James Coney  

We may have to wait until autumn to see the real Rishi Sunak

James Coney

James Coney

It was the Budget that the chancellor did not want to have, but the one that was so desperately needed.

When he was appointed to the role last year, Rishi Sunak had just a few weeks to prepare for his annual spending statement, when normally chancellors get several months.

And even last March he did not want to have to unveil big fiscal and monetary plans; rather he wanted the Budget to be held in the autumn every year. How quickly plans change though.

So it is interesting that despite having had two Budgets he never wanted, and not holding one that he did actually desire last autumn, we still do not really know what to expect of Sunak.

That is primarily because since he last stood up, so much has changed: GDP has slumped 9.9 per cent, national debt has soared to £2.11tn, the cost of putting 4.7m workers on furlough is £53.8bn, the tax take has fallen £65.2bn and 726,000 jobs have been lost so far.

The reason we do not know what type of chancellor we have is because he has not been able to get hold of some of the gnarly issues in our tax system – and so the real cut of jib may be shown on March 23, which has been dubbed ‘tax day’.

This is the moment we are supposed to get a series of major consultations into the way our personal and business finances operate, and if word from the Treasury is right, it could demonstrate the chancellor’s desire for the most fundamental shake up since Nigel Lawson overhauled income tax rates.

Those who know him say Sunak is a joined-up thinker – he realises that you can not just tweak one bit of the taxation system without affecting another.  That seems sensible, so what are we going to get?

You can draw up your own list, but my guess is it will feature business rates and digital taxes, income tax for the self-employed and capital gains, inheritance, and stamp duty, and, of course, tax relief on pensions.

All of these things are essentially linked together, and you can not go tinkering with one without having a knock-on effect on the other.

We see this unintended behaviour all the time. I know of young savers who are cashing in Lifetime Isas thanks to the government’s temporary waiver on exit penalties, because they now realise the Isa will never help them buy a house where they want.

And I know of landlords who are using the stamp duty holiday to bundle up their properties into limited companies.

If the government starts tweaking national insurance for the self-employed it will lead to a further rise in limited companies, so that is why Sunak is also probably looking at corporation tax rates for small businesses and the use of capital gains.