With an estimated 700,000 people having lost their jobs since the start of the pandemic, it’s no surprise that employment related issues were front and centre in last week’s Spring Budget.
The key announcements included:
Furlough scheme:
The Coronavirus Job Retention Scheme (“CJRS”), also known as the ‘furlough’ scheme, will be extended from the end of April to the end of September. The level of support will be reduced from July onwards.
The eligibility criteria and other conditions are complex, but in summary:
Until the end of June, the government will continue to contribute 80% of wages for hours not worked (up to £2,500 per month).
In July, the government’s contribution will drop to 70% of wages (up to £2,187.50 per month) and the employer must pay the other 10% (up to £312.50).
In August and September, the contribution will drop again, to 60% of wages (up to £1,875 per month) and the employer must pay the other 20% (up to £625).
The government will spend £100 million on a new HMRC taskforce to investigate and address fraud in the government’s Covid support schemes, including the furlough scheme.
Self-employment:
The Self-Employment Income Support Scheme (“SEISS”) is being extended until September, covering the fourth and fifth payments under the scheme:
The fourth payment covers February to April. As with previous payments, it is worth up to 80% of trading profits, averaged over three months, up to £7,500 in total.
The fifth payment covers May to September, but the amount available depends on loss of income.
These fourth and fifth payments are available to the newly self-employed, provided they filed their 2019-20 tax return by midnight at the end of 2 March 2021.
Pay and tax:
The National Living Wage will increase to £8.91 an hour from April and will be extended to those aged 23 and over, rather than those aged 25 and over.
The tax-free personal allowance will be frozen at £12,570 from April 2021 to 2026.
The higher rate income tax threshold will frozen at £50,270 from April 2021 to 2026.
Support for staff with Covid:
Small and medium-sized employers will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (“SSP”) costs per employee.
The £500 Test and Trace support payments in England will be extended until the summer.
Expenses:
The government will extend to the 2021-22 tax year the income tax exemption and NICs disregard for (a) employer reimbursed expenses covering the cost of home office equipment and (b) Covid antigen tests provided by or reimbursed by employers.
Apprentices:
The government will extend and increase the payments 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 or £2,000 per hire under the current scheme. This is on top of the existing £1,000 payment the government provides for certain groups of apprentices.
There is also additional funding for so-called ”portable apprenticeships” (which enable apprentices to work across multiple projects with different employers) and traineeships.
Immigration:
The government will introduce various new types of visas, including an “elite points-based visa” for highly skilled migrants by March 2022 and a new “Global Business Mobility visa” by spring 2022 for overseas businesses to establish a presence in the UK.
The government plans to modernise the immigration sponsorship system to make it easier to use and will publish a delivery roadmap in the summer.
For further information and guidance on any of these changes, please get in touch with your usual Bird & Bird contact.
You may also be interested in the comprehensive summary of the Spring Budget prepared by the Bird & Bird Tax team, available here.
