What will be this year’s “rabbit out of the hat”?
Never has there been more speculation around a budget statement as we emerge from Covid-19 and continue to pay for the damage it has caused to the economy. Could it be this is the end of the rabbit-out-the-hat moment, as the Chancellor Rishi Sunak looks to balance the books? Here are a few predictions from us as to what the budget may contain this Wednesday.
Minimum Wage increases
There have already been several announcements from the government outlining plans to upskill workers for a “high skill, high wage, high productivity economy”. That means it’s likely there will be minimum wage rises - but with the income tax threshold frozen, will this be enough to help working families?
Household bills - on the change?
The energy crisis has barely left the headlines, but the government is under significant pressure to prevent price surges from hitting households hard. While the government has said on previous occasions it would not be bailing-out energy firms, there is a chance it could subsidise energy providers so that users pay less. Also, Rishi Sunak hinted in a recent interview with the Financial Times that he may consider a cut to the 5% rate of VAT on household energy bills (source as before). It will be interesting to see how that pans out, as he will understandably be reluctant to loosen the purse strings when he is under so much pressure to tighten them!
And it looks as though energy won’t be the only focus for households - council tax too is potentially under review. The surge of activity in the housing market during the Stamp Duty holiday saw pressure to change the outdated tax, and there have been talks for some time to combine it with council tax and replace it with one levy that would see households pay a percentage according to the value of their home at the time of purchase. While the government has not confirmed this, in the meantime, it has hinted there could be rises in Council Tax by as much as 5%.
Building and developing
On the topic of housing, it won't just be the owners facing higher bills. During the cladding crisis, there has been many conversations about how huge costs to replace that cladding would be covered. We think it is likely Rishi Sunak will introduce a Residential Property Developer Tax, designed to go some way to making what he calls “a fair contribution” to those costs.
As the COP26 summit draws nearer, there will be pressure on the government to introduce new greener measures and incentives, ahead of its plans for net zero emissions, due to be released in the spring.
Following the recent announcement about grants available for heat pumps to try and introduce greener heating options, it has been suspected that more could be on the cards as the government looks to ban gas boilers after 2035.
As always, we will be watching closely on Wednesday and bringing you all the latest news, as well as how any legislation changes may affect you.
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