The Treasury has said this “Budget will set out the next phase of the plan to tackle the virus and protect jobs”. Although the Bank of England’s chief economist Andy Haldane predicts consumer confidence will surge back thanks to the vaccine programme, with the economy firing “on all cylinders” by spring, the Q4 and December GDP data published on 12 February showed the current lockdown continues to have a significant impact on many people.

So, what do the experts expect for business from the chancellor’s red briefcase? We’ve rounded up Budget 2021 predictions from George Bull, senior tax partner, RSM UK; Ed Molyneux, CEO and co-founder, FreeAgent; Peter Cudlip, head of consulting and Ian Goodwin, partner in the tax team, Mazars; Jon Hickman, corporate tax partner, BDO and Helen Cowley, tax partner, UHY Hacker Young.

According to reports in the national press, the chancellor is expected to announce that the year-long business rates holiday for the retail, hospitality and leisure sectors will continue beyond the previous end date of 31 March. Other support measures, including the furlough scheme, will also be extended into the summer before being phased out.

The November Budget will instead likely include a review of business rates, which will consider a potential online sales tax to help boost high-street retailers.

Goodwin says an extension to the Coronavirus Job Retention Scheme (CJRS) furlough arrangement that is due to come to an end on 30 April may present a further lifeline to employers and employees in protecting jobs and income until the summer (30 June). “Alternatively, we may see the reimagining of the employer £1,000 CJRS bonus that was withdrawn in January, given that this aimed to encourage businesses to keep people employed. This could help reduce unemployment figures and provide a greater chance of a quicker recovery as the vaccine rollout continues to accelerate.”

“Incentives for expenditure on qualifying research and development (R&D) are among the most widely used and valuable corporation tax reliefs in the UK,” writes George Bull in RSM’s blog. “A consultation has been conducted on expanding the scope of the regimes to provide additional tax relief for, in particular, R&D-related data and cloud-computing costs.” RSM expects the chancellor to announce that the government intends to proceed with this proposal.

Peter Cudlip at Mazars also foresees further encouragement of R&D projects following the increase in expenditure credit rate from 12% to 13% last year. “With many companies still grappling with a business landscape that is constantly changing, a boost to R&D will provide welcome relief as organisations transform their digital operations and look to protect themselves from growing cyber threats.”

Post-Brexit, there may be scope for the government to simplify the existing patent box regime in the UK to make it more effective, notes Jon Hickman for BDO. “Whether the chancellor seeks to simplify and broaden the rules for UK-based R&D for exporters remains to be seen,” he says.

There is speculation about changes to corporation tax. “It is largely anticipated that there will be an increase in corporation tax; perhaps to a rate of up to 23%. Businesses that have struggled throughout the pandemic are unlikely to be affected immediately, particularly if they have been loss making, but once they return to profitability, and utilise any losses, they will then feel the impact,” writes Helen Cowley for UHY Hacker Young.

Given the Conservatives’ 2019 election manifesto pledge not to increase rates of income tax, National Insurance contributions, or VAT, the corporation tax rate appears to be an obvious place to start for a chancellor keen to take steps towards balancing the books, says RSM’s Bull. “However, many will feel that an immediate increase in taxes on businesses that are still dealing with the ongoing disruption caused by coronavirus, and still adapting to life outside the EU, is not the right way to go about jump-starting the economy and getting GDP back to pre-pandemic levels.”

“Unlike their larger counterparts, small businesses are commonly dependent on month-to-month success and do not have the same footing larger corporations do to simply stay afloat,” says Ed Molyneux, CEO and co-founder of FreeAgent. “Therefore, if there have to be any tax rises to help pay for money that the government has borrowed during the pandemic, I would prefer to see this introduced for larger, stable companies that are capable of contributing, rather than smaller, more vulnerable businesses.

“From our own research, we know that small businesses are keen for the government to make big, forward-thinking policy changes that will benefit their sector,” Molyneux adds. “Many want to see things like a greater crackdown on tax evasion by multinationals, simplification of the UK tax system for small businesses, more statutory protections for self-employed workers, harsher penalties for late payment, additional financial aid for start-ups and more coronavirus support – including an expansion to the furlough scheme. While it’s wishful thinking that all of these issues will be covered in this year’s Budget, I hope that the chancellor will at least consider some of them.”

“The government continues to champion the employment of young workers and we anticipate further support through direct grants to help level the playing field for those whose job prospects have been heavily impacted by the pandemic,” says Cudlip at Mazars. “We expect to see an uptake in apprenticeships, with organisations already showing a willingness to diversify their talent acquisition strategies in order to gain competitive advantage and benefit from government support packages.”

“The noises coming from the government strongly suggest that there will be no delay to the private sector IR35 or Off Payroll changes, meaning that it will go live from 6 April regardless of whether employers are ready or aware,” writes Ian Goodwin at Mazars. “There is still strong opposition to this change, however many businesses have accepted this is unlikely to be scrapped or further delayed and are therefore preparing for the imminent change that has already been delayed by 12 months.”

“We should expect to hear increased income tax and NIC [National Insurance contribution] reliefs for going ‘green’ and supporting sustainable reward,” says Goodwin. With November’s Climate Change Conference in mind, the government is reportedly looking at ways to tax carbon emissions across all departments, adds Hickman. “For example, alongside the new plastic packaging tax, there may well be consultations on new taxes on single-use items (coffee cups etc) so they can also take effect from April 2022. Alternatively, post-Brexit, it would be possible for the chancellor to introduce a new higher rate of VAT for environmentally damaging goods and services without breaking the Conservatives’ pledge to not increase the standard rate of VAT. Whether the chancellor is inclined to increase fuel duty, after 11 years of frozen duty rates, remains to be seen.”

Because the chancellor is mindful of protecting consumer spending, an increase in VAT is not anticipated. “Indeed, a temporary reduction in the standard rate of VAT would be helpful in stimulating the economy,” writes Cowley. “However, this would be dependent inter alia on businesses passing the VAT saving on to consumers, as opposed to increasing profit margins by keeping selling prices the same.

“The tourism and hospitality sectors, which have been particularly hard hit by lockdown measures, are hoping that the reduction in VAT to 5% (applicable to those sectors) will be further extended beyond 31 March 2021. The VAT cut was introduced in July 2020 and was intended to support businesses throughout the winter period, but that was before the third national lockdown and a further extension would certainly be welcomed.”

George Bull says: “The Conservative Party election manifesto promised to cut the burden of tax on business by reducing business rates for retail businesses and extending the discount available to grassroots music venues, small cinemas and pubs. A consultation ran from July to October 2020 and represents the first step in a fundamental review of the business rates system. The chancellor is expected to announce the next step in the review, which is likely to be further consultation on the detailed design of a new system.”