Will the Chancellor put our houses in order?

The shadow of a general election expec-ted within a matter of weeks will loom large over Gordon Brown's 2005 Budget this Wednesday.

The shadow of a general election expec-ted within a matter of weeks will loom large over Gordon Brown's 2005 Budget this Wednesday.

As a result, says Victor Dauppe, a partner at accountants MacIntyre Hudson, it is "unthinkable" that voters will be left with less money in their pockets because of hikes in income tax, VAT or national insurance contributions.

But with a growing budget deficit, neither does the Chancellor have any scope for the usual pre-election handouts, adds Mr Dauppe.

"It's likely that this Budget will be heavy on forthcoming consultations and light on meaningful measures."

Such a view suggests that two much-mooted changes - to stamp duty and inheritance tax (IHT) - will play no part in Mr Brown's speech.

However, others are not so sure. "As the Chancellor charts a course for the post-election period, we can still expect some surprises," says Patrick Stevens, senior tax partner at accountants Ernst & Young.

Whatever his decision, keep a close on eye on measures that may affect your personal finances. Any announcement - or lack of one - on the following will be worth noting.

Stamp duty

Many in the mortgage industry want Mr Brown to raise the threshold at which a 1 per cent duty becomes payable from £60,000 to £150,000. This would cut the cost of buying a first home by more than £1,200 on average, and leave more money for legal and administration fees.

Stamp duty was last revised in 1993, but house price inflation has since pushed up the cost of the average home by 160 per cent and caught millions in its tax net.

However, many believe the Chancellor backs cheap social housing as an alternative to helping out struggling first-time buyers with tax breaks.

Radical change to the way the duty is levied has been suggested by some lenders and think-tanks. This would involve the type of "banding" used for income tax, so that the duty payable would not be a percentage of the total house price but any sum over a given threshold. A house bought for £100,000, say, would incur a 1 per cent duty only on the extra £40,000 above the current threshold. This is unlikely, although it would make property more affordable for first-timers.

IHT

Because of higher house prices, some 2.4 million homeowners now face potential IHT bills (a 40 per cent tax that kicks in when any estate crosses a £263,000 threshold), according to the Halifax.

Raising this limit would exempt many who, apart from property, would otherwise pass on a small legacy. But many believe Mr Brown might opt for a government-sponsored IHT consultation instead.

Pre-owned assets

Greater clarification of the rules for assets such as second homes handed to children is needed before legislation comes into force on 6 April this year, says Simon Rees, tax manager at accountants PricewaterhouseCoopers.

The new law is designed to stop people avoiding IHT by giving away assets they continue to enjoy. But there has been much concern over its retrospective element; however, Dawn Primarolo, paymaster general, last week said it wouldn't apply in many cases.

The lack of detail is potentially misleading, warns Mr Dauppe; he believes a deferral of the new regime might be announced.

Trusts

A review of tax on trusts specifically set up to protect assets such as cash, property or shares was announced last year by the Inland Revenue. Although new regulations are due to take effect from April, says Mr Rees, "the draft rules are complex and definitions so widely drawn, it is not clear they would be legally enforceable".

Since discussions with the Revenue are continuing, he believes the Chancellor should defer change until 2006.

Savings

Plans to slash the £7,000 limit on tax-efficient individual savings accounts were given a stay of execution, subject to consultation, in the pre-Budget report; more long-term details could emerge on Wednesday.

Property investment trusts

Much has been said, but little announced, about this scheme to let ordinary savers invest in commercial property. Details on how these real estate investment trusts (Reits) will work could be announced, including the extent of tax relief.