Budget 2021: Employment Tax

3 March 2021 / Insight posted in Budget 2021

There were several employment tax measures in today’s Budget, with the most significant of these relating to the government’s continued support for businesses in light of the impact of Coronavirus.

 

Coronavirus Job Retention Scheme extension

The Coronavirus Job Retention Scheme (CJRS) was previously due to end on 30 April 2021, and has now been extended for a further five month period to 30 September 2021.

Throughout the remaining life of the scheme, employees will continue to receive 80% of their current salary for hours not worked, and employers will continue to pay national insurance contributions (NICs) and pension contributions on the amounts employees receive. Employers will be required to make a 10% contribution towards the cost of unworked hours in July 2021, and a 20% contribution in each of August and September 2021.

Moore Kingston Smith comment

This extension may well prove to be a lifeline to businesses and employees across many sectors continuing to struggle with the economic effects of Coronavirus.  It will be absolutely critical for businesses to ensure the accuracy of their claims, as HMRC will increase their efforts to tackle error and fraud.

 

Extension to income tax exemptions for Coronavirus tests and home office expenses

It was announced that employers can continue to provide – or reimburse employees for the cost of – Coronavirus antigen tests without any tax or NIC implications until 5 April 2022.

Similarly, the temporary rules which allow employers to reimburse employees for home office costs (providing certain conditions are met) without tax or NIC implications will be in place until 5 April 2022.

Moore Kingston Smith comment

These extensions are not surprising but are nonetheless welcome given the continued impact Coronavirus is having on traditional office-based working arrangements.

 

Increasing national insurance thresholds

NIC thresholds only increase in line with CPI in 2021/22, with the primary threshold set to increase by £1 to £184 per week, and the upper earnings limit set to increase by £5 to £967 per week.

Moore Kingston Smith comment

This modest increase to thresholds in line with CPI is to be expected at a time when the government was always unlikely to make any bold announcements regarding raising national insurance thresholds.

 

Company vehicles benefit charges

From 6 April 2021, fuel benefit charges and the van benefit charge will increase in line with CPI.

The flat-rate van benefit charge will increase from £3,490 to £3,500; the multiplier for the car fuel benefit will increase from £24,500 to £24,600; and the flat-rate van fuel benefit charge will increase from £666 to £669.

Moore Kingston Smith comment

These increases are not expected to have any significant implications for businesses that provide these benefits. There are no changes to the electric car benefit regime, which remains extremely beneficial.

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