Budget 2021 live blog: Countdown to 3 March
Track all the rumours, leaks and policy steers leading up to and beyond Rishi Sunak’s speech on Wednesday 3 March.
Anticipation for one of the most eagerly awaited Budgets in recent years spilled into the news schedules weeks ahead of the big day. To cater for the growing interest, AccountingWEB enlisted our tax brains trust to monitor all the rumours, leaks and policy steers leading up to and beyond Rishi Sunak’s speech to the Commons at 12:30pm on Wed 3 March.
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Finding cracks in Sunak’s plan
3 March, 13:52 – Tax and insurance specialist Seb Maley responded to the Budget by pointing out the ‘cracks’ in Sunak’s plan.
“On the face of it, the headline grabbing measures in this Budget seem generous - no immediate increase in corporation tax, a freeze on personal tax thresholds and more support for the self-employed will please many people working for themselves, in the short term at least. Dig deeper though and the cracks in this Budget become clear.
“The Chancellor reiterated that he will do ‘whatever it takes’ to support people and businesses. Yet millions of small business owners have been abandoned and left stranded without meaningful financial help for an entire year. The government must go further - these workers are key to the economic recovery.
“Delaying or, better still, scrapping IR35 reform in the private sector would have been the right thing to do for contractors. But I’m not surprised the changes will definitely go ahead next month - the government are desperate to roll out reform. My advice to contractors and businesses impacted is to prioritise IR35 compliance immediately. The reform can be managed with the right approach.”
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3 March, 13:48 – Paul Monghan calls out false signalling from the corporation tax provisions:
Whoah - these corportion tax provisions are not anything like as progressive as signalled. The carry back losses extension + super enhanced Cap Allowances (both Trump policies) will decimate corp tax take in short-term. The 2023 increase in CT may also never happen #Budget2021
— Paul Monaghan (@PaulJMonaghan) March 3, 2021
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And the commentary keeps coming...
3 March, 13:45 – First thoughts from Blick Rothenberg tax partner Heather Self:
- Continuing large sums on COVID support
- CT rate rise to 25% steeper than expected but not until 2023
- Loss carry back welcome
- Super deduction interesting and will accelerate investment
- No change yet to CGT
13:43 – Richard Murphy asks for proof that this Budget is green in any way. Is there any to be had?:
The claim that this budget is green seems wholly misplaced. All I hear is support for the financialised economy where accountants rule, the rich and big business gain and cheating pays. But green? No, I don't see that #Budget2021
— Richard Murphy (@RichardJMurphy) March 3, 2021
13:35 – Where are the jokes, asks The Independent's Westminster correspondent Ben Kentish. Perhaps this isn't the best time for levity, Ben - but that didn't stop opposition leader Kier Starmer from jesting that Sunak's pre-Budget video was so expensive, it merited an OBR forecast line of its own:
Absolutely none of the traditional Budget speech jokes from the Chancellor today. #Budget2021
— Ben Kentish (@BenKentish) March 3, 2021
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3 March, 13:30 – Budget that papered over the cracks rather than rebuilding the foundations," says Kier Starmer, pushing aside his shadow chancellor to lead the Opposition response.
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Happy day for accounting software industry
3 March, 13:16 – Among the treats dished up in Sunak’s Help to Grow scheme is a discount on software of up to £5,000 to help companies “manage their accounts and finances digitally”.
There will be celebrations in Newcastle, where Sage has been pushing for incentives since the summer. It’s also a clear scene-setter for the continuing roll out of MTD.
"Five employees is a high threshold to get discount software," comments Rebecca Cave. "The businesses that really need support for MTD are not going to get it."
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Manifesto triple-lock stays, but…
3 March, 13:18 - Sunak held to the 2019 Tory promise not to increase income tax, NICs or VAT, but that didn’t stop him from freezing the personal allowance at the current level – bringing the phrase “fiscal drag” back for a nostalgic return - and increasing the corporation tax rate to 25% from next year, along with a “small profits rate” at the current 19%
More gnashing of teeth among our tax brains trust. “Gawd, more fluffing tapers,” is the polite way our tax editor Rebecca Cave put it.
