What will be in Rishi Sunak’s 2021 budget?
Rishi Sunak’s budget on 3 March is set to unveil a range of measures to help support the recovery of the UK economy, but tax rises are in the offing too. Here is what we can expect.
Economic support measures
Stamp duty The threshold at which buyers start paying stamp duty increased last July from £125,000 to £500,000 in England and Northern Ireland, exempting almost nine in 10 transactions. A backlog of sales means an extension for three months beyond the 31 March deadline is expected, costing around £1bn.
Hospitality sector VAT Already extended once, the temporary reduction from 20% to 5% is likely to be pushed back to the summer, possibly for three months beyond the current 31 March cut-off. A delay could add £800m to the estimated £3.3bn cost so far.
Business rates relief An extension in the temporary 100% tax cut for hospitality, retail and leisure is expected. Last year, larger firms paid back £2bn of unused relief on the tax, which is levied on commercial properties, and it could help fund a continuation of the subsidy. A more fundamental review of business rates and a potential online sales tax to help boost bricks and mortar retailers have been delayed until an autumn budget.
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Business grants £600m of funds made available in January for the hardest hit firms, many of them in the hospitality, leisure and tourism sectors, could be topped up.
Universal credit A £20-a-week uplift will run out in April but an extension for six months is likely after calls from all sides of the political spectrum for poorer families to receive support while restrictions remain in place.
Investment for ‘levelling up’ The chancellor is expected to accelerate investments in transport, infrastructure spending and top-up pots for regenerating town centres.
Investment in net-zero carbon Last month, the green homes grant for insulating homes was cut back to save around £1bn. The budget is expected to roll out further measures to bring down carbon emissions, including a more extensive electric vehicle-charging network.
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Budget tax measures
Corporation tax The chancellor is considering an increase in the headline corporation tax rate from 19% to 20% or even 21% from the autumn. Each percentage point rise gives him an extra £3bn in annual receipts. It could reach 25% by 2024.
Pension tax A restriction on the amount wealthier people can put into their pensions to £1m over their lifetime could save £250m in tax relief. Around 1.2 million people are projected to exceed the threshold by the time they start drawing on their private or occupational pension.
Capital gains tax The Office of Tax Simplification has recommended the government set the main tax on asset sales at the same rate it uses on income. That would mean increasing the CGT rate of 10% to 18% on company share sale profits and the 20% to 28% tax on property gains to match levels for income tax, which are levied at between 20% and 45%.
