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On 3 March, Chancellor Rishi Sunak delivered the Budget for 2021. Here we have provided a summary of the measures that were announced relating to employment.
The current CJRS allows an employer to place an employee on furlough and apply for a grant to cover wage costs for the time an employee is on furlough.
In December 2020, the Chancellor extended the scheme until the end of April 2021.
In Budget 2021 the Chancellor further extended the scheme to 30 September 2021. The level of grant available to employers under the scheme will stay the same until 30 June 2021.
From 1 July 2021, the level of grant will be reduced and employers will be asked to contribute towards the cost of furloughed employees’ wages. To be eligible for the grant an employer must continue to pay furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough.
The reduction in the level of the grant means that the percentage recovery of furloughed wages will be as follows:
Employers will need to continue to fund employer NICs and mandatory minimum automatic enrolment pension contributions.
The Chancellor has also extended eligibility for the scheme. For periods starting on or after 1 May 2021, employers can claim for employees who were employed on 2 March 2021, as long as a PAYE Real Time Information (RTI) submission was made between20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee.
The government will provide an additional £126 million in England for high quality work placements and training for 16-24 year olds in the2021/22 academic year. Employers who provide trainees with work experience will continue to be funded at a rate of £1,000 per trainee.
The government will extend and increase the payments made to employers in England who hire new apprentices. Employers who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive £3,000 per new hire, compared with £1,500 per new apprentice hire(or £2,000 for those aged 24 and under) under the previous scheme.
This is in addition to the existing £1,000 payment the government provides for all new 16-18 year-old apprentices and those aged under 25with an Education, Health and Care Plan, where that applies.
The government will introduce a £7 million fund from July 2021 to help employers in England set up and expand portable apprenticeships. This will enable people who need to work across multiple projects with different employers to beneﬁt from the high quality long-term training that an apprenticeship provides.
New tax rules are soon to come into force for individuals who provide their personal services via an ‘intermediary’ to a medium or large business. The new rules apply to payments made for services provided on or after 6 April 2021.
The off-payroll working rules apply where an individual (the worker) provides their services through an intermediary (typically a personal service company) to another person or entity (the client). The client will be required to make a determination of a worker’s status and communicate that determination. In addition, the fee-payer (usually the organisation paying the worker’s personal service company) will need to make deductions for income tax and NICs and pay any employer NICs.
In the Budget the government announced minor technical changes to improve the operation of the rules, in response to feedback from stakeholders, which will be legislated for in Finance Bill 2021. The government will make changes to the rules regarding provision of information by parties in the labour supply chain.
From 6 April 2021, a nil rate of tax applies to zero-emission vans within the van beneﬁt charge. In 2020/21 such vans have a van beneﬁt charge at 80% of the standard ﬂat rate of £3,490.
The Government will legislate in Finance Bill 2021 to introduce a time-limited easement to the employer-provided cycle exemption to disapply the condition which states that employer-provided cycles must be used mainly for journeys to, from, or during work. The easement will be available to employees who have joined a scheme and have been provided with a cycle or cycling equipment on or before 20 December 2020.
The change will have effect on and after Royal Assent of Finance Bill 2021 and be in place until 5 April 2022, after which the normal rules of the exemption will apply.
The Government will legislate in Finance Bill 2021 to introduce a retrospective income tax exemption for payments that an employer makes to an employee to reimburse for the cost of a relevant coronavirus antigen test for the tax year 2020/21. Legislation will extend this exemption for the tax year 2021/22.
The change will have effect on and after Royal Assent of Finance Bill 2021. The corresponding NICs disregard is already in force and this will also be extended for the tax year 2021/22.
The Government will, by secondary legislation, extend the temporary income tax exemption and Class 1 NICs disregard for employer reimbursed expenses that cover the cost of relevant home ofﬁce equipment. The extended exemption will have effect until 5 April 2022.
If you need assistance or advice related to any of the measures announced as part of Budget 2021, please contact us to arrange an initial discussion.