The Spring Budget is soon approaching, it will be published on Wednesday 3rd March 2021, but what can we expect?
This budget is hotly anticipated, not only due to the cancellation of the autumn Budget in 2020, but it also set to be a historical one. This isn’t only because of the pandemic; it will be the UK’s first budget independent from the EU for over 40 years.
Although we don’t know for certain what will be announced: we’ve identified key changes we might expect to see.
Pre-Budget Plan
It won’t be until 3rd March that we hear the announcement of the full Budget, but the Financial Times has speculated that the Chancellor will publish the coronavirus ‘recovery plan’ as soon as 22nd Feb. It is expected this plan will reveal a proposal to boost investment and skills. It will be published alongside the Prime Minister’s highly anticipated roadmap in exiting the lockdown.
Raising Taxes
Due to all the government borrowing & spending throughout 2020 for coronavirus support measures, there have been many queries raised around how the Treasury will pay for these.
It is rumoured that extra revenue could be generated through freezing income tax thresholds; these are known as ‘stealth taxes’. In light of Sunak’s spending review in November 2020, it was expected that tax thresholds would rise by 0.5% (in-line with CPI inflation). However, The Telegraph recently reported that Sunak may change his mind. If the thresholds are frozen, it would result in raised taxes for millions of people as their annual rise in income would displace their current tax threshold.
Not only this, but there is also the potential for taxes to openly rise. They could increase the tax on Class 4 National Insurance, raising fuel duty, changing capital gains tax, and a focus on taxing the large profits seen by online retailers through lockdown – but note, these are rumours at this point.
Increased Support for Self-Employed
Good news for those who are self-employed. It is expected that the Budget will reveal the fourth self-employed income support scheme (SEISS) grant, although the grant period begins one months prior to the Budget announcement.
It is said the fourth grant will cover February to April, but there is no news on the amount or who is eligible until the Budget announcement.
Stamp Duty Holiday Extension
The current stamp duty holiday is due to expire on March 31st, those in the housing sector are calling for this to be extended. They are hopeful on this matter as it is assumed that the Chancellor had set the deadline for 6 months without knowing there would be another strict lockdown and therefore an extension of this holiday may be needed to continue the stimulation of this market.
Higher Contactless Payment Limit
This limit was raised last year from £30 to £45 to encourage shoppers to use the most contact-free form of payment possible during the pandemic, contactless bank cards. The FCA recently launched an enquiry into raising it again, from £45 to £100 – both the PM and the Chancellor are said to be in support of this.
Furlough
The current furlough scheme is due to expire at the end of April, so an announcement in the Budget at the start of March would be an ideal time to announce its extension. News on the furlough scheme is something that thousands will be looking out for, but without first having a roadmap to industries being potentially reopened it is difficult to predict if it will be extended.
So, keep your eye’s peeled for March 3rd to see what the Budget reveals. Remember to sign up to the Knowledge Hub for FREE to keep up to date with the latest business news.