On March 3rd 2021, Chancellor Rishi Sunak will deliver his Budget to the country, having famously delivered his very first just last year, after only 4 weeks in office.
Taking a look back at Budget 2020 might give some indication of what to expect, last year’s budget was offered amid the developing shadow of the Coronavirus epidemic, and while little did any of us know the severity and impact that the virus would have on all our lives, the delivery and the content were roundly applauded.
Sunak exuded a calm authority, focusing on targeted support for the NHS and small businesses, introducing a £30 billion programme of fiscal stimulus including business loans and payments designed to keep the economy as buoyant as possible. The priority was clearly aimed at saving jobs, and supporting households.
Of course, the pandemic hit harder than expected and other measures, including furlough scheme and business grants were introduced throughout the year by this most pragmatic Chancellor.
A lot of money has been spent, and the prevailing thought must be that at some point, we are all going to be required to ‘pick up the bill’.
So, with a full, albeit dramatic 12 months to prepare this time, what might we expect from the Chancellor on March 3rd?
Our immediate thought is that we will not be faced with many dramatic changes, the economy remains in a precarious state and in the face of so many positive messages about ‘bouncing back’ and ‘recovery’, Rishi Sunak will not want to rock the boat…. we can’t see him referencing the famous Gordon Brown line about fiscal prudence, but we do not expect a radical departure from ‘steady as she goes’.
Brexit will be a consideration but the inevitable focus will remain on supporting businesses and getting Britain back to work, we may see delays in personal tax rises from a Chancellor committed to avoiding any action likely to have a negative effect on spending.
Rumours however abound about a small increase in Corporation Tax, nothing too severe and perhaps only for those companies that have done particularly well during the pandemic, this would certainly play well in the country, as would an extension of the ‘Stamp Duty Holiday’.
We may see an extension of the 5% VAT rate for tourism and hospitality and we would not be surprised to see a new initiative along the lines of ‘Eat Out to Help Out’ designed to further boost these most hard hit of service sectors.
Expect to hear the phrase ‘post-Brexit bonus’, and if the Chancellor is feeling particularly bold we may perhaps even see a general drop in VAT rates, albeit time limited.
We anticipate something to boost business investment, increases in capital allowances seem possible if not probable, and areas of the UK hit hardest by the pandemic will almost certainly receive special and significant support. Property Developers are already braced for a new tax in 2022 that will help pay for the replacement of cladding on high-rise buildings and it is ‘detail’ like this that shows just what a juggling act the budget is, and never more so than this year.
Capital Gains Tax will change, and that is about as bold a prediction as we are prepared to make at this stage, an increase will probably be aligned to Income Tax rates and while many are anticipating a delayed introduction, we have a feeling that it may be brought in immediately, giving an immediate boost to tax revenues.
One very specific area to keep an eye on might be taxes on cigarettes and alcohol, traditional sources of much needed tax revenue over the years. It would be a very brave Chancellor indeed that sought to raise taxes in a way that would potentially damage further the hospitality and leisure industries, and as a teetotaller himself perhaps Rishi might just leave the booze alone?
Whatever happens, the Butt Miller mantra remains the same… be prepared, be informed and be up to date with your numbers so that you can make decisions based on facts, rather than educated guesswork.
We will be on hand to answer any questions that you may have, and we will be reacting to the Budget as it happens with a blog and notifications of any significant changes, as ever we will keep you informed. And finally, don’t have nightmares, just call and we’ll help.