This last year has been a testing one for all of us with record debt and job cuts. The latest figures show government borrowing for this financial year has now reached £270.8billion – £212.7billion more than a year ago, according to the Office for National Statistics (ONS).
Chancellor Rishi Sunaq will announce his planned budget on 3rd March 2021 and how he plans to counter this debt and protect jobs moving forward. Little known at the time of last year’s budget, Rishi Sunaq has been thrust into the limelight for the measures he has implemented during this year of pandemic.
According to the Financial Times Mr Sunaq will be publishing an economic recovery plan on 22nd February ahead of the main budget. This is to show a medium-term plan of proposals to boost skills and investment.
There has been much speculation about how taxes may or may not increase to cover the spend on coronavirus support measures. These include raising fuel duty, an increase in Class 4 National insurance contributions and changing capital gains tax and rises in corporation tax. Tax increases are expected on cigarettes and alcohol even though pubs may still be closed. Treasury Minister Jesse Norman has said that online sales tax may be a solution and that taxes may not rise at all if the vaccination program leads to natural economic growth.
The 6-month stamp duty holiday did stimulate the housing market and many in this sector are calling for it to be extended although there have been no hints from the Treasury on this. Due to the pandemic, there is a backlog in paperwork reported in Rightmove’s January House Price Index that means some buyers looking to complete their transaction before the 31st March deadline might miss it. The Chancellor may make exemptions for this or indeed maintain the £500,000 threshold permanently. There is also speculation that the Chancellor might look to replace council tax and stamp duty with a new property tax at a later date.
The current furlough scheme is due to end in April, but it is expected the Chancellor will announce an extension to this and business loan schemes.
The icing on the cake
At the end of every budget that may have caused many moans and groans, the Chancellor could announce something surprising. At the end of the summer statement that was the Eat Out to Help Out scheme. It will be interesting to see what it may be this time.
Scotland and Wales
The Scottish Budget was delivered on 28 January and that included new income tax thresholds, changes to the housing sector and funding for council tax freezes. The Welsh Budget took place in December 2020 where stamp duty for buy to let landlords and people buying second homes increased from 3% to 4%.
Of course, all of this just speculation at the moment. What do you hope the Chancellor will announce on March 3rd?
A Review of the 2021 Budget
On the morning of the 4th March, join KJG Tax Partner, Alex White as he reviews the announcements, along with the impacts it will have on both businesses and individuals.