll be no break with the commitment to eliminate the deficit and no big giveaways.’

Chris Sanger, head of tax policy at EY, agreed: ‘This Budget, as the first one of a Parliament, would normally be expected to be full of bold moves, where the Chancellor builds a war chest to utilise later in the Parliament. However, in this case, with a minority government, and business and citizens struggling to understand what the future of the UK will be following Brexit, the Chancellor may seek to buck this particular trend.’

EY’s predictions include potential changes to the stamp duty land tax (SDLT) regime, with the firm pointing out that recent increases in revenue have come from the additional 3% charge on second homes and buy-to-let properties, while there has been an 8% drop in transactions on average across the country. 

Sanger said: ‘With residential transactions now at their lowest level since before the financial crisis, the Treasury should be considering whether the current system is delivering the right support for the housing market both in terms of numbers of transactions and the delivery of new homes. SDLT can act as a significant impediment to purchasing property and to the development of new and affordable housing stock, something that is a clear objective of the government and indeed the London mayor.’

EY’s analysis also suggests action on ‘intergenerational fairness’, with tax breaks for the younger generation in a bid to address rising concerns over property prices and insecure employment.

David Kilshaw, private client services partner at EY, said: ‘We could see the re-introduction of an “age-allowance” but instead of this being directed at the over 65s it could be for the under 30s. The allowance could taper away as income rises.

‘In the alternative scenario, he may choose to readjust NICs for those under 30.’

There are also predictions that the Chancellor may look at adopting some of the suggestions around ‘worker status’ put forward by the Matthew Taylor review, and BDO tax partner Paul Falvey is predicting action on the rules around ‘off payroll workers’, following the introduction of new regulations requiring public sector employers to operate PAYE for contractors.

‘Since the new off-payroll rules only affected the public sector there have been warnings of an IT contractor exodus from Whitehall, with contractors preferring to work in the private sector for tax purposes. We expect the Chancellor to even up the playing field and extend the rules to private sector companies too to increase tax take, correct an imbalance in employment tax legislation and avoid a brain-drain from the public sector,’ he said.

Hammond has previously said that he will increase the personal allowance to £12,500 and the higher rate threshold to £50,000 by 2020/21. These rise by CPI each year unless another amount is substituted.

Patricia Mock, tax director at Deloitte, said: ‘If CPI continued to rise at the 3% rate the personal allowance would exceed the limit by 2020/21 and the higher rate threshold would almost meet the limits in the same year. It may be that the Chancellor decides not to raise the allowance this year, as this would of course be very costly for the Exchequer.’

There is widespread agreement that the Chancellor may make some concessions on business rates, may possibly make further changes to the pensions regime, as well as providing additional support for the UK’s oil and gas industry, and is likely to continue to crack down on tax avoidance.

In a pre-Budget analysis, RSM states: ‘The release of the so-called Paradise Papers will undoubtedly put the Chancellor under pressure to respond to the feeding frenzy which has blown up about tax avoidance and secrecy.

‘Might he make some announcement about requiring companies (and even high net worth individuals) to publish their tax returns or at the very least to publish the country-by-country information that they are already required to provide to HMRC? We don’t expect new rules to come into effect immediately but expect some moves in this direction – perhaps via a consultation document.’

Finally, Bill Dodwell, tax partner at Deloitte, points out: ‘The last few years have seen very major changes to the tax system, which have added thousands of pages of new law and brought significant complexity. It’s much harder today for individuals and businesses to understand their own tax position, which has added to business and individual costs, as the burden of complying with UK tax rules has increased substantially. We’d like to see a greater focus on a simpler and more effective tax system.’

Report by Pat Sweet