The government will publish the 2021 Budget this Wednesday, March 3, where plans for protecting jobs will be announced, alongside any new tax changes and initiatives to boost the economy.
Chancellor Rishi Sunak is likely to start at around 12.30 on the day to reveal plans. However, ahead of that, there has been much speculation about what Sunak will announce.
Here is what companies and entrepreneurs can expect to likely hear, and what the will be closely listening out for….
The government said in December the furlough scheme had been extended until the end of April 2021. There have been some indications the support could go beyond that date, but that has not been confirmed. The struggling hospitality and high street sectors will be eager to hear the latest update.
A business rates holiday launched last year to help firms ride out the virus crisis is due to finish at the end of this month. This is expected to be extended for retail, hospitality and leisure, the Financial Times said last month. Some associations want the support to run to the end of the year, or into 2022.
If there is no extension, a number of business lobby groups would likely react with anger, and warn a number of members would struggle to pay the bills. A number of firms anticipate it will take some time before trading returns to pre-Covid levels.
John Webber, head of business rates at property agent Colliers International, said: “We urge that he [the Chancellor] does not ignore business rates and that he reassures businesses that they will not be faced with either untenable bills from the end of the month or court action.”
Webber added: “Failure to do bring in significant reliefs to those companies that need it, may mean the bloodbath we are currently seeing in the retail and hospitality sectors could well spill across other sectors, leading to more closures and job losses across the board.”
Failure to do bring in significant reliefs to those companies that need it, may mean the bloodbath we are currently seeing in the retail and hospitality sectors could well spill across other sectors
John Webber, head of business rates at property agent Colliers International
Firms will have to wait to later in 2021 for the government to publish a final report on its wider review of business rates.
Mortgage guarantee scheme
A new mortgage guarantee scheme to help buyers with a 5% deposit get on the property ladder, is set to be announced at the Budget.
The initiative is aimed at helping those looking to buy a house of up to £600,000. The government will offer lenders the guarantee they need to provide mortgages that cover the other 95%.
The scheme will be available to lenders from April, and is designed to increase the appetite of mortgage lenders to offer high loan-to-value lending to creditworthy customers across the UK. Housebuilders and estate agents could see increased demand for properties as a result.
The suspension of stamp duty on property sales of up to £500,000 was announced in July, and is due to finish at the end of this month. Sunak is preparing to extend the stamp duty holiday by three months, according to The Times. There is no confirmation on this, but if it is announced, it could prompt a number of buyers to try and quickly ink deals to beat the new deadline.
Chris Sanger, accountancy firm EY’s head of tax policy, says: “A consistent rumour of recent Budgets, and one which has increased in volume over recent weeks, is a rise in the headline rate of corporation tax.”
Some reports suggest plans are being considered to increase corporation tax to 25% from 19%.
Capital gains tax and inheritance tax
People will be listening out for any moves that would raise the capital gains tax. Tom Evennett, EY’s head of private client services, said: “While raising inheritance tax and capital gains tax rates may make little difference to the significant fiscal deficit as a result of Covid-19, they [the rises] would be perceived by some as addressing the imbalance of wealth in the UK. It would send a message to the electorate that the government is serious about the redistribution of wealth.”
Sovereign green savings bond
Sunak is set to announce that the UK will launch the world’s first sovereign green savings bond for retail investors “allowing savers to help drive the country’s transition to net zero by 2050”.
The aim is that savers will have the opportunity to buy bonds in the knowledge they are contributing towards projects that will accelerate the transition to a low carbon economy, create green jobs, and support the collective effort to tackle climate change, whilst saving money at the same time. Further details will be set out in the coming months.
There could be other efforts to further strengthen the UK’s environmental credentials, EY’s Langer reckons. He said Sunak could use the Budget to “expand on the government’s ten-point plan for a green industrial revolution, and set the government’s green ambition and credentials to help position the UK as a global leader and attractive destination for investment”.
Visa changes to attract workers
Sunak is set to outline a series of reforms to encourage high-skilled workers including researchers, engineers, scientists and those in the tech sector, to come to work at UK firms.
Measures will include a simpler sponsorship process being introduced to reduce bureaucracy and the burden on companies wanting to sponsor skilled workers.
Claire Walker, co-executive Director of the British Chambers of Commerce, said: "Ensuring the immigration system is clear, fast and low cost for businesses is critical to ensuring firms get the skills they need to restart the economy.”
Sunak is due to announce firms in retail, hospitality, accommodation, leisure and personal care will benefit from a new £5 billion Restart Grant scheme as the economy reopens.
A new “flexi-job” apprenticeship is on the horizon that will enable apprentices to work with a number of different employers in one sector. The government is set to invest £126 million to enable 40,000 more traineeships.
The British Beer & Pub Association last month said a letter signed by 68 Conservative MPs had been sent to the Treasury, imploring Sunak to cut beer duty. There have been some reports beer duty will be frozen.