Budget 2021: Furlough extended and other measures affecting employers
The Chancellor has delivered his budget and confirmed that the coronavirus job retention scheme will continue until 30 September this year. The scheme, which funds 80% of furloughed employees’ wages (up to a maximum of £2,500 per month), had been due to end on 30 April.
The job retention scheme will continue on its current terms until 30 June, with employers only paying employer National Insurance Contributions and pension contributions for furloughed hours. In July, employers will also have to contribute 10% of wages for furloughed hours, increasing to 20% for August and September.
Other measures affecting employers announced by the Chancellor in the budget include:
- A Restart Grant for businesses in England as they start to re-open. Non-essential retail, who can open first, will be able to apply for a grant of up to £6,000 per premises. Hospitality, accommodation, leisure, personal care and gyms, which are not able to open fully until later, will be able to apply for grants of up to £18,000 per premises
- A new Recovery Loan Scheme – all businesses will be apply for a loan of between £25,000 and £10m, backed by an 80% government guarantee to the lender. This will replace Business Interruption and Bounce Back Loans which cease to be available from the end of March 2020
- The 100% business rate holiday for eligible retail, hospitality and leisure properties will continue until the end of June, followed by a 66% discount until to 31 March 2022. Nurseries will also be eligible
- The 5% VAT rate for hospitality and tourism will continue until 30 September, followed by an interim rate of 12.5% until 31 March 2022
- Corporation tax will increase to 25% from 2023 on profits over £250,000. The rate for small profits under £50,000 will remain at 19%, with relief for businesses with profits under £250,000 so that they pay less than the main rate
- No increase in the rates of Income Tax, National Insurance Contributions and VAT
- The Income Tax Personal Allowance and higher rate tax threshold will increase as planned to 12,570 and £50,270 respectively from April, but will then be frozen until April 2026
- No change to the Pensions Lifetime Allowance which will remain at £1,073,100 until April 2026
- Doubling the incentive to hire apprentices, from £1,500 to £3,000 for new apprentices hired between 1 April 2021 and 30 September 2021
- Visa reforms for highly-skilled migrants, including the introduction of a new elite points-based visa by March 2022
The full budget policy paper can be viewed here
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