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ANALYSIS: Weighing up Rishi's balancing act

BUDGET BRIEFING: By Brian Evans, managing partner at Lanyon Bowdler Solicitors

As is always the case with budget announcements, the devil will be in the detail, but the Chancellor seems to be continuing his attempt to balance providing major support for businesses without causing long-term damage to the economy.

The main headline for businesses is the extension of the furlough scheme to the end of September (albeit with increased employer contributions from July), and our employment team have been extremely busy supporting clients with the finer details of the scheme ever since it was first introduced way back in March 2020.

The furlough scheme has undoubtedly helped to secure jobs, and it is clear from the amount of enquiries we have received that it has been very well-utilised by firms. The question on everyone’s minds, though, is what will happen when the scheme finally ends.

One of our busiest departments over the past year has been residential conveyancing, with property markets across all of our areas - Shropshire, Herefordshire and North Wales - being buoyant.

The extension of the stamp duty holiday until the end of June is likely to see that resurgence continue, and it feels like there is sufficient momentum in the market now to continue the uplift throughout 2021 and beyond.

I do have some concern, though, that simply extending the holiday will just move the ‘cliff edge’ to a later date, and it might have been nice to see a more creative solution to provide continued stimulus for the housing market.

The Chancellor said he wanted to be “honest” about the impact the mass borrowing would have on the economy, and one way he can claw back some of the spending is of course on tax rises.

Whilst he froze fuel duty and announced the continuation of the business rates holiday for retail, leisure and hospitality businesses, one area that has taken a hit is corporation tax which is being raised to 25% by 2023, except for smaller companies.

Raising corporation tax is usually seen as quite a low-risk political move because voters see it as a tax which doesn’t directly impact on them - but clearly that’s not the case for us in the business community!

From speaking with clients, I know there is some confidence that the economy will bounce back quite strongly once the worst of the pandemic is over, so once again the Chancellor needs to balance the need to raise funds without dampening any potential recovery.

Time will tell whether he has achieved that.


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