Graham Bridgeford, managing partner at James Milne Chartered Accountants says the March Budget may be the biggest and most interesting in a decade.
There are some potential opportunities, but business may be called upon to pay, he says.
“The Chancellor of the Exchequer, Rishi Sunak, will unveil his Budget on Wednesday 3 March 2021. The Budget should have taken place in November 2020, so Mr Sunak has had time to consider his options, as he attempts to revive the economy and protect jobs. However, the Chancellor is caught between a rock and a hard place. On the one hand, he has to put some life back into the economy. After a disastrous previous 12 months, he must increase consumer confidence and boost spending, while the vaccine brings long-awaited hope of a light at the end of the tunnel. On the other hand, the Chancellor is facing an additional £300bn deficit as a result of the pandemic – a hefty bill which must be addressed.
“A further obstacle is the Conservative Party’s pledge not to increase income tax, national insurance or VAT, which may leave Mr Sunak looking to business to help pay back the huge debt facing the country. Businesses which have either been closed for months or facing significant loss in revenue, however, will not be happy to take on this liability – and in the case of many – will not be able to.
“There is a chance that Mr Sunak will play it safe and not make many changes, we are after all still very much in the depths of the pandemic and for many businesses that means they are a long way off getting people back in the office let alone any sign of getting business back to normal.
“The Chancellor might, however, start to sow the seeds of payback, in particular when it comes to capital gains tax, which has been talked about for months now. Corporation tax is another area which Mr Sunak might take a look at. Before Covid-19 took hold, it was hoped that a reduction in corporation tax would encourage businesses to remain in the UK after Brexit – but that reduction looks less likely now.
“The Coronavirus Job Retention Scheme, otherwise known as the furlough scheme, is set to end in April, and many firms are asking for it to be extended once more while we still live with movement restrictions. The economy is still struggling and consumer spending low, but the Chancellor will want to signal an end to the Government supporting wages.
“One thing we can be sure of, is that predicting the contents for of Budget is foolhardy. This has been an exceptional 12 months, full of twists and turns, and so the Chancellor may surprise us all. Forecasters do predict growth in 2021, following a contraction of over 20% in 2020, but borrowing has been predicted to remain high.
“This Budget is the most interesting and important budget we have seen in a long time. With the rapid rollout of the UK’s vaccination programme and predictions it will lead to an economic boom, business owners are hopeful that the Budget will give them time to recover and prosper. All will be revealed on 3 March.”