The Budget – Impact on Employers

Chancellor Rishi Sunak announced his budget on 3rd March 2021.

The main eight points for employers from his budget are:

  • Furlough Scheme to be extended until 30th September 2021
  • Increase to Apprentice Incentive Payments
  • Trainees grants
  • Business Rates holiday extension
  • Reduced VAT rate for hospitality and tourism extended
  • Restart Grant
  • Corporation Tax Rises
  • Statutory Sick Pay Scheme to remain

Extension of the Furlough Scheme

The Furlough scheme, which pays 80% of an employee’s salary was due to end on 30th April 2021, this has now been extended until 30th September 2021.

Any period of Furlough ending on or before 30th April 2021, employers can claim furlough for any employees who were employed as of 30th October 2020, as long as a PAYE RTI submission has been made to the HMRC between 20th March 2020 and 30 October 2020.

For periods of Furlough starting from 1st May 2021, employers can claim for employees who were employed as of 2nd March 2021, as long as a PAYE RTI submission has been made to HMRC between 20th March 2020 and 2nd March 2021.

Employers do not need to have previously claimed furlough for an employee before 2nd March 2021 to claim furlough for 1st May 2021 onwards.

For any furlough periods up to 30th June 2021, employers can claim 80% of their employee’s usual salary for any hours not worked due to the pandemic, up to a maximum of £2,500 per month.

From 1st July 2021 the level of the grant provided by the Government will be reduced each month and employers will be required to contribute more towards the costs of employee’s salaries. From July employers will be required to pay 10% towards the hours increasing to 20% for August and September 2021.

Increase to Apprentice Incentives

The Chancellor has announced that The Apprentice bonuses that were introduced last August, were due to end at the end of March 2021, will be extended until the end of September 2021.

Under the scheme employers are offered £2,000 to take on apprentices aged between 16 to 24 and £1,500 for any over the age of 25.

Employers taking on apprentices between 1st April 2021 and 30th September 2021 will now receive £3,000 per new apprentice regardless of their age.

These payments are in addition to the £1,000 payments already provided for apprentices aged 16 to 18 and any under 25 with an Education, Health and Care Pan.

Trainee Grants

The Government will provide an additional £126 million in England for higher quality work placements and training for 16 to 24 year olds in the 2021/2022 academic year.

Employers that provide work experience for trainees will receive £1,000 per trainee.

Business Rates holiday extension

The business rates holiday is to be extended until 30th June 2021 to help the retail, leisure and hospitality industries who have been hit the hardest during the pandemic.

Reduced VAT rate for hospitality and tourism extended

The 5% reduced VAT rate for the hospitality and tourism businesses will be extended until 30th September 2021, this will then be increased to 12.5% until April 2022.

Restart Grant

A new restart grant is to be launched in April, any non-essential retail business will receive a grant of up to £6,000 per premises and the hospitality and leisure businesses, including hairdressers and beauty salons will receive a grant of up to £18,000.

In addition, in excess of £400m is to be made available to help museums, theatres and galleries to open in England.  £300m is also going to be made available to help sports.

Corporation Tax Rises

From April 2023 corporation tax is to increase to 25%, however companies with profits of £50,000 or less will benefit from a small profit rate of 19%, and the rate will vary for profits above £50,000.

Companies will only pay the full rate of 25% on profits from £250,000.

Statutory Sick Pay Scheme to remain in place

The Statutory Sick Pay Scheme for small and medium sized companies will remain in place.

Under this scheme employers can claim a refund for statutory sick pay payments, up to two weeks, made to employees in relation to coronavirus.

This scheme was put in place last March to help employers with high levels of sickness absence.

If you would like further information on how these changes will impact your business, please get in touch 0121 516 0299 or info@cloverhr.co.uk


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