With the first 2021 Budget on the way, we take a look at what Chancellor of the Exchequer Rishi Sunak might have in store.
It’s hard to believe, but this time last year Rishi Sunak was not a household name. He replaced Sajid Javid as Chancellor in a last-minute reshuffle just weeks before the 2020 Budget.
One Budget, two financial statements and several televised pandemic briefings later, he’s one of the most recognisable faces in British politics. But despite this, we don’t have a clear picture of exactly what he’ll have in his briefcase this year.
What we do know is that the pandemic’s second wave is causing untold damage to the UK, so COVID-19 support is likely to be front and centre.
Here, Which? takes you through the latest rumours about what will be in this year’s Budget.
When is the 2021 Budget?
The 2021 Budget will take place on Wednesday 3 March 2021 – almost a year after the last Budget of 11 March 2020. The planned autumn Budget was cancelled in September.
Last year’s Budget was dubbed ‘the coronavirus Budget’, as the emerging pandemic took prominence over the ‘levelling up’ agenda the Conservatives promoted on the 2019 campaign trail.
With COVID-19 still spreading rapidly, expect a coronavirus focus again this year. Here’s what might be in store.
Tax rises (or no tax rises)
Throughout 2020, questions were raised as to how the Treasury would pay for its record borrowing to fund coronavirus support measures.
The leading rumour was that this would be done through tax rises. Measures such as increasing Class 4 National Insurance, raising fuel duty, cutting pension tax relief and changing capital gains tax were all rumoured at various points, though so far nothing official has materialised.
The Times and the Express have published stories saying Mr Sunak may opt for raising corporation tax in March’s Budget as the first step to reducing the deficit. Further down the line, perhaps at a later Budget, he may seek to replace council tax and stamp duty with a new property tax, according to both papers.
However, just a week before it published its story, the Times said we shouldn’t expect to see any tax rise announcements on 3 March as a government source told the newspaper it’s the ‘wrong time’. Perhaps this reflects that the Treasury hasn’t yet decided exactly what the Budget will include.
- Find out more: our tax guides
Stamp duty holiday extension
Many in the housing sector are calling for the six-month stamp duty holiday to be extended beyond its current 31 March expiry date, though the Treasury has not hinted at this so far.
The assumption is that the Chancellor set that deadline without anticipating strict lockdown measures would return, meaning the tax cut could still be needed to stimulate the market.
- Find out more: will the stamp duty cut be extended?
Help for cladding scandal victims
Pressure is mounting on the government to help leaseholders who are struggling with sky-high bills to pay for dangerous cladding to be removed.
In December 2020, a spokesperson from the Ministry of Housing, Communities and Local Government told the Which? Money Podcast: ‘We are developing affordable solutions where needed and will provide more details in due course.’ Many leaseholders will be listening closely to the Budget for any news on these.
Listen to the Which? Money Podcast’s special investigation into the cladding scandal:
Furlough scheme extension
Throughout the pandemic, the Chancellor has repeatedly announced end dates to the coronavirus job retention scheme, only to extend it before it expires.
Currently, it’s due to end in April, but if he’s planning to extend it again, the Budget at the start of March might be the perfect time to do it.
Indeed, the Times says it expects Mr Sunak to extend the furlough and business loan schemes on 3 March.
- Find out more: furlough scheme extended to 30 April
In last year’s Budget, the government pledged to protect access to cash through new legislation.
This was an issue Which? had campaigned on for years, so we welcomed the announcement.
The legislation hasn’t been passed since then, so perhaps this year’s Budget will update us on its progress.
- Find out more: meet the people fighting to bring back cash
What else could be in the Budget?
Chancellors often announce something surprising at the end of a Budget, known colloquially as the ‘rabbit in the hat’ moment.
At the end of Mr Sunak’s summer statement, for example, he announced the Eat Out to Help Out scheme, which offered discounts to encourage visiting restaurants in person.
There could be another ‘rabbit’ on its way this year – likely one that doesn’t involve dining out.
- Find out more: latest lockdown measures explained
This story was first published on 12 January 2021, and has been updated since. The latest update was on 18 January to include new rumours.