Delaying Autumn Budget 2021 would be sensible, contractors' advisers say
Rishi Sunak defying tradition by asking as chancellor for a fiscal forecast this autumn without picking a Budget date indicates his ‘Red Book’ might be delayed.
Typically when Number 11 invites the Office of Budget Responsibility to prepare the forecast, a Spending Review or Budget is pinpointed in the calendar.
But in a letter last week to Treasury Select Committee chair Mel Stride, Mr Sunak gives the date of October 27th for the OBR forecast, but cites no date for a spending review or Budget.
Oxford Economics was first to say the omission indicates the Budget could be delayed (as it was in both 2019 and 2020), reportedly telling the Times that if it isn’t, HM Treasury perhaps just wants to wait until nearer the time.
'Prudent to delay the Budget'
Advisers to contractors say a Budget delay is the more likely of the two and to Graham Jenner, a chartered accountant, it seems sensible.
Jenner & Co founder’s explained: “With so many employees still on furlough, and no real indication of how many of those will be made redundant when the scheme ends, the chancellor may see it as prudent to delay the Budget.
“It’s a difficult balancing act between providing some element of certainty and waiting to assess the impact on the economy of the Coronavirus Job Retention Scheme ending.
“Uncertainty over the extent to which things are returning to ‘normal’ suggests a delay might be a sensible decision.”
'Raising taxes on the self-employed'
Rebecca Seeley Harris, a tax lawyer, agrees that delaying the Red Book would give Mr Sunak more time to “assess the position,” especially, she said, if it was not unveiled until March 2022.
The founder of an advisory to contractors’ clients and agencies on IR35, ReLegal Consulting, Ms Seeley Harris reflected: “I can only imagine that a delay is now a prospect because the chancellor is going to have to think about raising taxes, most notably on the self-employed.
“This is a very uncomfortable position for him – and them – to be in.
She continued in a statement to ContractorUK: “But there is a potentially telling side-note too. The Single Enforcement Body which the business department has promised to create, which will regulate the umbrella company industry, is relying on the Spending Review -- and the date for that has not been announced either.”
'Clients face paying more for inside IR35 contractors'
Another contractor advisory, Qdos, warns that prime minister Boris Johnson’s quietly mooted plan to raise National Insurance will mean businesses that engage contractors inside IR35 will need to pay another [one] per cent.
“There are certainly other ways to go about raising tax revenue,” said an unsupportive-sounding Seb Maley, Qdos’s chief executive.
“It would also make the reason not to needlessly force contractors inside IR35 even more compelling. Other than pushing contractors away, the fact of the matter is that businesses will pay even more to engage these workers inside IR35.”
'Fill the Treasury blackhole created by covid'
But personal tax announcements at the next Budget could sting contractors too.
Tom Wallace, head of tax at WTT Consulting said: “Rumours are starting to circulate that Inheritance Tax may be the first tax to see changes to fill the Treasury blackhole created by covid.
“In a way it makes a lot of sense, IHT being seen as a ‘wealth tax’ means that there would be very little backlash against the government. However what most people do not realise is that with rising house prices, particularly in the south, more and more families are facing IHT liabilities.
Taking to LinkedIn, Mr Wallace further recommended: “[So] it may be a good idea to have your estate reviewed before any reforms are introduced.”
'Required to hold a Budget every financial year'
However, it might be more a question of whether a Budget is going to be introduced this calendar year at all and if not, at what stage before April 5th 2022.
In fact, asked about the inference of a delay due to Mr Sunak requesting OBR forecasts but not setting any Spending Review or Budget date, a Treasury spokeswoman told ContractorUK:
“We have asked the Office for Budget Responsibility to prepare a forecast for October 27th in the usual way.
“We are required to hold a Budget every financial year. Last year the extraordinary Covid context meant the chancellor did this in the Spring. We will confirm in due course when the next Budget will be. However, we haven’t announced any Autumn Budget, so any consideration of one is purely speculation at this point.”