What's in store for business?

George Osborne has been keen to express his support for manufacturing

George Osborne has a tricky conundrum on his hands.

How does he convince businesses that he is on their side while at the same time hitting them up for more money to fund his deficit reduction plans?

Business is feeling pretty duffed up by the chancellor after increases to the national living wage and the new apprenticeship levy.

Then there's the raid on insurance companies and the time and expense of pension auto-enrolment.

You can perhaps understand why business lobbies are saying "enough, already".

He is unlikely to leave them alone. Pressure to hit his budget surplus holy grail by the end of the parliament while not adjusting the big three - income tax, national insurance and VAT - will see him forced to come back for another bite at business.

Proceed with care

He will be loathe to raise headline rates so he needs to broaden the base - the amount available to be taxed.

So there may be limits on how much of the interest companies are paying on debt can be set against profits.

This is a key part of international attempts to avoid tax by stuffing UK companies full of debt - often borrowed from their own subsidiaries in lower tax jurisdictions.

However, lots of infrastructure projects (one of his favourite areas) rely on lots of debt financing so he'll have to proceed with care.

He's abandoned major reform of pension taxes but there are other things he could do.

The contributions employers make to pensions don't attract National Insurance - but it's a form of pay and maybe they should?

Charging full whack would raise nearly £15bn (and business would scream blue murder) but maybe a portion of it could be targeted and maybe at higher earners.

It would raise serious money for the chancellor but would be very unpopular with employers.

Beef and the sea

Expect more help for the North Sea. This is a no brainer because currently he is not making any tax out of oil and gas there as the companies are making losses and laying off thousands of highly paid (and taxed) staff.

Big tax cuts could slow that process.

If there is one big beef that businesses have it is rates.

For many larger companies this has overtaken corporation tax as a cost.

We will get a long promised review on rates and business will want promises of reform.

However, the chancellor has already said any reform will be fiscally neutral - in other words - the same total amount will be paid so the capacity for wowing businesses is small.

He could decide to change the rate at which rates go up from the hardly used Retail Prices Index currently at 1.3% to the more commonly used and usually lower Consumer Prices Index - currently at 0.3%.

But business rates produce £25bn a year and he'll be reluctant to put this golden goose on a diet.

Elephant

One phrase you are guaranteed to hear is "Business Tax Roadmap".

He wants to make the UK competitive and corporation tax is already due to fall from 20% to 18% by the end of the parliament.

By presenting a clear path of where various taxes, reliefs and business rates are headed he hopes to widen the tax base while giving business a bit of confidence they won't be ambushed by surprise moves down the line.

He'll hope that his roadmap will help offset the uncertainty facing businesses as we approach the EU referendum.

The rather large elephant which will be sitting in the room with him tomorrow.