Tuesday April 21, 05:28 PM
FACTBOX-Measures to expect from the UK Budget on Wednesday
LONDON, April 20 (Reuters) - British finance minister Alistair Darling will deliver his second Budget on Wednesday with little leeway for any largesse but still under pressure to reduce the severity and impact of the recession.
Below are some measures to expect.
SCRAP TAX RELIEF FOR HIGHER BAND ON PENSION CONTRIBUTIONS
Darling could abolish higher rate tax relief on pension contributions, perhaps reducing it to the lower rate of 20 percent from 40 percent -- cutting the amount higher earners can save on their contributions.
He could either do this for all of those who pay income tax at the higher 40 percent band or just for people who earn above a certain amount.
JOBS
Darling is expected to announce a 2 billion pound jobs package to cover extra funding for JobCentre Plus -- an existing service to match people to jobs -- and a new initiative to get the under-25s back to work, according to government sources.
GREEN STIMULUS MEASURES
Darling is expected to announce an extra 500 million pounds of spending on 'green' initiatives, according to government sources. Expect cash for loft insulation to reduce home fuel bills and investment for solar heating projects, wind farms other low carbon technologies.
REDUNDANCY PAY
An increase in the maximum statutory redundancy pay to 380 pounds per week from 350 pounds is also expected on Wednesday, according to government sources.
EFFICIENCY
Darling could also announce a further 10 billion pounds in public sector efficiency savings by 2011 -- on top of the extra five billion pounds announced last year.
SCRAPPAGE
The Treasury is said to be as yet undecided over whether to give drivers the chance to trade in old cars for a cash bonus to be spent on newer, greener vehicles.
A similar scheme has helped prop up car sales figures in Europe but there are questions about the scheme would be implemented in Britain -- and what stimulus it would provide given many cars driven in Britain are made elsewhere.
STAMP DUTY EXTENSION
Given the fragile state of Britain's housing market, Darling is expected to extend an exemption from paying sales tax on properties worth less than 175,000 until the end of the year -- temporarily raising the threshold from 125,000 pounds.
Last September, the stamp duty exemption was introduced for one year.
MORTGAGE-BACKED SECURITIES GUARANTEE
The government will implement a multi-billion pound plan announced earlier this year to underwrite asset-backed securities in an effort to kickstart bank lending.
OIL AND GAS INDUSTRY INCENTIVES
There could also be incentives to encourage investment in marginal oil and gas fields and for exploration.
One proposal is accelerated tax relief on exploration expenses. This would allow companies to offset exploration costs against income earlier than currently allowed, echoing the system in Norway.
Another proposal is reduction in taxation on new fields. The oil industry would like the government to cut the 20 percentage point supplementary tax which is levied on oil and gas production profits, on top of corporation tax, for all new fields.
A third one is reduced decommissioning provisions. Companies which buy North Sea fields must set aside a cash amount to cover potential liabilities associated with decommissioning the field in the future. Companies would like the amount reduced.
CLIMATE CHANGE MEASURES
Darling is expected to back a legally-binding commitment for Britain to cut greenhouse gas emissions by 34-42 percent by 2020 compared to 1990 levels, as the government's chief climate adviser recommended in December.
He may also announce or consult on extra funds to test carbon capture and storage and could raise the power price premium for off-shore wind, through an existing renewable obligation certificate scheme, and introduce loan guarantees to boost other renewable energy project finance. Keywords: BRITAIN BUDGET/MEASURES
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