On the 3rd March 2021, the Chancellor announced an extension of the coronavirus job retention scheme (furlough) until September 2021. The length of the extension may come as a surprise, especially as the Government’s roadmap suggests that it is hoped that all legal limits on social contact can be removed no earlier than 21 June. However, this extension comes as welcome news.
With the extension, it will mean that the Government will continue to fund 80% of wage costs until the end of June. Then from July, employers will be required to pay 10% of the hours not worked by their employees, with the Government funding changing to 70%. The contribution from employers will further increase from August when the employer contribution will become 20% with the Government’s funding reducing to 60%. This contribution will continue into September until the scheme ends on 30 September. Of course, furlough payments are limited to a set monthly cap.
The aim of the Furlough scheme has always been to protect jobs, and of course, this may not always be possible given the extent of the pandemic. However, for those businesses who may need to consider redundancies, due care and attention should be given as to whether using furlough can mitigate against any redundancies at this time. Whilst employers are not legally compelled to make use of the furlough scheme, when managing a potential redundancy dismissal, a reasonable step in that process would be to give serious consideration to it.
Available data from the Government show that a total of 1.3 million employers have furloughed since the start of the furlough scheme equating to 11.2 million jobs. The accommodation and food services sector having the highest take up rate with 65% of employers using the scheme.
In terms of other areas of support for business announced in the budget include:
- £3,000 will be available to businesses for the appointment of all new apprentices, of any age
- £126 million will be invested to triple the number of new traineeships
- An extension to the business rates holiday until June has been announced for retail, hospitality, and the leisure sector. For the last nine months of the financial year, they will be discounted.
- Bounce back loans will end as planned with a new recovery loan scheme replacing it for which 80% will be guaranteed by the government
- Cash grants for businesses will end in March but a new restart grant will become available to help businesses re–open. For those that can re-open from April (i.e., non-essential retail) they will be able to receive a grant of up to £6,000. For those sectors which must open later and who have been hit the hardest, such as hospitality, pubs, clubs, gyms and hair salons will be able to receive grants of up to £18,000
- The reduced VAT rate of 5% for the hospitality and tourism sector will be extended until 30 September, with an interim rate of 12.5% for a further 6 months, then returning to the normal 20% in April 2022
- Corporation tax rates will increase to 25% from April 2023, but those businesses with profits under £50,000, the corporation tax rate will remain at 19%.
We will bring you further details on these announcements, as the detail behind these schemes are published.
For further support and advice, contact HR Solutions on telephone number 0844 324 5840 or contact us online.