The Chancellor delivered his Budget on 3 March 2021.
As expected, the Chancellor's priorities were to continue to offer support to individuals and businesses affected by the COVID-19 pandemic and to start to repair the damage to the country's finances. None of the mooted wholescale changes to the taxation of pensions and the capital gains tax treatment of share incentives have been made – at least for the coming tax year. We round up the key announcements on employment, incentives and pensions below.
Extension of the furlough scheme
The government's furlough scheme (officially known as the Coronavirus Job Retention Scheme) will be extended until the end of September 2021 but employers will have to start making a greater contribution to wage costs from the start of July. The scheme will continue to operate on a flexible basis so staff may work part-time and be furloughed for the remainder of their usual working hours.
Until 30 June, the government will continue to pay 80 per cent. of wages for hours not worked up to a cap of £2,500 per month. As currently, employers are not expected to make a contribution beyond national insurance and pension contributions due. However, in July, employers must contribute 10 per cent. of wage costs and this will increase to 20 per cent in August and September.
Other COVID-19 related measures
Two other COVID-19 related measures are as follows:
- Statutory sick pay rebate: Small and medium-sized employers may currently reclaim up to two weeks of eligible statutory sick pay costs from the government. The Chancellor has confirmed that this arrangement will continue for the time being. The government will set out steps for closing the scheme "in due course".
- Tax reliefs: the government will extend to the 2021-22 tax year the income tax exemption and national insurance disregard for COVID-19 antigen tests provided by, or reimbursed by, employers and for expenses on home office equipment reimbursed by employers.
Visa routes
Reforms to the immigration system are proposed to make it easier for highly-skilled individuals from around the world to work in the UK. Previous statements suggest this is particularly aimed at fintech and cyber companies. Employers will be particularly interested in the following changes:
- by March 2022, an elite points-based visa will be introduced. Within this route, a fast-track visa will be available for those coming to work for a recognised UK "scale up" business. It seems that a sponsorship licence will not be required although the individual must have a job offer from the relevant business;
- by spring 2022, a new Global Business Mobility visa will be launched to allow overseas businesses to establish a presence or transfer staff to the UK; and
- the immigration sponsorship system will be modernised to make it easier to use; a "delivery roadmap" on this will be published in the summer.
Apprenticeships
Under an existing government scheme, from 1 August 2020 until 31 March 2021 employers receive a payment of £2,000 for each new apprentice they hire aged under 25 and £1500 where the apprentice is aged 25 or over. In an extension to this scheme, for new apprentices hired between 1 April 2021 and 30 September 2021, an employer will receive a payment of £3,000 (regardless of age).
Employers continue to be eligible for a £1,000 payment for all new apprentices aged 16-18 or those aged under 25 who have an Education, Health and Care Plan.
From July 2021 the government will provide funding to help employers set up and expand portable apprenticeships enabling apprentices to work across multiple projects with different employers.
Freezing of tax allowances
The following tax allowances will be frozen at their current levels until April 2026:
- the pensions lifetime allowance of £1,073,100; and
- the capital gains tax Annual Exempt Amount of £12,300 – this may impact participants in employee share plans whose gains fall within the capital gains tax regime.
Enterprise Management Incentive plans
As promised in last year's Budget, the government has now published a Call for Evidence on extending enterprise management incentive plans (EMI) to more companies. Employers and other interested parties are invited to give their views on how EMI currently works and whether it is fulfilling its policy objectives of helping SMEs recruit and retain employees. Responses will help the government decide, among other things, whether to expand the eligibility criteria for EMI.
HMRC has also confirmed that new legislation will ensure that EMI options may be granted up until 5 April 2022 to employees who fail to meet the working time requirement as a result of COVID-19. Options already granted to such employees will also have their tax status protected.
Further information
For more information on any of the Budget announcements, please speak to any of the people whose contact details are given below. A further set of consultations is due to be published on 23 March and so there may be more relevant announcements then.
