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Spring 2021 Budget - Key Announcements for Employers

on Friday, 05 March 2021.

On 3 March 2021 the Chancellor of the Exchequer, Rishi Sunak, led the 2021 Spring Budget. In this article, we examine the key elements of the Budget that employers and businesses need to know.

Extension of the Furlough Scheme

It was confirmed in the Budget that the furlough scheme, which had been due to end on 30 April 2021, will instead be continued until the end of September 2021. The Government plans to continue paying 80% of employees' wages for hours they cannot work. Employers are to be asked to contribute 10% in July and 20% in August and September towards the hours that their staff are not working. The cap of £2,500 will remain in place.

Although the Budget did not announce as such, we expect that the Employment Rights Act 1996 (Coronavirus, Calculation of a Week's Pay) Regulations 2020 ('Week's Pay Regulations') will be amended once again to reflect the extension. The Week's Pay Regulations came into force on 31 July 2020, and require employers to calculate various statutory payments, including redundancy and notice pay, with reference to a furloughed employee's normal week's pay. The regulations were amended in February 2021 to reflect the previous extension of the furlough scheme to 30 April 2021.

Statutory Sick Pay - Reclaim

In addition to the extension of the furlough scheme, small and medium-sized employers in the UK will still to be permitted to reclaim up to two weeks' Statutory Sick Pay costs for each eligible employee, for sickness absence due to coronavirus (COVID-19), from the Government. Applications should be made to HMRC.

Currently, eligible employers are those with fewer than 250 employees.

Extension of 'Support for the Self-Employed'

The Chancellor also announced details of the fourth and fifth payments for the self-employed income support scheme (SEISS). The fourth payment, which covers February, March and April 2021, will be worth 80% of three months' average monthly profits and is capped at £7,500. The grant may be claimed from late April 2021. The fifth and final payment of the scheme will cover May to September 2021 and can be claimed from late July 2021. The level of the grant will depend on how much turnover you have lost over the period.

Coronavirus guidance employers

Combatting Fraud

The Chancellor 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 the furlough scheme and the SEISS.

In addition, the Government will raise awareness of enforcement action to deter fraud.

Traineeships and Apprenticeships

On 28 January 2021, the Government announced that employers who created new traineeship opportunities were eligible for a cash payment of £1,000 for each trainee, up to a maximum of 10 trainees. The scheme is available until 31 July 2021, and permits employers to claim the cash incentive for all work placements completed since 1 September 2020. The Chancellor has announced an additional £126 million will be provided for high quality work placements and training for 16-24 year olds in the 2021/22 academic year in England. Employers who provide work experience to trainees will continue to receive £1,000 per trainee.

The Chancellor has also extended and increased the payments made to employers taking on new apprentices, with those who hire a new apprentice between 1 April 2021 and 30 September 2021 receiving £3,000 per new hire (previously £2,000 for each young apprentice under the age of 25 and £1,500 if aged 25 or over).

In addition to this, the Chancellor announced a £7 million fund to develop a portable apprenticeship programme in England, that will enable apprentices to work with a number of employers in one sector.

Additional Announcements

  • Corporation tax will rise in 2023 from 19% to 25%. This will only affect businesses with profits of £50,000 or over, ie roughly 10% of UK companies. Businesses with profits under this amount will still continue to pay 19%.
  • Reforms to the immigration system will help ambitious UK businesses attract the brightest and best international talent.
  • Temporary income tax and NICs exemption 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.
  • The £20-a-week universal credit uplift will be extended for a further six months.

No doubt the extension of the many coronavirus support schemes mentioned above will be welcomed by the millions who continue to benefit from them.

Unsurprisingly the main focus of the Budget was largely related to the plans for a post-pandemic UK, and the related coronavirus support schemes. The Chancellor stated that the Budget's announcements bring the Government's total coronavirus spending to £407bn, and that record levels of borrowing meant that 'huge challenges' would lie ahead.

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 changing government guidance and drafting any necessary documentation.

If you need specialist legal advice on any of the issues covered by the Spring 2021 Budget, please contact Ellie Boyd in our Employment Law team on 07393 148143, or complete the form below.

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