Budget 2021: when is it and what will it include?
THE Budget is soon approaching, and with it could come tax rises and a boost to Universal Credit.
We take you through everything you need to know about the upcoming statement, which will affect the cash in your wallet.
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What is the Budget?
The Budget is when the government outlines its plans for tax hikes, cuts and things like changes to the minimum wage.
It's different to the Spending Review, which sets out how much public cash will go towards funding certain departments, devolved government's and services, such as the NHS.
The Budget is read out in the House of Commons by the Chancellor of the Exchequer. It will be Rishi Sunak's second Budget as Chancellor.
Mr Sunak's first one in March last year has been dubbed the "coronavirus Budget" after it focused on supporting Brits financially through the crisis, rather than the government's "levelling up" agenda as promised in the 2019 general election.
Normally, the Budget is held once a year but the unprecedented circumstances of the pandemic in 2020 saw Mr Sunak give a "mini-budget" in the Commons on July 8.
When is the Budget?
The Budget will be held on Wednesday March 3 2021. The government confirmed the date in December 2020.
The time is yet to be announced but it's usually delivered in the morning ahead of Prime Minister's Questions.
The Budget was due to be delivered last autumn but was cancelled back in September.
Instead, Mr Sunak updated MPs on plans "to continue protecting jobs", including furlough extensions and support for businesses to get them through the Covid crisis.
What can we expect from the Budget 2021?
The Budget is likely to focus on the economic fallout from the coronavirus crisis.
The government has borrowed a record £284.7billion from April to November to help fund schemes such as furlough and the bounce back loans for businesses.
Here are some of the things we can expect, although bear in mind things can change quickly as the pandemic unfolds.
Universal Credit boost
Last year, the Chancellor announced a £20 a week boost to Universal Credit to help low-income families through the pandemic and lockdown restrictions.
But the hike, worth £1,040 a year, was only a temporary measure set to last a year.
What to do if you have problems claiming Universal Credit
IF you’re experiencing trouble applying for your Universal Credit, or the payments just don’t cover costs, here are your options:
- Apply for an advance – Claimants are able to get some cash within five days rather than waiting weeks for their first payment. But it's a loan which means the repayments will be automatically deducted from your future Universal Credit payout.
- Alternative Payment Arrangements – If you're falling behind on rent, you or your landlord may be able to apply for an APA which will get your payment sent directly to your landlord. You might also be able to change your payments to get them more frequently, or you can split the payments if you're part of a couple.
- Budgeting Advance – You may be able to get help from the Government for emergency household costs of up to £348 if you're single, £464 if you're part of a couple or £812 if you have children. These are only in cases like your cooker breaking down or for help getting a job. You'll have to repay the advance through your regular Universal Credit payments. You'll still have to repay the loan, even if you stop claiming for Universal Credit.
- Cut your Council Tax – You might be able to get a discount on your Council Tax by applying for a Council Tax Reduction. Alternatively, you might be entitled to Discretionary Housing Payments to help cover your rent.
- Foodbanks – If you're really hard up and struggling to buy food and toiletries, you can find your local foodbank who will provide you with help for free. You can find your nearest one on the Trussell Trust website.
There has been much speculation if the policy will be extended beyond March.
A source told The Sun back in October that Mr Sunak is "open to the idea", but that was before much of England was plunged into the latest lockdown.
MPs are due to vote on the extending the scheme tonight but the government has told Conservatives to abstain.
One way the Chancellor may be looking to raise funds to repay the UK's record borrowing is by raising taxes.
There has been speculation National Insurance and fuel duty could see rates rise, while pension tax relief could be cut.
There is also talk of changes to capital gains tax but nothing has been announced.
Some experts have warned that raising taxes now, when households are still coping with the impact of crisis on their finances, could be even more damaging.
Sarah Coles, personal finance analyst, Hargreaves Lansdown said it's still very early "to consider cawing back cash" but admits some hikes could be announced in March.
She added: "Taxes don’t have to be hiked in order to extract more cash from us: inflation will do that all by itself.
"Consumer Price Inflation is likely to rise slower than wage inflation, which means income tax and NI will rise.
"Meanwhile, a combination of price inflation and the possibility we’ll spend more as the economy recovers, means we’ll spend more in VAT."
Furlough scheme extended again
The government's Coronavirus Jobs Retention Scheme (CJRS), or furlough, could be extended again while some businesses are forced to remain shut.
The government will cover 80% – up to £2,500 – of an employee's wages if they have been furloughed.
It has been extended three times already. Firstly, it was pushed back from its initial deadline on May 31 to October 31.
The scheme was then extended to last until March 31, 2021 following the second national lockdown in England.
Current lockdown restrictions aren't expected to be eased until at least March this year, with England returning to the Tier system.
Some jobs will continue to be affected by the lockdown measures and Mr Sunak could choose to extend the scheme to support them.
What is stamp duty?
STAMP duty land tax (SDLT) is a lump sum payment anyone buying a property or piece of land over a certain price has to pay.
Up until July 8, most house-buyers in England and Northern Ireland had to pay stamp duty on properties over £125,000.
This was temporarily increased to £500,000 until March 31, 2021 in the government's mini-Budget in July 2020.
The rate a buyer has to fork out varies depending on the price and type of property.
Rates are different depending on whether it is residential, a second home or buy-to-let, or whether you're a first-time buyer.
The usual system in England for residential properties means:
- First-time buyers pay nothing on properties below £300,000 (and relief available on properties of up to £500,000)
- You pay nothing if the property costs below £125,000
- You pay 2% if it is worth between £125,001 and £250,000
- You pay 5% if between £250,001 and up to £925,000
- You pay 10% if it is between £925,001 and £1.5million
- You pay 12% on anything over £1.5million
For second homes or buy to let properties:
- 3% on purchases up to 125,000
- 5% on purchases between £125,001 and £250,000
- 8% on purchases above £250,001 and £925,000
- 13% on purchases above £925,001 and £1.5 million
- 15% on purchases above £1.5 million
Stamp duty rates are different in Scotland and Wales.
Stamp duty extension
There have been many calls from the housing sector for the Chancellor to extend a stamp duty holiday, due to end March 31.
The tax break, which sees land duty scrapped on the first £500,000, was introduced in July's mini-budget.
It has been credited for the mini-boom that saw house prices rise by 6% in the second half of the year.
Last week, The Sun reported how Mr Sunak has privately ruled out an extension to the nine-month tax holiday but over the weekend, The Sunday Times reported he is still "considering" it.
Parliament is now set to debate the issue after more than 110,000 people signed a petition calling for its continuation.
Stamp duty is an unpopular tax and there have been calls to change the way it works in recent years.
But David Hannah, from Cornerstone Tax, said: "Calls to make the holiday permanent or scrap the tax altogether seem unrealistic given the levels of public debt and the £12billion tax take it generates each year.
"But having such a strict cut-off point, particularly in such a turbulent and difficult housing market and economic climate could result in a a catastrophic drop in demand and prices."
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