Rishi’s Fiscal Drag Race #Budget2021
— Stuart Jones (@stuartjones22) March 3, 2021
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Professional anguish at VAT rate tapering
3 March, 13:10 -Hospitality and attraction businesses might be welcoming the Chancellor’s Budget concession to extend the 5% VAT reduction, followed by an interim 12.5% rate for six months from October - taking is all the way back to 1978, Paul Aplin reminds us.
“Won't somebody think of the people who have to administer this?” groaned one anguished accountant.
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Key Covid support extensions confirmed
3 March, 12:42 - Furlough scheme confirmed to continue until the end of September. Also:
- SEISS - grants 4 & 5 will be made available to those who filed their tax returns by midnight on 2 March.
- Universal Credit £20 uplift will continue for a further six months
- £700m in “restart grants” to arts and sports organisations
- 100% business rates holiday for all retail and leisure businesses. Will continue until the end of June. Rates will be discounted by 66% for the rest of the year up to a maximum of £2bn.
- Hospitality and tourism: 5% reduced rate of VAT extended to 30 September. Will go back via a 12.5% interim rate for another six months after that.
- Nil rate band of Stamp Duty on house purchases less than £250,000 extended until the end of September, and 95% mortgage guarantee scheme. "We want to turn generation rent into generation buy" is the corny soundbite to accompany this treat for the housebuilding and real estate industries.
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Budget 2021 is underway
3 March, 12:37 – A downbeat start for Sunak's spring Budget, framing the speech against the wider backdrop of a 10% economic slump.
“Sounds as if he’s on the defensive,” says Ray Newman, who also notes the first appearance of an alliterative phrase: “Meets the moment”.
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3 March, 12:35pm - Shadow Chancellor Anneliese Dodds sets a test for Rishi Sunak:
After the worst economic crisis of any major economy, we need a Budget to rebuild Britain's economic foundations.
This is a test of character for Rishi Sunak. After a year of last-minute scrambles, u-turns and waste, he needs a plan to deliver a better, more secure future.
— Anneliese Dodds (@AnnelieseDodds) March 3, 2021
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3 March, 12:18 - PracticeWeb's Ray Newman picked up this little treat from the House on all the Budget leaks:
"I think I already know most of it" - a passive-aggressive whine from the Speaker over the budget leak. And he moves on. That's your lot for the UK's checks and balances.
— Frédéric Moreau (@goodclimate) March 3, 2021
Paul Aplin (@PaulAplinOnTax) has joined our live feed, but is a bit more relaxed about all the pre-announcements: “I’m sure there will still be some rabbits to pull from the hat.” Be careful what you wish for, Paul!
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Rishi has left the building
3 March, 11:55am - The Chancellor has left Number 11 Downing Street and is on his way to deliver the Budget, according to HM Treasury.
Stay tuned to watch the speech live after Prime Ministers Questions. pic.twitter.com/3fZmQ6moCK
— HM Treasury (@hmtreasury) March 3, 2021
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3 March, 11:50 - Kirsty McGregor shares her Budget Bingo card - are you ready to play?
Who wants a ready-reference guide to tick off what the Chancellor may be announcing this afternoon? Then myself, CEO of @Capitalisers and @capitaliser_PH will share more later with our thoughts on the impact for SMEs #Budget2021 #SMEs #CapitalAdvisory pic.twitter.com/2f9Rn6Kmug
— Kirsty McGregor (@TheCFN) March 3, 2021
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3 March, 11:45 - In light of all the Budget leaks streaming in this morning, head of policy ACEVO Kristiana Wrixon asked the Chancellor where the support for financially struggling charities was going to fit in to the Budget:
Early lunch so fuelled up to watch #Budget2021. The (many) leaks indicate there's more financial support coming for almost all the hard-hit sectors but so far nothing more for charities.
Will @RishiSunak show he has listened to 1000+ charities working for millions of people?
— Kristiana Wrixon (@KristianaWrixon) March 3, 2021
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What's the reason for pre-Budget leaks?
3 March, 11:30 - PracticeWeb's Ray Newman, a former civil service comms manager, sees the unusually rapid flow of leaks, trails and pre-announcements as part of Sunak's extended leadership campaign:
“His team wants to control the messaging after a damaging few months in which, for example, Eat Out to Help Out was blamed for a rise in Covid cases.”
