The Chancellor, Rishi Sunak, has set out in his Budget announcement to the House of Commons the Government’s ‘Three Part Plan’ to protect jobs and livelihoods.
In this article, Michelle Chance (Partner) and Choy Lau (Senior Associate) set out the key take away points for employers:
Extension of the Furlough Scheme
It has been confirmed that the furlough scheme will be extended to the end of September 2021. This means that the furlough scheme will run for 18 months (if not extended further).
The Chancellor confirmed that there would be no change for employees benefiting from the scheme. Employees that are furloughed will continue to be paid 80% of their salary for the time that they are not able to work.
However, employers will be required to contribute to the cost of the furlough payments from July; paying 10% of salary in July and 20% in August and September (reducing the government’s contribution to 70% and 60% respectively). This will be an additional cost to employers on top of paying tax, National Insurance Contributions, and pension contributions.
Extended help for self employed
The Self Employed Income Support Scheme will also be extended until the end of September 2021 and the eligibility requirements have been amended to enable more self-employed people to benefit from the scheme.
Self-employed individuals that have filed their tax return before midnight on 2 March 2021 will be eligible to claim under the scheme. The government estimates that this will enable an additional 600,000 self-employed people to benefit from the scheme.
The scheme will involve two new grants. The fourth grant will cover February – April 2021; allowing self-employed individuals to claim 80% of their average trading profits for 3 months. The fifth grant, from May – September 2021, will vary depending on how much reduction in turnover a self-employed person has suffered. If their turnover has fallen by less than 30%, the grant is reduced to 30% of average trading profits.
Increase in the National Living Wage
From April 2021, the National Living Wage will be applicable to all workers that are 23 years old and over (previously 25) and will be increased to £8.91 per hour (previously £8.72). This increase equates to a £350 annual pay rise for a full-time worker earning the National Living Wage.
The National Minimum Wage rates from April 2021 will be:
Age
21 and 22 years £8.36
18 to 20 years £6.56
Under 18 years £4.62
VAT for Hospitality and Tourism industries
The VAT rate of 5% for hospitality, accommodation and attractions across the UK will remain until the end of September. There will then be an increase to 12.5% VAT until the end of March 2022, with the rate returning to 20% in April 2022.
Restart Grants and Recovery Loan Scheme
To assist businesses re-opening in the coming months, the government has announced grants and loans that will be made available to businesses.
The government has pledged to make available £5 billion for new ‘Restart Grants’. For non-essential retail, that will be the first to reopen from April, these grants will be £6,000 per premises. For hospitality, leisure, personal care and gyms that have been the hardest hit by lockdown restrictions, the grant will be £18,000 per premises.
In addition, any business, of any size, will be able to apply for a ‘Recovery Loan’ of between £25,000 – £10 million. These loans are guaranteed by the government up to 80%.
Support for domestic abuse
It has been widely acknowledged that there has been an increase in domestic abuse since lockdown restrictions first began in March 2019. The government has previously called on employers to put in place measures to identify and support victims of domestic abuse. It is, therefore, welcome news to learn that the government will provide an additional £19 million for domestic abuse programmes. Whilst this is not going to employers directly, it will greatly assist employees that are victims of domestic abuse.
