Chancellor Rishi Sunak is preparing to unveil the government’s tax and spending plans as part of his 2021 budget.
Westminster is flooded with rumours of what Number 11 Downing Street’s high-profile occupant will announce when he takes the despatch box on Wednesday afternoon.
While the chancellor almost always keeps one rabbit to pull out of the hat on budget day, as ever, some of his plans have already leaked.
Here’s what we know so far.
Furlough scheme to be extended until September
The emergency wages scheme was due to close at the end of March, but Sunak will extend it until September.
Under Boris Johnson’s unlock roadmap, restrictions are set to continue into May and some social distancing measures will remain in place until June.
The chancellor will continue the UK-wide scheme, said to cost around £6bn a month, until September. However, he will taper the Treasury’s 80% contribution from July.
Businesses struggling will be grateful for the move, which highlights how worried ministers are about a sharp rise in unemployment.
95% mortgages and stamp duty holiday
Help for home-buyers is on its way with the return of 5% deposits, it has been confirmed. As part of a mortgage guarantee scheme on properties worth up to £600,000, the government will underwrite the remaining 95% of the loan.
In a separate move to bolster the property market, Sunak will reportedly extend the stamp duty holiday on homes worth up to £500,000 until the end of June.
New ‘buy your boozer’ scheme
Hospitality businesses have been hard-hit by lockdown.
To help them, Sunak is expected to unveil a £150m pot of cash to help communities take over pubs at threat of closure.
Community groups will be able to bid for up to £250,000 of matched-funding to help them to buy local pubs to run as community-owned businesses.
In “exceptional cases” there may be £1m available to help people do the same with a sports club.
Hike in tax on big business
Sunak is expected to outline plans to raise corporation tax from the current 19% throughout the parliament to, according to some reports, as high as 25%.
The measure will be controversial among some low tax-backing Tory MPs, but Sunak will argue Covid has left a gaping hole in the nation’s finances.
The UK rate is the lowest in the G7, as it stands, with France firms paying 33% and Germany’s 30%.
Joe Biden’s new US administration is reportedly preparing to raise its corporation tax level from 21% to 28%.
‘Stealth’ income tax rise
Sunak is reportedly eyeing a three-year freeze on income tax thresholds.
The move does not hike taxes as such, but is viewed as a “stealth” tax in that it will drag employees into higher tax bands as their salaries rise.
It has been suggested the freeze will bring an extra £6bn into the Treasury coffers.
While much has changed since the election in December 2019, it would be a risky step for the Conservative chancellor, as his party’s manifesto pledged not to increase rates of income tax, national insurance or VAT.
Universal Credit boost
Sunak has been under increasing pressure to make the £20-a-week uplift to Universal Credit permanent.
It has been reported the chancellor will not go that far, but will keep the temporary £20 boost for a further six months.
Covid-hit firms to share £5bn grant fund
Businesses hammered by Covid, such as shops, pubs, clubs, gyms and hair salons, can apply for grants of up to £18,000 as part of a £5bn scheme.
A £520m scheme will also help businesses boost their software and training.
Sunak has refused to rule out the return of the Eat Out To Help Out scheme, but he may err on the side of caution after reports it may have allowed Covid to spread last year.
Arts funding boost
Museums, galleries and especially theatres have struggled to weather the lockdown drop in earnings.
Sunak is expected to recognise that hardship by allocating £400m to help arts venues in England to reopen.
This is in addition to the £1.57bn Culture Recovery Fund, established by Sunak and culture secretary Oliver Dowden.
There will also be a £300m package for sports – much of it targeted at cricket.
More money for vaccinations
The UK has one of the most successful vaccination programmes in the world.
Sunak is expected to double down on measures to accelerate the rollout with an extra £1.65bn.
Apprenticeship boost
Sunak is set to announce a £126m boost for traineeships, enabling the creation of 40,000 additional schemes in England.
At the same time, Sunak is set to promise to increase the cash incentives for employers who take on an apprentice to £3,000 – regardless of age.
Currently firms can claim £2,000 for each apprentice they hire aged 16 to 24, or £1,500 for those aged 25 and over.
An ‘elite’ visa scheme
Sunak will outline a “fast track” visa scheme to help start-up and rapidly growing tech firms recruit talent from overseas.
Applicants will no longer need a “third-party endorsement” or to be backed by a sponsor organisation, simplifying the current rules and making it easier for researchers, engineers and scientists to come to the UK.
The measure is aimed at boosting the UK tech industry and will be seen as an acknowledgement that the UK’s post-Brexit immigration system is limiting firms.