Heather Self, a tax partner at Blick Rothenberg, also reacted to the deluge of Budget announcements before the Budget. She quipped:
Does anyone remember when Budgets weren’t announced until Budget Day? https://t.co/soIz5wMQdH
— Heather Self (@hselftax) March 2, 2021
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Community reacts to 'blatant headline grabbing' Budget leaks
3 March, 11:00 - With so much of the Budget already splashed across this morning’s front pages, one AccountingWEB questioned whether it’s all just “blatant headline grabbing”.
AccountingWEB regular Stepurhan is really irked by the pre-Budget leaks of the expected furlough scheme extension.
“Their sole purpose seems to be to trumpet some popular announcement that is going to be made to garner positive press. Those of us in the industry know that the devil is in the detail,” said the AccountingWEB member.
“I would not be surprised if this extension came with a whole new set of rules that will passed out piecemeal over the next few months so we have another round of explaining to clients we don’t know how it will work yet.”
"It seems to be the SOP of the current government - leak things to the press, gauge the reaction and pull anything that receives a negative response on the basis that it wasn't really policy in the first place,” agreed member johnt27.
Meanwhile, the AccountingWEB readers are bracing themselves for the prospect of processing furlough claims into September.
Sparkly admitted to feeling “gutted” by the news. “I can't even bear to think about more changes in the furlough computations... it's like Groundhog day!”
After nearly a year of furlough claims, Arthur Putey chimed: “I am definitely charging extra for this now!”
New to Accountancy is trying to look at the positives: “I didn't want to continue doing the CJRS claims either, but I know the business’ I deal with will not be back to normal straight away, so it'll help them.”
The members are equally concerned by the idea that the furlough extension means some restrictions may still be in place post 21 June. “I think it’s pretty obvious it won’t be “as normal” in June unless there is a massive increase in the number of jabs taking place,” said Ireallyshouldknowthisbut.
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Predictions for Rishi's rhetoric in today's speech
3 March, 10:35 - The Budget announcements are coming in thick and fast but what is not clear yet is the slogan Rishi Sunak will repeat throughout the speech. Keen Budget watchers will remember Sunak's “get things done” catchphrase from last year.
In recent interviews the Chancellor has mentioned “the kickstart generation” - a nod to his similarly named job scheme for young people. As a Chancellor who puts job protection at the centre of his winter recovery plan, he may well sprinkle 'kickstart generation' through his speech.
But just a short week after the prime minister's roadmap to exit lockdown, the odds look good for a 'road to recovery' inspired phrase. But don't expect an appearance of a George Osborne "fixing the roof while the sun is shining".
Simon Lancaster of Bespoke Speechwriting Services places his bets.
Rhetorical figures to look out for in the Budget.
1. Alliterative pairs - the centre piece of many past Budgets - pound in your pocket (Wilson), price worth paying (Howe), prudence for purpose (Brown). In 2020, Sunak went with 'fiscal framework'. 'Road to recovery' this year?
— Simon Lancaster (@bespokespeeches) March 1, 2021
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Contactless payment increase
3 March, 09:30 - The Chancellor is set to increase the contactless payment limit as part of today’s Budget announcement.
Contactless payments using cash or card will now be more than double their previous limit, increasing from £45 to £100.
In a bid to boost the economy, high street retailers will now be able to offer pricier items with a single tap.
The limit has already been raised once before, from £30 to £45 early last year.
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Furlough takes the front pages
3 March, 09:00 - Naturally this morning’s newspapers are all dominated by the furlough extension.
The Guardian reports:
Guardian front page, Wednesday 3 March 2021: Sunak extends the safety net pic.twitter.com/4da65wwgps
— The Guardian (@guardian) March 2, 2021
Furlough is also splashed across the front page of The Telegraph:
— BBC News (UK) (@BBCNews) March 2, 2021
The Times also confirms the furlough announcement:
— BBC News (UK) (@BBCNews) March 2, 2021
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SEISS round four
3 March, 08.45 - Also expect another self-employed income support grant in today’s Budget. AccountingWEB reported the news back in January after money saving crusader Martin Lewis received confirmation from the Treasury.
Early signs from this morning’s media suggests that there may be a little more meat on this SEISS announcement. Rather than simply unveiling a fourth grant, the Chancellor will also open the scheme up for more than 600,000 newly self employed people.
