The Budget, taking place on March 3rd, will arguably be the most closely watched and scrutinised in many of our lifetimes.
The fallout from the negative effects of the Coronavirus pandemic on the UK economy will no doubt see the Chancellor, Rishi Sunak, make some difficult decisions as he looks for ways to revive the UK economy and balance the nation’s books.
January 2021 saw government borrowing reach a record high for a January of £8.75 billion, as the Office for National Statistics revealed the UK had borrowed £270.6 billion in the ten months to January. This was the first January deficit for a decade.
What business owners across the UK will be looking for is how the Chancellor intends to put the economy back onto a more sustainable footing with a fear that tax hikes will be imposed sooner rather than later, which could stifle the recovery of many businesses.
Business owners will be looking also for how the government intends to support those who have been hardest hit by the economic downturn.
Are tax rises on the horizon?
The government pledged in 2019 not to increase income tax, National Insurance or VAT, but that was pre-pandemic, so they could be forgiven for changing their stance on that pledge.
Some of the more obvious areas where the government can increase revenues include levies on capital gains tax, corporation tax and fuel duty.
While extra savings can be made by further reducing government spending.
The usual suspects that are alcohol and cigarettes will likely face hikes in prices, yet the positive impact of government revenue would remain low if pubs, bars and restaurants were to remain closed.
What is clear is that even when we are all able to leave or our homes, meet our friends and family again, and return to our workplaces, the nation won’t be out of the woods, and there will be more hard times ahead until businesses can restore consumer confidence and start generating the kind of revenues that they once enjoyed before the pandemic began.
We’ll all be listening to the Budget on March 3rd with keen interest.