On Wednesday, (March 3, 2021) the chancellor will announce this year’s Budget.
This is the first Budget the UK has had since March 2020, when newly appointed chancellor Rishi Sunak announced swathes of relief to help companies through the pandemic.
Little did we know at the time how long these new policies, such as furlough, would continue and the Autumn Budget was cancelled in 2020.
With prime minister Boris Johnson hinting that Sunak would reveal support to get people and businesses through the rest of restrictions, we can expect to hear more on this on Wednesday.
However, the chancellor is also focussed on reclaiming the money spent out during the pandemic.
What we do know is what keeps people spending is good for car sales, so what could be introduced this week to help that? And what support could Sunak announce?
Will the furlough scheme continue?
Reports in the Telegraph suggest that the furlough scheme will be extended until the summer.
Currently, it is set to end in April but some businesses will have to stay closed until later in the year under the new UK roadmap.
Therefore it’s expected news on this will be announced in next week’s budget.
Will there be an extension to the business rates holiday?
It is speculated that the business rates relief, first introduced in March 2020, could be extended for hospitality, retail and leisure sectors.
Although some larger car dealers paid back tax relief that was unused last year, it is rumoured this could be used to continue the subsidy for businesses that need it.
Will there be support to get people into jobs?
Sunak is expected to announce a £126m traineeship scheme, which could enable 40,000 new trainees.
This scheme will include a ‘flexi-job’ scheme, which will allow one apprentice to work with different employers in the same sector.
Businesses in England are currently given £2,000 for every new apprentice they take on under the age of 25, and £1,500 for those over 25.
This is in addition to another £1,000 they receive from another project.
The chancellor will pledge to increase the employer cash incentives to £3,000 for all ages.
Will there be more business grants?
It has also been said that the Treasury may top up grants for businesses in sectors that have not been able to reopen since January.
For car dealers, like all retail, this will continue until at least April 12.
Will there be investment in cars?
Yes and no. The government has pledged to get to net-carbon zero and it is predicted that an announcement could be made on an improved electric vehicle charging network to support this.
While this is not a direct investment in car production or sales, it is likely to have a positive impact on consumer confidence in EVs.
Will online sales be subject to new tax?
While we’ve all had to switch to online sales to get through the lockdown, it has not gone unnoticed by the Treasury.
It has been suggested that this could be a one or two per cent increase in tax on goods sold online.
However, high street retailers with strong online sales offerings have said this could hurt them financially – even though it’s been reported these tax hikes could be used to reduce business rates.
For high ticket items like cars, this could be a painful addition.
Will contactless payment limits increase?
We don’t think people will be paying for cars completely contactless ⎯ but the limit could increase.
Earlier in February, the FCA launched a consultation into raising the threshold again from £45 to £100.
According to reports in the Times, this is something both Sunak and Johnson are keen to implement.
Will Corporation Tax go up?
It looks very likely that Corporation Tax will increase from 19 per cent to at least 20 per cent – but possibly even 21 per cent. However, this said to be from autumn.
It is predicted that by 2024 it could reach 25 per cent. Each percentage point increase will return the Treasury £3bn in receipts.
Will the Budget effect my pension?
Pensions lifetime allowance could be frozen in the announcement on Wednesday.
This means that if you’re planning to put more than £1,073,100 into your pension, the cash over this amount will be subject to higher tax.
If you withdraw it as a pension you’ll be subject to a 25 per cent one-off charge or if you choose to pay it as a lump sum you’ll pay a 55 per cent charge.
It is said this could save the government £250m in tax relief.
Will there be any other tax increases?
There has been lots of tax increase speculation and while some, such as raising fuel duty, would fit inline with other government policies, it is expected they will also be delayed until autumn.
Although it wouldn’t be surprising if they are announced, the extension of the lockdown has made some reports more positive that these will be delayed.
Will there be another Eat Out To Help Out scheme?
This is looking incredibly likely. Although there was some speculation that this increased infection last summer, it is expected Sunak will bring the scheme back to support hospitality when it reopens.
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