Rishi Sunak could delay tax rises until next autumn but will end Stamp Duty holiday in March amid warnings over scale of government borrowing during Covid crisis
- The Chancellor reportedly believes that it is the ‘wrong time’ to bring in tax rises
- Source added Mr Sunak has also rejected calls to extend the stamp duty holiday
- It comes as Mr Sunak draws up plans to bail out up to a million small businesses
Rishi Sunak is expected to lay aside plans for tax rises in his March budget due to the huge cost of the coronavirus crisis.
The Chancellor reportedly believes it is the ‘wrong time’ for them and they are likely to be shelved until the autumn at the earliest.
A source added that Mr Sunak has also rejected calls to extend the stamp duty holiday.
It comes as he draws up plans to bail out up to a million small businesses who have missed out on financial support during the pandemic.
The Chancellor reportedly believes it is the ‘wrong time’ for them and they are likely to be shelved until the autumn at the earliest
The source said the Treasury had changed its mind on tax rises due to the mutant strain of coronavirus ripping its way across the country.
They told the Times: ‘We’ll be in the midst of a recession and living under severe lockdown restrictions.
‘The mutant strain of the virus has changed our entire perspective on this. It’s too soon.’
The country is this year expected to have to borrow more than double what it did during the financial crash in 2008 – £370billion compared to the £158billion deficit.
To try to plug the hole left by Covid there are plans to cut pensions tax relief for high income households, ramp up capital gains tax and bringing in a digital sales tax.
The source said that it was not yet clear if tax rises will be included in Mr Sunak’s Budget.
Coronavirus is thought to have inflicted the worst hit to GDP since the Great Frost of 1709
Meanwhile he is drawing up plans to bail out up to a million small businesses who have missed out on financial support during the pandemic.
The Chancellor is facing mounting pressure to help small traders who have not had a penny in help because they pay themselves through dividends.
Under one £3billion proposal, sole directors of limited companies hit by the lockdowns would receive 80 per cent of their normal income.
Treasury minister Jesse Norman has been examining plans for a Directors Income Support Scheme, which would pay grants of up to £7,500 to cover three months of lost profits.
It would be limited to those who earn less than £50,000 a year and it will cost between £2billion-3billion.
The scheme, proposed by business groups, would use corporate tax returns to assess the hit that traders had suffered.
And the size of grants for each applicant would be based on three years’ worth of accounts.
Treasury sources last night warned there were still problems with the proposal but pressure to act now is mounting.
Former Cabinet minister Esther McVey this week said many had struggled without support for nine months and ‘cannot go another three months’.