Chancellor Rishi Sunak delivered his 2021 budget on Wednesday 3rd March, setting out the governments tax and spending plans for the year ahead, highlighting how the government will continue to support businesses through the ongoing pandemic conditions.
We have rounded up the key items which will affect payroll for UK businesses.
Furlough to be extended.
The governments furlough support is set to be extended through to the end of September, continuing to pay 80% of employees’ wages. Employers contribution will remain at 10% through July and increase to 20% for August and September.
Ensure you make a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021 to ensure you can claim for employees who were employed on 2 March 2021 from periods starting on, or after, 1 May 2021.
Changes to thresholds.
Minimum wage is set to increase to £8.91 an hour from April.
Personal Allowance and Higher Rate Threshold
The income tax Personal Allowance will rise as planned to £12,570 from April 2021 and will remain at this level until April 2026, across the UK. The income tax HRT will rise as planned to £50,270 from April 2021 and will remain at this level until April 2026. The HRT for non-savings and non-dividend income will apply to taxpayers in England, Wales, and Northern Ireland.
National Insurance Contributions
As previously announced, and legislated for in February 2021, in 2021-22 NICs thresholds will rise with CPI, bringing the NICs Primary Threshold/Lower Profits Limit to £9,568 and the Upper Earnings Limit (UEL)/Upper Profits Limit (UPL) to £50,270, in line with the income tax HRT. The UEL/UPL will then remain aligned with the HRT at £50,270 until April 2026.
The pensions Lifetime Allowance will remain as is, at £1,073,100, until April 2026.
Exemptions for Covid-19 tests.
Retrospective income tax exemptions for employer payments to reimburse the costs of relevant coronavirus antigen tests will be extended for the tax years 2020 and 2021.
Statutory Sick Pay (SSP) Rebate Scheme.
For SMEs, the SSP rebate scheme will remain in place as announced in last year’s March budget. The scheme, intended to support employers during Covid-19 where levels of sickness absence were high, allows for SME employers to reclaim up to two weeks of eligible SSP costs per employee.
High quality traineeships for young people
The government will provide an additional £126 million in England for high quality work placements and training for 16–24-year-olds in the 2021/22 academic year.
Employers who provide trainees with work experience will continue to be funded at a rate of £1,000 per trainee.
Payments for employers who hire new apprentices.
The government will extend and increase the payments made to employers in England who hire new apprentices.
Employers who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive £3,000 per new hire, compared with £1,500 per new apprentice hire (or £2,000 for those aged 24 and under) under the previous scheme.
This is in addition to the existing £1,000 payment the government provides for all new 16–18-year-old apprentices and those aged under 25 with an Education, Health and Care Plan, where that applies.
Easement for employer-provided cycle exemptions.
A time-limited easement to employer-provided cycle exemption to conditions laid out in the Cycle to Work Scheme is will be available to employees who have joined a scheme and provided with cycling equipment on or before 20 December 2020.
The easement disapplies the condition that employer-provided equipment must be used mainly for journeys to, from, or during work and will be in place until 5 April 2022.
For more information on the budget announcements, you can review the Government’s published document here.
If you require further insights or advice on these legislative changes, contact Zalaris.