No one can be certain about what Rishi Sunak may propose in his 2021 budget. However we do know that the pandemic has done untold damage to the country and public finances which need to be clawed back but this needs to be balanced by a budget which aids recovery and offers further COVID 19 support to our battered businesses.

The 2021 Budget will take place on Wednesday 3 March 2021 but speculation suggests that Mr Sunak may publish a recovery plan on the same day that Boris Johnson is expected to update us on the manner we may exit lockdown on 22 February. 

Regarding the budget, several rumours have been circulating:
  • Extra income may come from freezing income tax thresholds. This would result in tax rises for millions of people meaning that they would have to pay tax on a greater proportion of their earnings.
  • Other possibilities are that Class 4 National Insurance, corporation tax and fuel duty may increase and we could see Capital Gains Tax being equalised with income tax at 45% from its current rate at 20%.
  • Pensions too may be affected through the reduction of tax relief.
  • Other possibilities include scrapping council tax and stamp duty and replacing them with a property tax which would be levied on the existing values of homes, rather than 1990s valuations, which council tax is based on.
  • On the positive side we may see further support for the self-employed to help them through the recovery and there is some speculation that the stamp duty holiday extension may be extended beyond March. In addition there may be some appetite to extend the Universal Credit uplift beyond the April expiry date.

This is a challenging budget for Rishi Sunak and he will need to carefully balance the need to claw back capital through taxation with the need to support the recovery of businesses, the economy and the country.

It may be that the changes to tax are minimal as a result, but rather something we may see more of in 2022.
 

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