After delaying the Budget in Autumn 2020 due to the ongoing Coronavirus pandemic, Chancellor Rishi Sunak is set to address Parliament on March 3rd to lay bare the true state of the nation’s finances, and outline plans to move forward.

 

With the impact of Covid-19, unemployment, and Brexit all on the agenda, it’s likely to be an eventful affair – but what exactly should we expect to come out of the 2021 Budget?

 

Tax rises

With every new business support scheme announced, questions have been asked about how the Treasury plans to pay for its record-breaking measures. Several rumours have swirled around the future of the UK’s tax systems, with both income and Capital Gains Tax potentially in the Chancellor’s sights.

 

The latest claim is that extra revenue could be generated through ‘stealth taxes’ – freezing income tax thresholds – which would result in rises for millions of people, as their annual rise in income would outstrip tax thresholds, meaning they would have to pay tax on a greater proportion of their earnings.

 

While nothing certain has materialised yet, other measures including increasing Class 4 national Insurance, raising fuel duty and cutting pension tax relief could also be on the table.

 

Furlough extended

With several extensions already in place and the country still on lockdown, it wouldn’t be a complete surprise if it was announced that the Coronavirus Job Retention Scheme – furlough – was set to continue.

 

Throughout the course of the pandemic, the Chancellor has set end dates to the scheme – currently April 30th – before announcing extensions shortly after. If he’s planning to extend again, the Budget would be the perfect time for such an announcement.

 

More self-employed support

Workers and business owners who are self-employed have arguably been the hardest hit during the pandemic, with many claiming that schemes introduced weren’t broad enough to support everyone falling under the umbrella.

 

MoneySavingExpert’s Martin Lewis, however, has revealed that the Budget is likely to include news of a fourth Self-Employed Income Support Scheme (SEISS) grant. Despite the Budget taking place in early March, this grant would cover a period of February to April.

 

Higher contactless payment limit

Along with a whole host of measures introduced to stop the spread of Coronavirus, the contactless payment limit rose from £30 to £45 in an effort to reduce cash transactions. Last month, the FCA launched a consultation to increase the limit once again, this time to £100 – and according to rumours, the Chancellor is on board with the proposal.

 

Stamp duty holiday extension

House buyers across the country rejoiced when the Stamp Duty Holiday was announced back in July 2020, but as the deadline approaches on March 31st, many are left racing to complete their purchase before it’s too late.

 

While nothing has been confirmed, the assumption is that the Chancellor set that deadline without anticipating strict lockdown measures would return, meaning the incentive could still be necessary to boost the struggling property market once restrictions are eased. Any extension, however, is likely to only be for purchases that are already in the pipeline.

 

The rabbit in the hat

Chancellors are known to announce something surprising at the end of the budget – an unknown incentive hoped to work magic on the country’s finance. Last Summer’s Spending Review twist came in the form of the Eat Out to Help Out scheme, and while it’s almost certain that dining out is off the table, we can almost guarantee that this year’s ‘rabbit’ will be centred around getting struggling industries back on their feet as we emerge from lockdown.

 

Stay tuned for a full review of the Budget this March.