Furlough scheme set to be extended again
3 March, 08:00 - Chancellor Rishi Sunak’s grandstanding Budget announcement to extend the furlough scheme was leaked to the nationals yesterday evening.
In today’s Budget Sunak is expected to extend the long-running job support scheme until the end of September. Early reports suggest that the scheme will continue to pay 80% of furloughed workers salaries.
The end date has caught many by surprise as rumours from the Treasury in recent days hinted that the scheme would wrap up at the end of June. The end of September end date would also continue three months after the proposed end date of coronavirus restrictions detailed in the Prime Minister’s roadmap to exit lockdown in England.
The extension is supposed to be a reassuring safety net for Covid hit businesses, but many on social media are interpreting this as a sign that lockdown could be extended.
Today’s announcement comes as figures from HMRC show a jump in the number of furloughed workers in the UK by 700,000 to 4.7m in January.
Meanwhile, commentator Andrew Fisher has criticised the furlough scheme for not going far enough:
The furlough scheme will be extended for six months to September #Budget2021
But no one should be getting 80% of the MINIMUM wage.
— Andrew Fisher (@FisherAndrew79) March 3, 2021
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Tuesday’s pre-Budget menu
2 March, 10:00 - More of the usual fare for you in this morning’s media. Some measures such all the Covid support scheme extensions are now taken as given, particularly in the wake of a radio appearance in which business secretary Kwasi Kwarteng confirmed as much. But iffy suggestions such as a corporation tax increase and personal allowance freeze are also becoming fixtures in the Budget betting favourites list.
With tax policies nailed down over the weekend, the final pre-Budget menu is being bulked out with ideas to support different sectors, including:
- £520m Help to Grow scheme - The Times strikes again by trailing a fund to help SMEs get training, technology advice and software discounts to improve productivity.
- Housebuilding shares have been on the up since Monday on the strength of signals that the Chancellor will introduce a 95% mortgage guarantee scheme to first-time buyers get on the property ladder. Recipients will need to have a 5% deposit and will be able to apply for guarantees on houses worth up to £600,000.
- £400m in support for the arts and culture sector in a bid to help museums, theatres, galleries and live music venues reopen in the coming months. Plus another £77m for similar cultural support initiatives in Scotland, Wales and Northern Ireland.
- Also a £300m sports recovery package.
- A £150m fund to help communities take over local pubs that forced out of business by the past year’s restrictions on opening.
These last three proposals were reported by The Independent with the words, “the Treasury said”. So that obviously makes them official.
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A political broadcast on behalf of the Sunak Party
The latest year in the life of a Chancellor short is a glossy treat (see below). The 5min pean recaps all the soundbites from the newbie Chancellor’s first stumbling steps towards political heroism, right from “We will get through this together…” to “We will do whatever it takes.”
Another highlight is his 15-min video encounter with Gordon Ramsay, in which the celebrity chef ploughs through his prepared notes on surviving lockdown. Pity they didn’t give him an autocue.
There’s a growing sense on all fronts that the Sunak’s careful curation of photo opportunities and social media activities is beginning to get out of hand. It would be nice to think the Chancellor was devoting as much effort on rescuing the UK economy as he is on building his personal brand.
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Sunak builds the buzz, but to what purpose?
1 Mar, 10:30 – Chancellor Rishi Sunak did the rounds of the Sunday morning TV studios yesterday to preview his big announcements next Wednesday.
While the policy leaks and rumours continued to flow in the press, live interviewers like the BBC’s Andrew Marr were left flailing for something to talk about when Sunak stonewalled them about potential announcements… Of course he couldn’t reveal anything before informing parliament, he answered coyly.
Then why did he bother to do the media circuit, wondered all and sundry.
Don’t worry, there will be plenty of chances to see more of the Chancellor next week, including a 5pm live press conference on Wednesday where he’ll take questions from the public. The next day, he’s lined up to appear on the show of accountants’ favourite Martin Lewis, who bagged a big interview by running a #RishiComeTalkToMartin hashtag campaign.
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Together again for the big event
26 Feb, 16:30 - As Budget week dawns, AccountingWEB is pleased to announce that our colleagues at PracticeWeb will be collaborating with our tax brains trust to produce this year’s downloadable Budget 2021 guide for AccountingWEB members.
