Yesterday’s Budget announcement from Chancellor Rishi Sunak brought some promising news for many employers, employees and organisations across the UK. We’ve summed up some of the key developments that employers need to prepare for going forward.
The Chancellor announced that the Coronavirus Job Retention Scheme will continue until the end of September, providing job security for the 4.7 million individuals currently on furlough, as well as crucial support for businesses who have suffered significant financial losses since the UK’s outbreak of coronavirus in March 2020.
However, there will be some changes to the structure of the scheme. While the government will continue to pay out 80% of affected employees’ salaries (up to a maximum salary of £2500 per month), from July employers will be required to pay at least 10% of these wages. In August and September, this will increase to 20%. Employers will also have to keep covering the costs of national insurance and pension contributions for their staff.
On Budget Day we also learned that the Bounce Back Loan and Coronavirus Business Interruption Loans Scheme (CBILS) introduced to support businesses who have suffered financially during the pandemic will be replaced by a new Recovery Loans Scheme from 6 April 2021.
The new scheme will allow businesses to borrow sums of between £25,000 and £10 million and the government has pledged to provide an 80% guarantee to encourage banks to keep lending to struggling companies.
From 1 April 2021, the national minimum wage will increase by a rate of 2.2%, meaning that employers will need to start paying out a minimum of £8.91 per hour to workers (aged 23 and over) from April.
Many self-employed workers have felt left out of government-backed wage support over the past 12 months, however the introduction of two further Self-Employed Income Support Schemes (SEISS) will mean that 600,000 self-employed will be able to access vital finance until September 2021.
The fourth SEISS grant will enable self-employed workers to claim 80% of their average trading profits over 3 months, which will be capped at a maximum of £7,500. This grant will cover tax returns from 2019-2020.
A fifth and final SEISS grant will be open for claims from July, though this will be means-tested based on how much a self-employed worker’s turnover has reduced in the tax year April 2020-2021. Further information on this grant can be found here.
While we have learned that national unemployment is set to hit 6.5% next year, these new measures are largely reassuring and will hopefully go a long way in ameliorating job and business security over the next year.
If you are an employer, it is vital that you take measures to implement these new requirements into your business as soon as possible. If you need advice or clarity on any of the new processes announced in yesterday’s Budget, please feel free to get in touch with our Employment Team at firstname.lastname@example.org.