Pictured above: Andrew Shaw

The emergency budget is likely to see pain today and pain tomorrow, according to Andrew Shaw, national tax managing partner at BTG Tax, part of the Begbies Traynor Group.

He thinks some measures will come in immediately and some will be deferred.

"There is only one way to make a hole in the budget deficit without hurting political ambitions and that is a big rise in VAT - at least 20 per cent, possibly 22 per cent, staged so part of the rise comes now and part next January.

"Widen the base for VAT and possibly extend the five per cent rate to the currently zero rated food, and altogether this raises over £16 billion in a full year. Also this tax is paid by everyone, including foreign tourists, and is voluntary because if you do not spend you do not pay."

Mr Shaw forecast that income tax would see increased personal allowances with a goal set of getting to £10,000, but no higher rate relief and tapered so it only benefits the lower paid. He suggests a major cut back in tax credits to compensate for the increased allowances, with the likes of child benefits either means tested or reduced to children under the age of 14.

He went on: "Capital gains tax will become part of income tax, with short term gains taxed to income tax at your marginal rate. Longer term gains will be a flat rate, possibly 30 per cent. Do not expect to see this until next April, they will want to consult on business reliefs. It is not a money spinner it just reduces avoidance.

"Indeed, a general anti avoidance proposal has been widely trailed but is unlikely simply because HM Revenue & Customs does not have the resources for an advanced clearance system, and the pressure is on to reduce Government headcount, not to create new departments.

"The Chancellor will trumpet lower rates of corporation tax but expect it to be phased in over several years - the old Brown tactic of good news deferred but bad news now."

Corporate partner Robert King suggests a significant increase in entrepreneurs' relief, perhaps to £5 million from the existing £1 million.

"Also expect relief for employee shares acquired under an approved scheme. At the moment the big benefit of such schemes is that the employee is only taxed at CGT rates. If these are increased to income tax rates it will pull the rug out from under employee share schemes which would not be good for generating a sense of employee involvement in the business. The Government could extend entrepreneurs relief to include shares acquired under an approved scheme.

"And there could well be measures to combat schemes that are currently doing the rounds for avoiding Stamp Duty Land Tax on significant property acquisitions."

For more information about Begbies Traynor Group, please visit their website here: www.begbies-traynorgroup.com