The Autumn 2021 Budget reflects the Government's increased focus on economic recovery in a post-COVID-19 world.
What Are the Relevant Developments for Employers and Employees?
- The Chancellor made it clear in the budget that the ongoing COVID-19 risk is acknowledged and that the Government will monitor the data and will only introduce further measures if needed. The chancellor cited Plan A and Plan B, taken from its COVID-19 Response: Autumn and Winter Plan (published 14 September 2021) which set out how it intends to address the challenges that may be posed by COVID-19 over the autumn and winter period.
- On 4 October 2021, the Chancellor announced a £500 million expansion of the Plan for Jobs initiative intended to support workers leaving the furlough scheme (which ended on 30 September 2021), unemployed individuals over 50 years old, young people, and those who are the lowest paid. The budget confirmed this and therefore announced:
- an increase in funding for the National Skills Fund to expand the Lifetime Skills Guarantee to increase opportunities to allow adults funding opportunities to upskill and retrain
- an increase in apprenticeships funding and a commitment from the Government to meet 95% of the apprenticeship training cost for employers who do not pay the apprenticeship levy
- the £3,000 apprenticeship hiring incentive that we reported on in the Spring budget has been extended to 31 January 2022
- Improvements to the apprenticeship system, including:
- an enhanced recruitment service will be introduced by May 2022 for small and medium-sized enterprises
- changes are being considered to the provider payment profiles by April 2022, which is intended to give employers more flexibility in delivering apprenticeship training as well as possible streamlining of employer support payments so that they go directly to employers
- introducing a return-on-investment tool in October 2022 which will enable employers to see the business benefits that are created from apprentices
- An increase in National Living Wage and National Minimum Wage, effective from 1 April 2022:
- National Living Wage for those over 23: from £8.91 to £9.50
- National Minimum Wage for those aged 21 to 22: from £8.36 to £9.18
- National Minimum Wage for those aged 18 to 20: from £6.56 to £6.83
- National Minimum Wage for those aged under 18: from £4.62 to £4.81
- Apprentice Rate: from £4.30 to £4.81
- Accommodation offset rate: from £8.36 to £8.70
In addition to this, the Government also announced a number of tax updates that are relevant for employment law purposes.
The Government will increase the limits and thresholds for National Insurance contributions (NICs), and the rates of Class 2 and 3 NICs, by 3.1% (although the upper earnings limit and the upper profits limit will not change). The increases will take effect in the 2022-23 tax year.
The Government announced it will legislate to introduce regulation-making powers to HM Revenue and Customs, under ministerial direction, concerning the taxation of employment income. The power will apply only in the event of a disaster or significant national emergency (such as a pandemic).
If you are concerned with how the latest announcement will affect you either as an employer, employee, worker or self-employed person, we can assist with providing relevant advice to comply with the updated government guidance, and drafting any necessary documentation.
If you have any questions about the 2021 Autumn Budget, or any other employment-related queries, please contact our Employment Law team, or complete the form below.