As well as designing websites and advising practices on their marketing strategies, PracticeWeb produces a vast amount of content for client businesses. We’ll be taking some of their technical summaries of Budget announcements and blending it with detailed analysis from AccountingWEB’s expert contributors on the key tax proposals affecting small firms.
As always, AccountingWEB will dispatch a Budget at-a-glance bulletin with an instant summary of the main measures on Thursday morning. More detailed analysis of the implications will follow, with the download guide arriving early the following week.
The collaboration with PracticeWeb worked very well for last year’s Coronavirus-affected Budget and it looks like we’ll be hearing more about the various support measures this spring. But the Chancellor could still have some tax surprises up his sleeve, according to PracticeWeb’s deputy editor James Martini. He’s hedging his bets on some of the following policy outriders:
- Any significant tax rises will be deferred until autumn at the earliest, according to The Times
- Stamp duty land tax and council tax lined up for replacement by a new proportional property tax (FT Adviser)
- Lifetime allowance for pension contributions frozen at £1,073,100 for the rest of this Parliament (The Times)
Once known as “The Thunderer”, has The Times regained its position as the UK’s newspaper of record this Budget season? Political editor Steve Swinford has racked up a series of authoritative sounding scoops on the Chancellor’s intentions. We’ll have to wait until Wednesday afternoon to find out how good his sources are, or whether someone at the Treasury is using him as a sounding board for new tax policy proposals.
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Pop another £1bn on the IOU spike, Rishi
26 Feb, 10:00 - Our cunning theory that the Budget was being stage-managed to showcase all the Covid support announcements is crumbling in the face of yet more policy announcements and previews this morning.
At 7:20am this morning BBC Radio 4 Today show was trailing Budget plans to announce 10 freeport locations that would lure inward investment with relaxed tax regimes.
Barely an hour later, the long-awaited Fintech review arrived from former Worldpay CEO Ron Kalifa. The 108-page document was full of fulsome praise for the sector as a stiumulus for the UK's economic revival, and called for a £1bn growth fund to give it a leg up. (A 12pp executive summary is available from the Treasury website if you just want to skim the highlights)
With the Sunday editions looming, how many other Budget surprises will we see before Wednesday?
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The leaks keep on flowing
25 Feb, 16:30 - We’ve grown used to this government’s proclivity for sharing its pet taxation ideas with chums among the Westminster lobby correspondents, but this year’s Budget season is setting new records for policy leaks and punts.
In this week’s Budget preview podcast, we speculated whether Rishi Sunak is deliberately spreading a miasma of policy rumours to disorient opposition critics. Or, perhaps with memories of George Osborne’s pastygate fiasco or Philip Hammond’s NIC “tax on jobs” U-turn in mind, Sunak is using the leaks to pre-test the political acceptability of different suggestions before they get him into trouble.
Among the leaks we’ve logged so far are the following:
- Extended support schemes for business affected by Covid-19 – across the board extensions are expected in “Coronavirus Budget 2” for the furlough scheme, SEISS, along with repayment dates for deferred VAT and government-supported loans. And who needs a government announcement when The Times has been informed that the stamp duty holiday will continue until the end of June?
- The OTS proposal to align CGT with income tax rates is getting a lot of airplay this week. And why not, when CIOT tax boffin Tina Riches and AccountingWEB tax editor Rebecca Cave both lent their support to the idea in their recent Fantasy Budget speeches. This idea may not feature prominently on Wednesday, but a second report from the OTS looking at technical and administrative issues could be on the way when the Treasury issues its next batch of tax consultations on 23 March.
- Corporation tax rate increases from 2022 – As one anonymous business chieftan told FT.com: “Corporation tax is pretty safe political ground. There is not too much outrage. At least with a tax on profit, the point is there is profit to be taxed. It’s not hitting us on the way in.” Rebecca Cave explained that because large companies pay CT quarterly within the tax year, they are already paying CT for the current tax year. Any increases will need to come into force next April, which will also give the Chancellor an opportunity to see if the economy is stable enough for him to raise the rate.
Have a listen to what PracticeWeb’s Ray Newman and the AccountingWEB editors have to say about all the Budget rumours and feel free to share your favourite leaks by commenting below.
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‘Why are we waiting?’
