furlough Archives - KM Chartered Accountants

Every April brings changes in Employment Law – here are the changes we are aware of.

Coronavirus Job Retention Scheme

Last extended to 31 April 2021, the Chancellor announced a further extension during the Spring Budget, to 30 September 2021.

The UK Government will continue to pay 80% of employees’ wages for unworked hours, with the employer picking up the costs of NICs and employer pension contributions, until the end of June 2021. In July the employer will be required to contribute 10% to wages for unworked hours and in August and September that contribution increases to 20%. The employer remains responsible for the full costs of wages for worked hours.

National Living Wage/National Minimum Wage

This year 1 April will see a drop in the age at which employees become entitled to the National Living Wage from 25 to 23 years as well as the annual increase in rates. The new rates will be:-

NLW will increase from £8.72 per hour to £8.91 per hour (for those aged 23 and over)
NMW 21 to 22 year old rate will increase from £8.20 per hour to £8.36 per hour
NMW 18 to 20 year old rate will increase from £6.45 per hour to £6.56 per hour
NMW 16 to 17 year old rate will increase from £4.55 per hour to £4.62 per hour
NMW apprentice rate for those aged under 19 or in their first year of an apprenticeship will increase from £4.15 per hour to £4.30 per hour

Statutory Benefits

Statutory sick pay will increase from £95.85 to £96.35 per week. Statutory maternity, paternity, shared parental and adoption pay increases from £151.20 to £151.97 per week.

Family leave pay, including maternity pay – will increase from £151.20 to £151.97 per week

Brexit

Post-Brexit employment changes not likely until 30 June 2021 – employers should still ask for passport, national identity card etc.
EU citizens in the UK by 31 December 2020 can apply to the EU Settlement Scheme to obtain permission to stay after 30 June 2021 – you cannot insist on production of Settlement Scheme status before 30 June 2021
Entry to the UK to work will be authorised in accordance with a points based system under the ‘Skilled Worker Route’ . Employers must become a sponsor.

Other changes expected include:

Workers to be given right to request a more stable contract after 26 weeks of service.
New legislation to carry out employment status tests
New law preventing tip deductions
New law offering increased redundancy protection to mothers returning from maternity leave

The content of this webpage is for information only and is not intended to be construed as legal advice and should not be treated as a substitute for specific advice.

A quick round up of the main Budget announcements.

Coronavirus Support

Furlough extended to September 80% of salary for hours not worked, workers must still be paid their full salary for hours they are working.

From July employers will be asked to contribute first 10% in July and then 20% in August of the employees’ furlough payment as well as the employers’ share of national insurance and pension contributions.

SEISS

Two additional grants have been announced to cover February 2021 onwards.

Anyone whose turnover has fallen by less than 30% will not receive the full 80% grant.

Anyone who was not self-employed before April 2019 and therefore did not qualify for the earlier grants can now qualify for grants 4 & 5 on the back of the submitted 2019/2020 tax return figures provided the return was submitted by midnight 3 March 2021.

Loans and Grants

A new round of Recovery Loans is also being made available with an 80% Government backed guarantee.

Hospitality, retail, and leisure industry specifics.

Also Restart grants of up to £6,000 for shops and £18,000 for leisure and hospitality.

There is three-month full holiday from business rates for those ailing sectors and an 2/3rds holiday for the remaining nine months of 2021/22.

5% VAT rate on food and accommodation to stay until September after which it will rise to 12.5% until at least April 2022.

Income Tax Rates and Allowances

Many personal reliefs, including personal allowance, CGT exemption and pension allowances are frozen at their 2021/22 rates until 2026.

Stamp Duty Land Tax

The temporary SDLT nil rate band of £500K BRB is extended to 30 June and to £250K to end of Sept. Usual level from 1 Oct.

Company Taxation

April 2023 will see a return to two rates of corporation tax. Companies with profits of less than £50,000 will pay 19% and those with profits over £250,000 will pay 25%. In between these two rates is an effective hybrid rate. Close Investment Holding Companies will be charged at the higher rate irrespective of profit levels.

If you own shares in a company which doesn’t actively trade speak to us now.

A new temporary Super Deduction will apply to capital allowance claims from April 2021 – 31 March 2023. This will give the business a deduction of 130% of capital expenditure costs on most new plant and machinery. Long life assets which would usually attract the 6% rate qualify for a 50% first year allowance. Annual Investment Allowance is still in place for the first £1M expenditure before1 January 2022.

Disposal proceeds will be adjusted where a sale of the asset is made, and if you do sell the asset timing may be important to avoid a balancing charge at the new higher rates in 2023.

Business Losses

Any business, whether company, sole trade or partnership can carry that loss back to offset against the earlier three years profits. For companies this applies to losses arising between April 2020 and March 2022, and is capped at £2M, and for unincorporated business the accounting perioded ended in 2021 and 2022 tax years. After this loss carry back will revert to the current one year.

If you’d like to speak with one of our team about anything in the Budget please call the office number.

Tag: furlough

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