Sunak: pubs boost, online tax, green savings bond
Rishi Sunak: more help on way
Chancellor Rishi Sunak is expected to confirm plans in this week’s Budget for an online deliveries tax, a £5bn hospitality and high street boost and the world’s first green savings bond.
Mr Sunak, who will announce his Budget on Wednesday, is also said to be considering a hike in national insurance contributions on the 4.5 million self-employed as he begins to claw back some of the £300 billion spent propping up the economy, though a final decision may come later in the year.
He is expected to announce his intention to ‘raise’ income tax by £6 billion to find an extra £43 billion a year partly by freezing for at least three years the point at which people start paying the basic rate of income tax —£12,500 — and the £50,000 threshold at which they begin paying the higher 40p rate.
An online tax is likely to focus on retail deliveries which have grown substantially as consumers have been forced to buy goods from their homes.
He is due to confirm a £5bn “Restart Grant” to help pubs, restaurants and non-essential shops which have been battered during the pandemic. Grants of between £6,000 and £18,000 will be made available.
Local authorities in England will also get an extra £425 million to distribute grants to businesses not eligible for the restart grants, while the devolved administrations in Scotland, Wales and Northern Ireland will share £794m through the Barnett formula.
Plans for an online tax were reported by Daily Business in January as speculation mounted that he would target the shift in retail trade.
However, it is unlikely he will pursue proposals for a tax on internet company profits.
There is also likely to be a rise in capital gains tax, possibly from 28% to 40% to bring it into line with income taxes paid by higher earners.
Green savings bond
On Saturday night the Treasury announced that Mr Sunak will launch the world’s first “sovereign green savings bond” for private investors allowing savers to help drive the country’s transition to net zero by 2050.
UK savers will have the opportunity to buy bonds in the knowledge they are contributing towards projects that will accelerate the transition to a low carbon economy, create green jobs, and support the collective effort to tackle climate change, whilst saving money.
The green savings bond will be offered through NS&I, the Treasury-backed savings organisation which offers Premium Bonds and other savings products.
Mr Sunak said: “The UK is a global leader on tackling climate change, with a clear target to reach net zero by 2050 and a Ten Point Plan to create green jobs as we transition to a greener future.”
The funds raised will be earmarked for projects such as renewable energy and clean transportation that will help the UK build back greener and meet its target to cut greenhouse gas emissions to net zero by 2050.
Further details will be set out in the coming months before the product goes on sale later in 2021.
Other green announcements in the Budget will help to progress the Prime Minister’s ambitious Ten Point Plan for a green industrial revolution, with funding allocations from the £12bn package provided by HM Treasury.
The Chancellor will announce the launch of three programmes that will receive funding from the £1bn Net Zero Innovation Portfolio – a UK-wide portfolio to support the development of the innovative technologies we need to reach net zero.
Funding allocations are expected to include £20m for a competition to develop floating offshore wind demonstration projects, which can be deployed in deep waters where winds are strongest and will support the Government’s aim to generate enough electricity from offshore wind to power every home by 2030.
Wind power ambitions
The floating offshore wind market has significant growth potential, particularly in Scotland and Wales, which could lead to the creation of new, high value, sustainable jobs.
Nearly £70m is expected for a competition to deliver first-of-a-kind long-duration energy storage prototypes that will reduce the cost of net zero by storing excess low carbon energy over longer periods.
A further £4m will go towards a biomass feedstocks programme to identify ways to increase the production of green energy crops and forest products that can be used for energy and play an important role in decarbonisation.
A new mortgage scheme to help first time buyers get on the housing ladder is expected.
Accountancy firm Azets will be sponsoring Daily Business budget analysis