There was much to welcome in last month’s Budget for business communities across the UK. The Chancellor listened and acted on many of the Chamber network calls for immediate support to help companies reach the finishing line of what has become a gruelling marathon and to begin their road to recovery.
At the time of writing this we are still waiting on the detail that will come on Tax Day, March 23, but it provided companies with some reassurance and has given us all the opportunity to plan for restarting and rebuilding for a better future.
There were some big wins for the Chamber network in the announcement. We have tirelessly campaigned for a number of initiatives including the extension of the Coronavirus Job Retention Scheme, which we argued needed to be in place until a full reopening of the economy was possible, to increasing cash grant support and extending business rates relief. These and many more were all successfully announced in the Chancellor’s Budget albeit in some cases not to the extent I would have liked to have seen.
A couple of surprises were also thrown into the mix. A super-deduction investment incentive, where companies can claim 130% on qualifying capital expenditure for the next two years, and a Help to Grow scheme encouraging businesses to develop their leadership, digital skills and capabilities were announced. They are bold and much needed incentives and it’s clear from this that the Government wants companies to do their share of rebuilding through increased investment and greater productivity.
Despite the widening of the self-employment income support scheme (SEISS), it was disappointing to see that the Chancellor didn’t take the opportunity to plug the gap for those businesses and individuals who have, through no fault of their own, been unable to access any palpable government support. As previously stated, I felt the Budget would have been an opportune moment to address this.
Whilst there is, of course, a recognition that our unprecedented levels of debt will need to be repaid and no business will relish the prospect of paying higher rates of Corporation Tax in the future, deferring the increase to April 2023 has allowed for companies to prepare a little more than usual. Small businesses will also welcome the return to a small profits rate, which will remain at 19%.
All in all, the Budget appears to have struck the right balance between critical business support and incentives to encourage businesses to boost the economy through increased activity and investment in innovation.
During the Budget, the Chancellor announced the Coronavirus Job Retention Scheme (CJRS) was to be extended until September 30, 2021. The Government has released guidance for extended CJRS, and further updates will undoubtedly be issued as the roadmap progresses.
There is no change for employees who will continue to receive 80% of their wages, subject to the cap. It is, however, important to note that the scheme will not operate in the same way from July when employers must make contributions to employees’ pay. The overall furlough payment will continue at 80%; with the option for employers to top up employees’ pay. However, from July 1, 2021, employers will contribute 10% and 70% will be paid by the government through the furlough grant, and from August 1 the employer contribution will rise to 20% with 60% being paid by the Government through the furlough grant.
Employees may be placed on full furlough or flexible furlough and employers can agree working arrangements with the employees as previously in the CJRS. Flexible furlough arrangements may continue, this is where employees work some hours. Alternatively, full furlough may apply. Employees can be on any type of employment contract. Employees who are shielding or need to stay at home with someone who is shielding can be furloughed unless they can work from home.
HMRC guidance outlines employers can, not must, furlough employees if they are affected by coronavirus or any other conditions. Other conditions refer to if the employee is unable to work from home or are working reduced hours because:
- The employee is clinically extremely vulnerable or at the highest risk of severe illness from coronavirus and following public health advice.
- Has caring responsibilities resulting from coronavirus. Therefore, parents and guardians who are caring for children who are at home as a result of school and childcare facilities closing or caring for vulnerable people in their household.
Employers must continue to pay National Insurance and pension contributions. The official guidance states businesses will need to:
- designate affected employees as ‘furloughed workers’, agree and notify employees in writing of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
- submit information to HMRC about the employees that have been furloughed and their earnings through the online portal.
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