Budget preview: Could this be the last of Brown's big tax Budgets?

The most important point to remember about next week's Budget is that the Chancellor, Gordon Brown, will almost certainly have time for only one more before the next general election, expected in spring next year. So this may be his last chance to raise several billion pounds in extra tax without risking Labour being slaughtered at the ballot box. Yet, on past form, he will want to proceed stealthily.

Andrew Smith, the chief economist at the accountant KPMG, says: "He is on target to meet his 'golden rule' objectives, but the scene will change after the next election and he will have to face hard choices on tax and spending. He will use this Budget to introduce a slow-burning fuse of measures to increase tax revenues."

Steve Durman, of the financial adviser Moore Stephens, says: "An increasingly desperate Chancellor will introduce a series of stealth taxes to ease his ever-growing public sector deficit. Unable to increase tax rates so close to a general election, Mr Brown will have to raise revenue through the closure of loopholes, a clamp-down on tax evasion and under the guise of EU compliance."

So do not expect fireworks on Wednesday. Much of what Mr Brown wants to do was signalled in his pre-Budget report in December. Since then the economy has performed more robustly than commentators predicted, which should add to the Treasury's tax revenues.

Mr Brown's preference for stealth taxes is likely to argue for no large increases in either income tax or VAT. The Chancellor is an inveterate tinkerman, tweaking here, polishing there and closing a loophole or two that no one thought existed.

If there is to be a set-piece tax assault, the fear is that it will focus on property. The green light for real estate investment trusts will be welcomed as a way for small investors to diversify their interest in property. Not so congenial for many homeowners, however, will be the enactment of a hint from the Treasury that residential property is a largely untapped source of revenue. The civil servants will have been licking their lips as they ran through the most tempting alternatives to place before their boss, from dearer stamp duty to a tax on multiple buy-to-let investments.

If Mr Smith and Mr Durman have read the runes correctly, Mr Brown will light a slow-burning fuse on property tax, either by launching yet another review or announcing a tax that will take effect in a couple of years. He will choose taxes that will have the smallest electoral impact, hitting people who probably would not vote Labour anyway or who live in the south-east. If you fall into either of those categories, fear the worst.

The cause of fairness will be wrapped around measures to close loopholes connected to inheritance tax planning and trusts, some of which will impact on property. By booking some extra future revenue from inheritance tax on homes, the Chancellor will soften the immediate blow.

Britain's chances of winning Oscars in the next few years may be shrunk by a move to stifle film partnerships set up for tax purposes. If the industry is lucky, Mr Brown may try again with another regime to encourage film-making without letting wealthy people exploit a tax concession. It is a tricky one, say film tax specialists: make the deal too risky and no money is forthcoming; make it too safe and there is a stampede.

Mr Durman says the success of London's congestion charge and the M6 toll road in Birmingham may encourage Mr Brown to go green. "Expect to see incentives introduced for the creation of more park-and-ride schemes or charges on the use of airports," he says.

Below, and right we examine in more detail some of the measures that the Chancellor is expected to introduce.

Real estate investment trusts

* These are expected to be listed companies owning commercial property as well as small and large investors.

They are expected to be able to pass on most of the rent from their properties in dividends, to provide investors with an alternative to fixed-interest stocks. They will have fixed capital, similar to investment trusts and other public companies. The price of their shares would depend on supply and demand, and be loosely connected to the value of their properties.

Property companiescurrently pay tax on rent and capital gains. What is left is taxed again when it is paid in dividends.

Treasury hopes to get tougher on taxes: Tax avoidance crack-down

* The selling of tax avoidance schemes may be revolutionised if the Chancellor goes ahead with a Treasury plan to crack down on them.

He is understood to be looking at the US system, under which accountants, lawyers and other advisers have to get their wheezes approved by the Inland Revenue before they can be offered to the public.

Experts believe that the Treasury is being denied as much as £10bn a year by legitimate avoidance, even though Mr Brown has stopped leakage totalling as much as £3bn a year through Budget-by-Budget measures.

Treasury officials say the present arrangements mean that the Inland Revenue and Customs and Excise are always one step behind those devising avoidance tricks. This is despite a law which bans any plans which are deemed to have tax avoidance as their main objective.

The proposal, which would amount to a licensing regime, would give the Inland Revenue prior sight of any new projects. Unlicensed projects would be illegal, and the Revenue would be kept up to date with the latest thinking - which could also give them ideas for new taxes.

Personal taxes

* The personal allowance which people can earn before paying tax is set to rise from £4,615 to £4,745 from 6 April.

KPMG says it is unlikely Mr Brown will increase the starting point for 40 per cent higher-rate income tax in line with the growth in earnings. Inheritance tax (IHT) is another area of concern for taxpayers.

It would be a major U-turn if Mr Brown were to raise the level at which IHT begins by more than the general rate of price rises, taking it from £255,000 to £263,000. Expect further restrictions on avoiding IHT by moving assets between family members, or into trusts.

Flexible pensions for the over 65s: Pension rules

The Chancellor is expected to confirm asimplification of the pension rules.

The spotlight is on his controversial £1.4m lifetime limit for individual pension pots. But there will also be proposals for flexible retirement, allowing a combination of part-time work and a partial pension, from next year, to encourage employment beyond retirement age.

The current system will be replaced by 100 per cent of earnings up to £200,000, with full tax relief at the highest available rate. On retirement, pensioners can take so-called "trivial" pensions as a lump sum, instead of an annuity. Up to a quarter of additional voluntary contributions can be taken as cash.

Small business owners

* Mr Brown is expected to impose a one per cent National Insurance surcharge on dividends paid by companies employing fewer than five people.

He is expected to announce the creation of enterprise capital funds, based on the Small Business Investment Company industry (SBIC) in the United States which can qualify for special loans if it meets set rules. Mr Brown also intends to revamp venture capital trusts (VCTs). He is expected to remove the ability to defer capital gains tax on VCT investments, but improve income tax relief. The maximum investment in VCTs and enterprise investment schemes is expected to be raised to £200,000.

Scare stories about property could come true: Taxes on homes

* Scare stories have multiplied recently about new home taxes in the Budget. David Kilshaw, of KPMG, says: "I believe [Mr Brown] will look at new ways to tax property and other assets."

The main option is to introduce capital gains tax on owners' principal home. This could either be calculated as a notional annual gain, to be paid on death or sale of the property. Or it may apply at a higher rate on sales only, which would have the effect of persuading many people to hold on to their properties.

Moore Stephens, the financial adviser, says the Chancellor may target taxes at buy-to-let property instead. Stamp duty is another possibility. The starting threshold may be raised from its present level at £60,000, a move designed to help first-time buyers get on the property ladder, but increased for properties worth £1m or more.

Bet on the Budget

This could be the Budget betting according to John Whiting, of Pricewaterhouse Coopers:

* Significant tax rises i.e. enough to raise around £10-15bn: 8-1

* National insurance ceiling for 2005/06 raised: 3-1

* Improved capital allowances for smaller businesses: 1-2

* New tax on dividends from some small companies: Evens

* Inheritance tax threshold up by more than 10 per cent: 10-1

* Stamp duty rises on house purchase: 6-1

* Inflationary increases (or less) on alcohol, tobacco and petrol: 2-1