With the pandemic shutting down massive parts of the economy and the huge amount of support the Government has given to businesses and the self-employed across the country, it has put the UK into a massive amount of debt. However, with interest rates being so low, Chancellor Rishi Sunak does have some breathing room, so Budget 2021 may not be as bad as the press are suggesting.
Will he or won't he:
Extend the furlough scheme to June 21?
Issue a 4th self-employment grant?
Extend the current business rates extension for 6 months?
Extend the reduction to 5% VAT for hospitality?
Extend the £20 top-up of Universal Credit for 6 months?
Extend the stamp duty relief for a few weeks?
Increase capital gains tax rates to be in line with income tax rates?
Increase corporation tax to say 22% whilst introducing a lower small business rate?
Freeze the lifetime allowance on pensions?
Amend tax thresholds or simply freeze them for a few years?
Tax businesses who have benefited from the pandemic?
All I can say for certain is that many of us will be listening in with interest; after all, we were deprived of a budget in 2020!
Will we get another budget in the autumn so he can delay many of the announcements? It's a tricky one, but this pandemic has cost the country £400billion so far and the books need to be rebalanced somehow whether we like it or not.
But before I sign off from this blog post, here's a thought for Rishi. Why not abolish National Insurance and just have one tax? Don't the tax and national insurance receipts just end up in the same pot anyway ... whatever they say!
"Here's my thinking!"
A typical person in employment earning under £50,000 pays tax at 20% above the personal allowance of £12,500. They also pay national insurance at 12% above £8,784. So, amalgamating tax and national insurance together at one rate of 32% means that person is actually better off with the two allowances being equalised at the higher amount. More money is in the pockets of the many who can go out and spend it and help kick start the economy.
Those earning over £50,000 currently pay national insurance at 2% and so higher rate tax could be set at 42% (or even higher while the books are rebalanced) such as 45% to align with the higher, higher tax rate.
I suppose it's a radical thought, but the scene is set for some creative economic thinking in the face of the pandemic and the imminent reopening of the economy thanks to the vaccine rollout. How bold will Rishi be?
You'll find out on Wednesday and then in Thursday's blog post.
Until next time ...
ROGER EDDOWES Business Godparent
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If anything I've written in this blog post resonates with you and you'd like to discover more about Budget 2021, call me on 01908 774320 and let's see how we can help. Don't forget to stay updated with our daily social media posts on our Facebook page.
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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