5 things we don't want from the Budget 2013

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A petrol pumpWhen George Osborne makes his Budget 2013 speech tomorrow, there are a few things that many of us are hoping he will leave out.

Drivers, for example, are willing him not to announce another fuel duty hike, while smokers are dreading the price of a packet of cigarettes rising again. We investigate how likely our biggest fears are to come true.


Pension allowance cuts
Pension savers have been hit hard by recent Budgets, with the annual pension allowance slashed from £255,000 to £40,000 and the lifetime pension allowance cut from £1.5m to £1.25m.

There is speculation that this year's Budget could further reduce both the annual allowance - to £30,000 - and cap the tax-free lump sum that people can choose to receive when they take out their pension.

However, Raj Mody, head of pensions at accountant PwC, believes the government might hold back due to fears of further dissuading people from saving for retirement.

"If we can't forecast the rules even five years ahead, what is the incentive to save?" he said.

Download a free brochure on Top 10 Retirement Tips here.

Likelihood: 5/10

Fuel duty hike
Drivers already hit hard by petrol price hikes are dreading the planned fuel duty rise later this year. The worst possible news for them would therefore be a further hike.

However, experts are predicting that another fuel duty increase will not take place until petrol prices start to edge back down, and the Chancellor is in fact considered likely to scrap the autumn duty rise for this reason.

Likelihood: 2/10

Alcohol duty increase

Taxes on alcohol and cigarettes, otherwise known as "sin taxes", are currently subject to automatic annual increases. They will therefore rise by at least 2% over inflation until next year at the earliest.

A repeat of last year's 2% above inflation hike in the duty on booze is therefore a certainty. The only question is whether it will increase by more than that.

Likelihood: 10/10

Higher cigarette duty

Last year, duty on tobacco products rose by 5% above inflation, adding 37p to the price of a packet of cigarettes.

That was over and above the automatic "sin tax" increase of inflation plus 2%. And the bad news for smokers is that tax experts expect this year's rise to be above the minimum too.

Likelihood: 10/10

Income tax rise

For many people, higher income tax is one of the most feared outcomes of the Budget each year.

This year, the Government has already announced that the top rate of income tax for those earning £150,000 or more will come down this year from 50% to 45%.

There is also speculation that Osborne may give more details of plans to increase the personal allowance - or amount you can earn tax-free - to £10,000.

The downside, however, is that more people may be dragged into the 40% tax band due to a reduction in the amount you have to earn to pay that rate of tax.

Likelihood: 5/10

Take a look at last year's winners and losers in the gallery below.


Budget winners and losers

Budget winners and losers

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