Budget 2021 Extension Of Coronavirus Job Retention Scheme

Chancellor Rishi Sunak unveiled the 2021 Budget in the House of Commons yesterday. The announcements included an extension to the Coronavirus Job Retention Scheme, two further payments under the Coronavirus Self Employed Income Support Scheme and increases to the threshold for National Minimum Wage, the personal tax allowance and the higher rate tax threshold.

Furlough To Be Extended Until The End Of September

The Coronavirus Job Retention Scheme (CJRS) had been due to close at the end of April 2021. However, the Chancellor yesterday announced that the CJRS will continue until the end of September. This will give welcome certainty to employers who can now build their post lockdown re-start plans on that basis. The Government will continue paying 80% of employees’ wages for hours they don’t work under the CJRS until June, up to a maximum of £2,500 per month.

Employers will then be expected to contribute 10% towards the wage payments in July, increasing to 20% throughout August and September. Employers are already required to pay pension and National Insurance contributions, and this will not change. No changes to the eligibility requirements for the CJRS were announced and these will remain the same. See our update of the extension of the Coronavirus job retention scheme from November 2020 here.

Support For The Self-Employed

The Chancellor also announced that there will be two further payments for self-employed individuals unable to work because of pandemic. These will be the fourth and fifth payments to be made under the Coronavirus Self Employed Income Support Scheme. From next month, claims can be made for the fourth grant. It will cover the three-month period from February until the end of April. As with previous grants, it is worth up to 80% of trading profits, averaged over three months, up to £7,500 in total.

The fifth grant will cover May until the end of September, but the amount available will depend on the loss of income during those months. Self-employed individuals whose turnover has fallen by at least 30% can still apply for a grant for up to 80% of profits, up to a value of £7,500 in total. Those whose income has fallen by less than that can apply for up to 30% of trading profits capped at £2,850. Claims for the fifth grant will open in July. Previous claimants will be able to apply for these grants, but they will also be available to an estimated 600,000 people who missed out on earlier support because they could not demonstrate their self-employed status on their 2018/2019 tax return. Those who have completed tax returns for 2019/2020 will now qualify for these new payments, provided they filed their tax returns by midnight on the 2 March 2021.

Tax Thresholds And The National Living Wage

Other measures announced include the increase of the income tax thresholds, these will increase from April to £12,570 for the 20% tax bracket, and £50,270 for the 40% bracket. However, these brackets will then be frozen for five years, meaning that people in receipt of pay rises until April 2026 may find themselves in a new tax bracket paying higher tax on some of their earnings as a result.

As anticipated, the national living wage is also set to increase to £8.91 per hour on the 1 April and for the first time will include those aged 23 and over, workers who previously fell under the lower wage bracket.

The new National Minimum Wage rates from 1 April 2021 in full will be:

Age 23 or over National Living Wage £8.91 (up 2.2% from £8.72).

Age 21 to 22 National Minimum Wage: £8.36 (up 2% from £8.20).

Age 18 to 20 National Minimum Wage: £6.56 (up 1.7% from £6.45).

Age 16 to 17 National Minimum Wage: £4.62 (up 1.5% from £4.55).

Apprentice rate: £4.30 (up 3.6% from £4.15).

Accommodation offset £8.36 per week (up 2% from £8.20).

If you have any queries in relation to these or any other employment law matters don’t hesitate to get in touch with the Geldards Employment team who are always on hand to give further advice.

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