The Budget 2021: What can we expect?

As Chancellor Rishi Sunak prepares to deliver another important Budget in the midst of the ongoing pandemic, Josh Ruthven from our tax team looks ahead to what we might expect to hear.

In total, more than £280 billion has been spent on the coronavirus response according to the National Audit Office. The upcoming Budget on 3 March 2021 will outline how the Chancellor plans to get the UK economy up and running again, but also repay the debts we have been accumulating.

Let's take a look at some of the predictions and how they may impact your personal finances.

Stamp Duty Land Tax

The current stamp duty cut on residential properties under £500,000 until 31 March 2021 has been successful in boosting the property market and the economy. As a result, there are calls to extend the scheme for a few more months into the summer.

Corporation Tax

There are rumours about the Treasury increasing the rate of corporation tax in stages, eventually reaching 23% by 2024. It is understood the rise could facilitate the furlough scheme and other business support schemes being extended into the summer.

Self-employed support

The latest Self Employment Income Support Scheme (SEISS) grant for the self employed ran up to 31 January 2020. The Chancellor is expected to announce further support for the three months ending 30 April 2021, as we already know the furlough scheme has been extended to this date.

Furlough scheme

The current furlough scheme, which was due to close on 31 October 2020, had already been extended to 31 March 2021, before being extended again in December until the end of April. Some jobs will continue to be affected by lockdown measures beyond April and there are calls to extend the scheme further into summer as we return to normality.

Capital Gains Tax

It has been suggested there could be changes to the rates of Capital Gains Tax (CGT), which could go as far as equalising CGT rates with income tax rates.

Universal Credit

Last year, the Chancellor announced a £20 per week increase to Universal Credit, which is due to run out at the end of April, so there is speculation about the policy being extended. It has also been rumoured the Chancellor could be drawing up a one-off bonus for people who claim Universal Credit.

VAT

The government have cut VAT to 5% for the tourism and hospitality sectors and there are calls for this to be extended, as businesses in these sectors look to get up and running again.

Business Investment

High on the Chancellor's agenda will be boosting business investment. This could lead to increases to capital allowances, especially those which support the government's agenda in reducing carbon emissions.

Personal allowances

This is a key area for the government. In their manifesto, they proposed they would not decrease allowances or increase rates but could look at freezing tax rates. The personal allowance is due to rise with inflation each year and is expected to be £12,780 in 2024/25, with the basic rate limit at £51,080. However, if the government froze the current rates, they would not reach these figures.

Pension relief

Pension reforms are a Budget favourite and there is speculation that possible changes may include restricting tax relief to a flat rate of 25%.

So, all eyes will be on Chancellor Rishi Sunak on Wednesday 3 March. Will he be able to deliver? We'll keep you up to date if you sign up for our newsletter here. And if you'd like to talk to a member of our team about tax rates for you and your business, please do contact us on 0115 955 5500. Or email enquiries@pagekirk.co.uk.