When Chancellor Rishi Sunak delivers his second Budget speech later today, the ongoing COVID-19 crisis engulfing the UK’s health and public finances will take centre stage.
With the Government borrowing £270 billion so far to fight the pandemic over the last year, will it come up with ways to start paying that back or will the can be kicked down the road?
One thing’s for sure, the Treasury needs to continue to support millions of people who are either out of work or on furlough due to the lockdown restrictions currently in place.
Here are five changes that could come out of today’s Spring Budget.
Extending the furlough scheme
An extension to the coronavirus job retention scheme will be announced by the Chancellor later today.
Ahead of the Budget, Sunak revealed 80% of an employees' wages will be paid until the end of September. However, employers will be asked to contribute 10% in July and 20% in August, when businesses are allowed to reopen.
The scheme was due to wind down on 30 April 2021, despite around 4.7 million employees currently on furlough.
Freezing the lifetime allowance
Sunak is reportedly considering a “stealth tax on pensioners” by freezing the lifetime allowance, which affects the amount of pension benefit that can be drawn from schemes.
According to The Times, Sunak is reportedly looking to freeze the amount at £1,073,1000, possibly until 2024
This means more people risk being dragged over the threshold and might face a 25% penalty on extra income from their pension pot, rising to 55% if they draw down a lump sum.
More support for self-employed
Details of the fourth self-employed income support scheme (SEISS) grant is set to be announced by Sunak today.
In November, the Government announced the third round of taxable grants made through the SEISS scheme, covering 80% of average profits up to a maximum of £7,500 for the period between 1 November 2020 and 31 January 2021.
The Government said details about the fourth grant will be announced on 3 March 2021.
Stamp duty holiday extension
The Government recently rejected a petition to extend the stamp duty land tax holiday in England and Northern Ireland.
The tax break is due to end on 31 March 2021, leaving many buyers who are stuck in chains facing the prospect of paying significantly higher amounts of stamp duty.
But The Times reported last month that the Chancellor will use Spring Budget 2021 to extend the holiday until the end of June.
Corporation tax to increase
If the Chancellor is to raise any taxes today, the main rate of UK corporation tax looks the most likely.
According to reports, Sunak will reveal a plan to stagger an increase to the main rate of corporation tax from 19% to 23% over the course of parliament.
This could see the main rate of corporation tax rise to 21% for 2021/22, with future 1% increases planned for 2022/23 and 2023/24.
Contact us to discuss your business or personal finances.
