Spring Budget set for 3 March 2021

The Chancellor of the Exchequer, Rishi Sunak, has announced that the government will publish the Budget on Wednesday 3 March 2021.

The Budget will set out the next phase of the plan to tackle the virus and protect jobs and will be published alongside the latest forecasts from the Office for Budget Responsibility (OBR).

The announcement was made alongside confirmation that the furlough scheme will be extended by an extra month to 30 April 2021, with the government continuing to pay 80% of wages until the end of the Scheme. That means the government contribution will not be reduced at the end of January, as was previously thought.

Rishi Sunak outlines his priorities for the year ahead in this Treasury video.

Extraordinary year

The Budget was meant to have taken place in November of this year, but it has been the most extraordinary year.

The Coronavirus pandemic has meant the Chancellor has had to continually bring forth new measures to help businesses and individuals cope with the financial impact, as can be seen from the list of key changes noted below.

Rumours persist as to what the Chancellor may do next year to recoup some of the £300bn the government has spent in propping up the UK economy to counteract the impact of Covid.

Will he go for tax raising measures, such as aligning Capital Gains Tax rates with those for income tax, or will he impose a one-off wealth tax? Or will he delay tax rises until the pandemic is well behind us?

Significant tax rises would be damaging to any economic recovery at this stage.

This Chancellor has had to deal with challenges to the UK economy it has not faced in 300 years. Covid's impact has been seismic.

Next March's Budget will be a landmark Budget, not only because of the pandemic, but also because it will be the UK's first Budget as an independent country outside the EU for over 40 years.

The Conservative manifesto in December 2019 promised that there would be no increases in income tax, national insurance and VAT, though that was before the pandemic and the billions the Treasury has since had to spend on supporting the economy.

An article in the Financial Times on 19 January 2021 speculates that the Budget may see an increase in the rate of corporation tax, and maybe a consultation on the raising of capital gains tax - possibly from April 2022. However, the Chancellor does not have much room to manoeuvre.

The Treasury has set up a portal for those who wish to make representations ahead of the Budget.

Major fiscal events in 2020

Summer Economic Update 2020 (8 July)

• New job creation schemes
• New Job Retention Bonus (subsequently scrapped)
• Increase in the Stamp Duty threshold to £500,000 until 31 March 2021
• VAT rate cut to 5% for the hospitality sector

Spring Budget 2020 (11 March)

• Entrepreneurs Relief lifetime limit cut from £10m to £1m
• Plastic packaging tax from April 2022
• Covid-19 - SSP for those who are advised to self isolate
• Temporary removal of minimum income floor for universal credit
• SSP refunded in full for up to 14 days (employers with less than 250 staff)
• Covid-19 business interruption loan scheme launched
• Abolishing business rates for certain sectors for one year
• Cash grants to business rate payers
• Employment Allowance increased from £3,000 to £4,000 from April 2020.
• £600bn available for infrastructure spending
• Abolish VAT on digital publications from 1 December 2020
• April 2021 - 2% Stamp duty surcharge on residential property bought by foreign buyers
• Pensions tax system - taper threshold increased by £90,000 to £200,000

Winter Plan announcements made in 2020

Winter Economy Plan Part 4 - furlough extended to 31 March 2021 (5 November)

• An extension of furlough until 31 March 2021.
• Job Retention Bonus scrapped
• Self-Employed Income Support Scheme grants will now be 80% of past profits

Winter Economy Plan Part 3 - the lockdown sequel (2 November)

• An extension of furlough until 2 December, with employees receiving 80% of their pay.
• A more generous third grant for the self-employed claimable from 30 November
• Extra welfare support for the self-employed until April 2021
• Cash grants for businesses which are closed
• Business Loan Schemes extended to 31 January 2021
• A top up facility for Bounce Back Loans
• Extended mortgage and consumer credit payment holidays

Winter Economy Plan Part 2 (22 October)

• A more generous Job Support Scheme
• More generous business grants
• More generous Self-Employed Income Support Scheme

Winter Economy Plan Part 1 (24 September)

• New Job Support Scheme unveiled to replace furlough
• Two new grants under the Self-Employed Income Support Scheme
• Extension of the temporary VAT rate cut
• More time to pay deferred VAT and income tax
• Flexibility over repaying government-backed loans

Check out our Business after COVID-19: Transition Knowledge Hub for more guidance and advice on managing the pandemic.