On Wednesday 3rd March 2021, Rishi Sunak announced his eagerly awaited Budget. Generally, the Budget has continued the Government's message that it is aiming to protect the "jobs and livelihoods" of the British people. The Budget was presented as a long term response to the issues presented by Covid-19 and the Chancellor warned that the levels of necessary spending mean that there will be some difficult times ahead.
Although the Budget included wide-ranging measures, we have set out below the key elements of the Budget that employers and businesses need to be aware of.
Extension of Furlough
The Chancellor confirmed that the Coronavirus Job Retention Scheme (CJRS), originally due to end on 30 April 2021, will be extended until 30 September 2021.
Neither the employer nor employee need to have used the CJRS before to apply for a grant under the extended scheme, but for periods from 1 May 2021 onwards, an employee must have been on the payroll on 2 March 2021.
Currently, employees receive 80% of their wages for the hours they cannot work, up to a cap of £2,500 per month, the full amount of which can be claimed from the government under the CJRS with employers paying the employers National Insurance and pension contributions on the Government grant. Between now and 30 June, this will continue.
From 1 July, support will be gradually reduced with the Government paying 70% of usual wages for hours not worked up to a cap of £2,187.50 and employers topping up the additional 10%.
From 1 August, the Government will pay 60% of usual wages for hours not worked up to £1,875, with employers topping up the remaining 20%.
Employers must continue to pay the associated employer National Insurance contributions and pension contributions on all furlough pay and can continue to top up wages above 80% but are not required to do so.
Taylor Walton is able to assist you with implementing furlough arrangements and connected queries. In this regard, it is extremely important that the approach taken to furlough arrangements and claims under the CJRS are correct as the Chancellor also announced the Government's plan to invest over £100 million in a Taxpayer Protection Taskforce of 1,265 HMRC staff to combat fraud within Covid-19 support packages, including grants claimed under the CJRS. In addition, the Government will raise awareness of enforcement action to deter fraud.
Support for the Self-Employed
The Chancellor has extended the Self Employed Income Support Scheme until 30 September 2021. Full details are available on the gov.uk website.
National Living Wage and National Minimum Wage
The National Living Wage will be increased to £8.91 (up from £8.72) from 1 April and will also apply to workers who are 23 and over (rather than workers who are 25 and over).
National Minimum Wage rate will also increase for younger workers as follows:
21-22 year olds - £8.36 (up from £8.20)
18-20 years olds - £6.56 (up from £6.45)
Under 18s - £4.62 (up from 4.55)
Apprentice rate - £4.30 (up from £4.15)
SSP for Coronavirus absences
Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks of Statutory Sick Pay costs per employee from the Government where the absence is Coronavirus related and subject to satisfying eligibility requirements. There is currently no date for the closure of this scheme
The Government has provided incentive payments to support employers hiring new apprentices between 1 August 2020 and 31 March 2021. This is in addition to the £1,000 employers already receive for hiring an apprentice.
The incentive payment, originally up to £2,000 dependent on age, has now been increased to £3,000 per apprentice (of any age) hired between 1 April and 30 September 2021. Furthermore, an additional £126 million is being made available to create 40,000 more traineeships in England for 16-24 year olds in the 2021/22 academic year.
Other elements which may be of interest to employers include:
Corporation tax will rise in 2023 from 19% to 25%. This will only affect businesses with profits of £50,000 or over. Businesses with profits under this amount will still continue to pay 19%;
Changes will be made to immigration rules to assist the UK in attracting the brightest talent in respect of particular fields;
Temporary income tax and NICs exemptions for expenses reimbursed by an employer to an employee for the purchase of equipment for the sole purpose of enabling the employee to work from home due to Covid-19, will be extended to the 2021-22 tax year; and
The £20-a-week universal credit uplift will be extended for a further six months
The extension of support schemes under the Budget will be a source of relief for many employers seeking to protect their business during what continues to be a challenging time. Taylor Walton is available to assist you with any queries you may have in relation to the matters covered in this note as well as any other employment issues you may be experiencing.