As I begin writing this, the Chancellor of the Exchequer Rishi Sunak has just taken his seat again after delivering his budget statement. Although he has looked forward to a time when coronavirus restrictions will be lifted, he is also clearly planning for a few more months of disruption caused by the pandemic.
Extension of the furlough scheme
Perhaps the most important announcement from a work and payroll point of view is the extension of the Coronavirus Job Retention Scheme, otherwise known as the furlough scheme. The scheme was due to come to an end at the end of April 2021, but it will now run until the end of September 2021.
Employees will still receive 80% of their salary for the hours they can’t work due to the pandemic but in July, employers will be asked to contribute 10% and in August and September they will be asked for 20%.
More grants for the self-employed
The Self-Employed Income Support Scheme will also be extended until September with two further grants confirmed. Newly self-employed who submitted a tax return for the 2019/2020 year will now be able to apply for a grant. The 4th grant covers the period of February to April and will pay 80% of average profits but the 5th grant will depend on how much income has been lost. If it is more than 30% of profits, then 80% can be claimed but if less than 30% has been lost then only 30% of average profits will be paid.
National Living Wage
As we have previously mentioned, the Chancellor confirmed the National Living Wage will increase from April 2021 and because the age threshold is lowering, more people will qualify for the higher rate of £8.91p.h.
Other business support
The Chancellor also announced a number of other initiatives to support business and jobs as companies reopen and the economy begins to recover.
Restart Grants will be available from April with non-essential retail businesses able to apply for up to £6,000 and hospitality and leisure businesses who will be reopening later will receive up to £18,000. Additional recovery loans will also be available.
The Business Rate holiday is extended until the end of June when a 2/3 discount will be applied until the end of the year.
The reduced VAT rate of 5% for hospitality businesses will remain in place until the end of September and will then increase to 12.5% for six months; not returning to the full 20% rate until April 2022.
Income tax
Although there won’t be an increase in tax and NI rates, the Chancellor did announce that both the personal allowance and higher rate threshold will be frozen from next year until 2026. This does mean that people will pay more tax in future years that they would have done if the allowances were allowed to increase.
If you need any help with any of the budget announcements – especially around how the extension of the furlough scheme will affect your payroll or if you think the time has come to ask someone to look after your payroll for you – then just get in touch and we can help.