Rishi Sunak has delivered the Government’s Budget today, and much of the financial support that is available to businesses has either been extended or revamped.
Coronavirus Job Retention Scheme (CJRS) extension
The CJRS has been extended until the end of September 2021. There will be no change to the terms of the CJRS for employees on furlough leave, and they will continue to receive 80% of their usual salary until the end of September 2021 for any hours not worked.
Employer contributions will be re-introduced as follows:
- A 10% contribution in July 2021; and
- A 20% contribution in August & September 2021.
As it stands, you can only claim through the CJRS for periods ending on or before 30 April 2021 for those employees who were employed as at 30 October 2020 and in respect of whom you made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020. You do not need to have claimed for an employee before 30 October to be able to use the CJRS now.
However, for periods starting on or after 1 May 2021, you will also be able to claim for employees who were employed as at 2 March 2021, as long as you have made a PAYE RTI submission to HMRC between 31 October 2020 and 2 March 2021. The Government has indicated that further information as to how you should calculate your claims for periods starting on or after 1 May 2021 will be provided in due course.
CJRS – tips for employers
If you use the CJRS you must ensure that you have a written furlough agreement in place with each furloughed employee, and you must also keep written records of the actual hours worked where employees are flexibly furloughed. We would recommend that you check whether any furlough agreements you currently have in place need updating in light of the CJRS extension.
We are currently advising on a lot of instances where employees are refusing to return to work from furlough, as businesses make plans to re-open or workflow picks up. Requiring an employee to return to work is a reasonable management instruction from the employer which, unless there are disability or dependent care considerations to take into account, the employer can take steps to enforce.
It is also worth highlighting that furloughed employees can undertake training and, subject to their hourly rate meeting the applicable National Minimum Wage rate, their furlough pay does not need to be enhanced. This is a good time to consider any training needs your employees may have and make plans to deliver training to them whilst your they are furloughed.
Finally, if you are planning redundancies, it remains the position that employers cannot make claims under the CJRS where employees are serving their notice periods.
The CG team are of course on hand to assist you with all of your furlough queries and training needs so please don’t hesitate to get in touch.
It has been clear from the outset that HMRC would be taking a hard line with fraudulent claims and this underlines the importance of accurate record keeping. There is already a system in place to facilitate fraud reporting to HMRC and we have recently seen details of employer’s CJRS claims being published online.
However, today the Chancellor went further and announced £100 million for a new Taxpayer Protection Taskforce to crack-down on COVID fraudsters who have exploited UK Government support schemes, which will include the CJRS.
Business Cash Grants
The current grants offered to businesses will come to an end in March as planned. There will, however, be a new ‘Restart Grant’ from April, to help re-open those businesses required to close due to the COVID-19 pandemic.
Non-essential retail businesses will receive one-off grants of up to £6,000 per premises, whilst hospitality, leisure, personal care, accommodation and gym businesses will be eligible for a grant of up to £18,000 per premises.
Business Loans – Recovery Loan Scheme
The Chancellor announced that Bounce Back and CBILS loans for businesses would be replaced by a Recovery Loan Scheme which will allow businesses of all sizes to borrow between £25,000 and £10 million until the end of 2021, with the Government guaranteeing 80% of the finance to the lender. Businesses will be eligible to apply even if they have already received support under the existing COVID-19 Government-backed schemes.
Business Rates Holidays
The Government’s £10billion business rates tax cut for retail, hospitality and leisure sector businesses will continue until the end of the June at 100% discount. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021, or £105,000 per business for other eligible properties.
Extension to VAT Reduction and VAT Deferral New Payment Scheme
The reduced rate of 5% VAT for the hospitality and tourism sectors has been extended to the end of September 2021, and it will then be set at 12.5% until April 2022.
Any business that took advantage of the original VAT deferral on VAT returns from 20 March through to the end of June 2020 can now opt to use the VAT Deferral New Payment Scheme to pay that deferred VAT in up to eleven equal payments from March 2021, rather than one larger payment due by 31 March 2021, as originally announced
All of these measures will be welcome news for those businesses in the hardest hit sectors of the economy.
National Living Wage
The National Living Wage will be increased from £8.72 to £8.91 and this will be applicable to any employees or workers aged 23 or over from April 2021. This is an important change for employers to note as currently only those employees or workers aged 25 or over are eligible for National Living Wage.
We would recommend you audit your payroll now to identify those employees or workers who will be aged 23 or over on 1 April 2021, and as such who will be entitled to receive the National Living Wage.
National Minimum Wage
The National Minimum Wage has also been increased with effect from April 2021, as set out below:
|Age||National Minimum Wage|
|21 to 22||£8.36|
|18 to 20||£6.56|
Statutory Sick Pay
Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks of eligible Statutory Sick pay costs per employee from the Government. This scheme extension is intended to provide support to employers who are experiencing high levels of sickness absence due to COVID-19.
The Chancellor announced an extension to the apprenticeship hiring incentive in England to September 2021.The payment for hiring new apprentices is being doubled to £3,000 per new hire, regardless of the age of the apprentice.
Apprentices enjoy special protection at common law and you therefore need to ensure that you have a robust apprenticeship agreement in place, as opposed to your organisation’s standard employment contract. Please note that this is completely separate to the contractual arrangement that is in place with an apprentice’s training provider.
We would recommend that you check the employment contract that you have in place with your apprentices, and we can assist with drafting apprentice agreements if you need us to.
Flexi-Job Apprenticeships and Traineeships
£7 million will be funding a new ‘flexi-job’ apprenticeship programme in England. This programme will enable apprentices to work with a number of employers in one sector.
The Chancellor also announced an additional £126 million for 40,000 more traineeships in England, to fund high quality work placements and training for 16-24 year old’s in the 2021/22 academic year.
We anticipate further details as to how employers can access this funding will be published in due course.
This scheme provides funding to create new job placements for 16-24-year-old’s who are in receipt of Universal Credit, and who are therefore perceived to be at risk of long term unemployment. Employers of all sizes can apply for funding that covers the following:
- 100% of the National Minimum Wage (or the National Living Wage depending on the age of the participant) for 25 hours per week for a total of 6 months;
- Associated employer National Insurance contributions; and
- Employer minimum automatic enrolment contributions.
Employers can spread the start date of the job placements up until the end of December 2021.
Whilst this scheme has been running for some time, the Chancellor confirmed its continuation today and employers may want to start looking into this scheme in more detail. Further information is available here: https://www.gov.uk/government/collections/kickstart-scheme. Help to Grow scheme
The Chancellor also announced a new Help to Grow scheme aimed at SMEs which offers support to businesses to develop their leadership team and their use of technology. Further information is available here: https://helptogrow.campaign.gov.uk.
The Queen’s Platinum Jubilee – 2-4 June 2022
Finally, the Budget also included provision for £28 million to fund the Queen’s Platinum Jubilee celebrations in 2022, delivering a major celebration for the UK!
The Culture Secretary had previously announced that the May bank holiday weekend will be moved to Thursday 2 June 2022 and an additional bank holiday on Friday 3 June 2022 will see a 4-day weekend to celebrate.
Whether this additional bank holiday will have to be given to employees as an additional day’s holiday, or whether you can take it out of an employee’s existing entitlement for the holiday year, will depend on the wording in your employment contract. We can of course advise further in this regard.
As always, the CG team are here to assist you throughout this time, please feel free to get in touch with any questions.