Budget 2021: What employers need to know
In his Budget on Wednesday 3 March – probably one of the most eagerly awaited in many years – Chancellor Rishi Sunak stood before the House of Commons to outline the government’s spending plans for the year ahead. Despite the government’s towering debt – a result of its heavy borrowing in the past year – he insisted that he would continue to do “whatever it takes” to keep people in jobs and businesses afloat, both while restrictions remain in place and as the country begins its phased exit from lockdown.
As such, he announced a further £65bn of support for struggling businesses and their employees.
Worker support extended
Firstly, the Chancellor announced that the furlough scheme, which pays 80% of employees’ wages for hours not worked, will be extended until 30 September to ensure cover during the transition out of lockdown. Although the amount employees receive will not change, employers will be asked to make a contribution as businesses reopen, starting with 10% in July and rising to 20% in August and September.
Secondly, the Self-Employment Support Scheme (SEISS) was also extended with two more grants covering the periods between February and April, and between May and July. However, due to persistent criticism that too many self-employed people have fallen between cracks in the eligibility criteria for previous grants, Mr Sunak also expanded access to the scheme. Now, any self-employed person who has filed a tax return for the 2020-21 financial year will be eligible for support – an additional 600,000 people, he said.
However, as the UK comes out of lockdown, the SEISS grant will be tailored to those who need it the most. All eligible applicants will receive the full grant – 80% of average trading profits across the three-month period – for February to April, but only those who have seen their trading profits decrease by 30% or more will receive this amount for May to July. All other applicants will receive a grant worth 30% of average trading profits.
Training and apprenticeships receive a boost
The Chancellor also announced further funding to support traineeships and apprenticeships as part of the Kickstart Scheme, doubling the incentive payment per apprenticeship to £3,000 (irrespective of age) and tripling the number of traineeship placements for young people with a £126 million boost.
New business support funding
With current government grant and loan schemes due to end on 31 March, the Chancellor announced two new support programmes to help businesses survive and recover. The first will be a new grant scheme for April, which again will be tailored to the amount of support businesses will need. Non-essential retail will open first, and so these businesses will be eligible for grants of up to £6,000 per premises. Hospitality and leisure businesses, which have suffered more and will be closed for longer, can apply for grants totalling up to £18,000.
Secondly, a new Recovery Loan Scheme will enable businesses of all sizes to access loan finance from £25,000 up to £10m. The government will offer lenders an 80% guarantee on these loans.
Mr Sunak also confirmed that the 100% business rates holiday for eligible retail, hospitality and leisure businesses will be extended until June, with a two-thirds discount for the remaining nine months of the financial year. And the reduced VAT rate of 5% for the hospitality and tourism sector will now end in September, with an interim 12.5% reduced rate applying until April 2021.
Expert employment lawyers
For specialist advice on how the Budget announcements could impact your business, please get in touch with our Employment Law expert, Ahmet Ozcan, at email@example.com.