Rishi Sunak set to extend furlough and Universal Credit support – but tax hikes are coming too

CHANCELLOR Rishi Sunak is set to extend furlough and the Universal Credit uplift – but painful tax hikes are on the cards too.

Insiders have described the Budget next week as a sandwich of good and bad news for families.

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Some have likened it to “two big slices of bread with very thin jam”.

The first piece is a £30billion coronavirus support bundle that will see furlough, business relief, the Universal Credit uplift and stamp duty holiday all extended until June.

The Sun has previously reported how furlough will carry on beyond its April deadline to help the millions of people still unable to work.

The Universal Credit uplift of £20 per week, amounting to £1,040 for families over the year, was also reported to be likely to remain in place beyond April as coronavirus rules are still in force.

ITV’s Peston reports that an extension could be granted for six months.

Meanwhile, the Chancellor has come under pressure to extend stamp duty by families who have been left scrambling to complete their transactions before the deadline of March 31.

But this package of support, to bring those measures in line with the roadmap for coming out of lockdown, leaves “thin jam” — or little to spend elsewhere.

Slice two is a package of tax hikes to start raising billions to close the UK’s budget deficit, which will hit £400billion by April.

Experts say this budget deficit needs to be reduced by £30billion to £40billion to stabilise borrowing and prevent debt from rising.

The Chancellor will likely announce a hike in corporation taxes — up to as much as 25% from 19% over a number of years.

Raising capital gains will target the rich, such as second-home owners.

Paul Johnson, head of the Institute for Fiscal Studies, previously warned how families will be hit by tax rises to pay for the Covid-shaped hole in the accounts.

The Institute for Fiscal Studies has said: “Even if the Government was comfortable with stabilising debt at 100% of national income — its highest level since 1960 — it would still need a fiscal tightening worth 2.1% of national income, or £43billion.”

But coronavirus spending means “thin jam” for other giveaways.

Mr Sunak is under pressure to keep the freeze on fuel duty rises, while the Chancellor is said to be considering cutting alcohol duty.

Boris Johnson was urged by MPs yesterday to instead slap the tax on supermarket booze instead.

The move could see 14p added to the price of a supermarket can and 36p knocked off the cost of a pint down the pub.

Meanwhile, more than two dozen Tory MPs have written to Mr Sunak urging him not to raise fuel tax in his Budget.

The Conservative Party had a manifesto commitment, called the “triple tax lock”, that pledged to not raise the rates of income tax, national insurance or value added tax.

Mr Sunak is reported to want to keep to this, according to the Financial Times, but any changes – if any – won’t be confirmed until the Budget.

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We round up everything we know so far about what could be included in the Budget 2021.

Mr Sunak’s first Budget in March last year was dubbed the “coronavirus Budget” after it focused on supporting Brits financially through the crisis.

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.

This post first appeared on thesun.co.uk