The Budget will be tomorrow, 3 March. Chancellor Rishi Sunak will make a statement to MPs in the House of Commons outlining the state of the economy and the government’s plans for raising or lowering taxes. The Budget includes decisions on what the government will spend money on and forecasts for how the UK economy could perform in future.
So, what can expect from the Budget?
Tax Increases
Mr Sunak is likely to announce several tax increases. Many think he will instead raise corporation tax from its current level of 19% to 23%. He may also choose to freeze the personal income tax allowance which usually rises in line with inflation.
Grants
The government will outline further detail on economic support to help protect jobs and livelihoods across the UK. That has been their priority throughout the past year, and they state it will be the priority for the year to come. Yesterday we heard the news that the government was set to launch a £5bn fund in England to help the High Street recover from Covid.
The chancellor said the grants, worth up to £18,000 per firm, will help shops and pubs reopen as England eases lockdown.
Some reports suggest he will extend the business rates holiday beyond its current end date of 31 March. It is also thought that the Job Support Scheme (furlough) will be extended until the end of June, just beyond the date when the final restrictions will hopefully be lifted.
Details will follow on Wednesday and we will keep you informed and how to claim shortly.
Apprentices
Pre-budget news releases report the Chancellor is set to announce a £126m boost for traineeships in England. The scheme will include a new “flexi-job” apprenticeship. It will enable apprentices to work with a number of different employers in one sector. The boost to existing apprenticeship and traineeship programmes will include paying up to double the current cash incentive to firms who take on an apprentice, regardless of age.
Mortgage Guarantee Scheme
A mortgage guarantee scheme to help people get on the property ladder is also set to be announced. The government will offer incentives to lenders, bringing back 95% mortgages.
Many home buyers have found themselves facing big bills if they don’t complete their transactions by the end of March. However, it is thought that Mr Sunak will extend stamp duty holiday to prevent this cliff edge.
Freeports
There is also talk of the Chancellor announcing the creation of “freeports” to help boost trade and manufacturing. Freeports are areas around a port or airport, where goods can be imported without having to pay import taxes. These taxes only become payable when the goods leave the freeport and are distributed elsewhere in the UK. If goods are re-exported they do not have to pay the relevant UK taxes. The building and operation of freeports in deprived areas could help stimulate the local economy in England. The other countries of the UK have their own freeport policies.
We will be sending out a tax newsletter following the Chancellor’s Budget, if you would like to receive it, please click here. Will he increase tax or will he focus on stimulating economic growth? What can we expect? All will be revealed tomorrow!