23 Feb, 11:30 - As predicted ahead of his roadmap for relaxing lockdown rules yesterday, Boris Johnson deferred any detailed announcements about business support measures until next Wednesday’s Budget.
The political stage management looks increasingly like a blunder as hard-hit sectors such as hospitality and the arts face a nine-day vacuum of uncertainty while they try to plan ahead for furlough periods that currently run out on 31 April. Opposition politicians lost no time in filling in the gaps…
Once again Ministers have set out public health restrictions for businesses but not the economic support that will be available, causing uncertainty and worry. Business owners are planning their futures and those of their staff now - they should not have to wait for the Budget.
— Ed Miliband (@Ed_Miliband) February 22, 2021
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Coronavirus Budget 2: Sunak to the rescue
22 Feb, 16:30 – A skim of recent Treasury housekeeping announcements and weekend news leaks points to a clearer alignment of post-lockdown announcements. After presenting his roadmap today (22 Feb), the Prime Minister confirmed that detailed financial support measures will be left for Chancellor Rishi Sunak to unveil on Budget day (3 March), as predicted last week by The Guardian.
Any announcements with direct implications on the government’s finances will be made on the same day, but all the associated documents and green papers will be held back until 23 March in a ritual that some have now termed “consultation day” – not forgetting the “legislation day” that will happen during that haitus.
Already, however, some of the more complicated tax proposals have been booted down the road for consideration in November. Among the announcements we’ve heard so far are:
- Business rates review – final report will appear in the autumn rather than on Budget day. Rebecca Cave suggested the rates review was one for the Treasury’s “too difficult to tackle now” pile, though there will be a consultation document on the 23rd to keep business hopes alive until November.
- Brexit SME support fund – The government does not want to complicate its Covid/Budget messaging with messy distractions such as Brexit, so this new initiative was quietly announced on 11 Feb.
We’ll update the blog with any support scheme or loan announcements from the lockdown roadmap presentations – but do share any other predictions or Covid-support measures you hear about by commenting below.
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What’s in your fantasy Budget?
22 Feb, 13:00 - Throughout February, AccountingWEB has been publishing fantasy Budget wishlists from key contributors. Here’s what they’d like to see:
- Zero-rate VAT on remedial work to replace flammable cladding and double the fund to £2m to help those trapped in affected flats undertake these repairs.
- Abolish the partial exemption de minimis thresholds from 31 March 2021.
- Simplify VAT further by abolishing the flat rate scheme in 2022.
- Increase the empty period requirement to qualify for 5% on residential building work from two to five years. To increase the number of homes constructed, rather than held as investments, the 5% rate will only apply when a project produces an increased number of homes.
- One-off wealth tax for those with wealth over £1m, based on 1% of the taxpayer’s wealth as at 31 December 2020, to be paid in annual instalments over five years.
- A new “inclusive” tax to replace income tax and national insurance with identical tax rates across the board, including CGT rates.
- Cease attempts to recover tax on disguised remuneration loans where the taxpayer has either settled with HMRC or is paying the loan charge.
- Link annual pay rises for health and social care service workers to the annual percentage increase in state pensions.
- Merge national insurance contributions and income tax, so everyone pays the same rate of income tax, irrespective of the source of that income.
- Abolish employers’ NIC and increase the rate of corporation tax to compensate.
- Create a single statutory test of employment to apply for tax law and employment rights.
- Link the capital gains tax rate to the equivalent of the highest income tax rate paid by the taxpayer.
- Link the personal allowance to the amount of adult national minimum wage payable for a 35-hour week. This means that a person earning the national minimum wage for a full year will pay no combined income tax. Abolish allowances for sundry trading income, property income and dividend income. Tax dividend income at the same rates as all other income.
- Support businesses affected by the pandemic with improved loss relief for all companies.
- Create a payable Covid-19 tax credit for SMEs.
- Ignore calls for a windfall tax or online sales tax: retrospective tax is not the best way to encourage investment and create jobs.
- Ensure big tech companies pay their fair share of tax by supporting OECD efforts to update the international tax system.
Each of our contributors’ fantasy Budget presentations stimulated all sorts of responses about the practicalities and desirability of the proposed measures. Feel free to join the debates on the individual articles, or post your own Budget proposals by commenting below.