With fewer than three months to go until the end and start of the new financial year, many businesses will be sitting down and beginning to put their plans in place for the year to come.
Typically, planning is relatively straightforward and although plans may never be 100% foolproof, the assumptions and predictions made can provide the foundations for business success, opportunity and economic and financial feasibility.
Budgeting of this nature is not exclusive to organisations. Governments budget too and the significance of these budgets is far-reaching for business owners, employers and individuals alike.
When does the Budget take place?
In the UK, the Budget is typically held once or twice a year—usually in the spring and/or autumn.
Generally, changes affecting the start of the new tax year are announced in the autumn Budget to allow businesses time to prepare.
Why does a Budget get delayed?
There is a precedent for Budgets being delayed; however, the reasons behind each delay vary.
Geopolitical events are contributing factors. Back in 2003, the reason behind the then Chancellor Gordon Brown’s delayed Budget was thought to be ongoing expenditure related to the Iraq War. On that occasion, the Budget was not finalised until 5 April, the last day of the tax year.
In autumn 2019, the Budget was delayed until 11 March 2020, largely due to the December 2019 general election and uncertainty over Brexit.
Again, Chancellor Rishi Sunak was widely expected to announce an autumn Budget in 2020; however, a wave of coronavirus cases has forced this to be delayed until March 2021.
What does a delayed Budget mean for businesses, employers and local authorities?
A delayed Budget has significant implications for businesses, employers and local authorities because planning for the year ahead is heavily based on the terms outlined.
Changes in employment laws or those affecting payroll take time to implement. Consequently, any delay means that businesses have less time to react and ensure they are ready and compliant.
A delayed Budget is not just a source of pain for payrollers, however. The UK Budget is also key for local authorities – e.g. councils – as it allows them to plan their internal budget. As a result, any delay also affects their financial planning.
When will this year’s Budget be held and what is expected to be included?
The 2021 budget will take place on 3 March.
Little is known about the announcement, but it is believed that IR35 legislation – anticipated last year but delayed due to the pandemic – will finally be rolled out.
Additionally, changes to National Minimum Wage (NMW) and National Living Wage (NLW), as well as income tax and National Insurance contribution (NICs) thresholds are also anticipated.
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