What should we expect from George Osborne’s budget today?

Here is a rundown of the key things to watch for:
The Big Picture:
Based on coalition comments, tax experts expect the ratio of spending cuts to tax rises to be 4 to 1.
Osborne will have to come up with a budget that is acceptable both to the electorate and his coalition partners, the Liberal Democrats, notes Patrick Stevens, tax partner at Ernst & Young.
“So you need to be able to show that the pain is spread in a fair and equitable sort of way,” he said.
Government sources said Osborne will set an overall figure for reining in public expenditure over the next five years as he seeks to eliminate the current structural deficit – which means wiping out the part of government borrowing that does not fall when tax revenues rise.
Estimates by the Institute for Fiscal Studies suggest £85bn will have to be found in cuts and tax rises over the course of this parliament to balance the books.
National Insurance contributions
Osborne will announce that any company set up outside London, the south-east or the eastern region will not have to pay employer National Insurance contributions (NICs) for its first year in business.
Firms will be able to apply for the tax cut at any time over the next three years up to a maximum of £5,000 per employee or £50,000 per firm.
It will be targeted at regions with a high concentration of public-sector workers.
Capital Gains Tax
The coalition has pledged to “seek a detailed agreement on taxing non-business capital gains at rates similar or close to those applied to income, with generous exemptions for entrepreneurial business activities”. CGT is currently 18%.
Osborne has dropped fairly clear hints that it will rise, describing CGT as a tax where “we see massive income tax evasion”.
The question is, who will be exempt and how much will it rise?
There has been no indication from the government over whether all the talk among economists and business groups of a likely VAT hike is grounded in reality.

Commentators say VAT is a quick and relatively fair way of raising large sums and that it is likely to be put up from 17.5% now to 20% or even 21% from either January or April 2011. A rise to 20% (2.5% increase) would raise around £12.5bn in receipts and cost the average household around £425 extra per annum. 
We do not expect currently VAT-exempt items (food, baby clothes, etc) to start attracting VAT however.
Corporation tax
The budget will set out a five-year “road map” to cut corporation tax, aides said.
Watch for any announcements on the controlled foreign companies rules. They have been cited as one of main factors making businesses relocate to countries such as Switzerland and Ireland because, under the current system, overseas subsidiaries of companies are paying UK tax if their HQ is here.
Michael Wistow, head of tax at law firm Berwin Leighton Paisner, said the chancellor could announce that rules on controlled foreign companies do not apply to companies operating in the EU. “This would end a complicated and burdensome tax obligation and send a strong message about the UK’s attitude to business and tax reform,” he said.
Income tax
An increase in the personal allowance is expected and will be portrayed as one of the two big giveaways of an otherwise harsh budget – the other being the NICs move. The coalition parties said they would announce “a substantial increase in the personal allowance from April 2011”, with the Lib Dems’ £10,000 allowance demand seen as a longer term goal.
The Chancellor could get closer to the £10,000 level now by paying for it with an increase in the basic rate of tax by one percentage point to 21%.
Osborne has made it fairly clear he will introduce a banking levy to claw back bailout money paid out to the sector from taxpayers.
A bonuses clampdown announcement is likely as Osborne seeks to show he is spreading the pain. Bankers will be hoping it is in the form of a tax rather than regulation, as the latter would fall to the business secretary, Vince Cable, and he has been pretty clear about a low cap on bonuses.
Green measures
For an air travel tax, the new government has already said that “a switch should be made to a per-plane, rather than per-passenger duty”. There could be more on the creation of a green investment bank, something pledged in both coalition parties’ election manifestos.
Experts advised watching for a restriction of tax relief on pension contributions. Already 50% taxpayers have their tax relief on pension contributions capped at 20% and 20% taxpayers only get 20% relief. So the 40% taxpayers could be seen to have an unfair advantage and may have to face a similar cap.
Insurance premium tax
Insurance premium tax, which is charged on car insurance and business insurance, could double, which would push up the price of policies for businesses.