The 2021 Budget will be presented on 3 March 2021 – almost a year after the last Budget of 11 March 2020. The planned autumn Budget was cancelled in September. Last year’s Budget was dubbed ‘the coronavirus budget’, as the emerging pandemic took prominence over the agenda the Conservatives promoted on the 2019 campaign trail. With Covid-19 still spreading rapidly, expect a coronavirus focus again this year. There are speculations about what Rishi Sunak will include in his new budget. One thing is certain that the pandemic’s second wave is causing untold damage to the UK, so Covid-19 support is likely to be in store this year too.
Tax rises (or no tax rises)
Throughout 2020, questions were raised as to how the Treasury would pay for its record borrowing to fund coronavirus support measures. The leading rumour was that this would be done through tax rises. Measures such as increasing Class 4 National Insurance, raising fuel duty, cutting pension tax relief and changing capital gains tax were all rumoured at various points, though so far nothing official has materialised. There were reports saying Sunak may opt for raising corporation tax in March’s Budget as the first step to reducing the deficit. Further down the line, perhaps at a later Budget, he may seek to replace council tax and stamp duty with a new property tax, according to reports. According to another report, this is not the right time to mope up revenue. Perhaps this reflects that the Treasury hasn’t yet decided exactly what the Budget will include.
Stamp duty holiday extension
Many in the housing sector are calling for the six-month stamp duty holiday to be extended beyond its current 31 March expiry date, though the Treasury has not hinted at this so far. The assumption is that the Chancellor set that deadline without anticipating strict lockdown measures would return, meaning the tax cut could still be needed to stimulate the market. Pressure is mounting on the government to help leaseholders who are struggling with sky-high bills to pay for dangerous cladding to be removed.
Furlough scheme extension
Throughout the pandemic, the Chancellor has repeatedly announced end dates to the coronavirus job retention scheme, only to extend it before it expires. Currently, it’s due to end in April, but if he’s planning to extend it again, the Budget is the perfect time to do it. In last year’s Budget, the government pledged to protect access to cash through new legislation. The legislation hasn’t been passed since then, so perhaps this year’s budget will update on its progress. Chancellors often announce something surprising at the end of a budget, known colloquially as the ‘rabbit in the hat’ moment. At the end of Sunak’s summer statement, for example, he announced the 'Eat Out to Help Out scheme', which offered discounts to encourage visiting restaurants in person. There could be another ‘rabbit’ on its way this year too.
