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Thursday, 04 March 2021 20:37

Budget Check

We don’t usually respond to the budget on this blog, preferring instead to leave that sort of commentary to the accountants and financial planners. On this occasion however, with the budget playing such a significant part in post Covid economic recovery, and having such dramatic effect on jobs and employment, we thought a few lines were in order.

As is customary, opposition leaders and analysts took the opportunity to lambast the Chancellor for devising a budget that, in their opinion, failed to deliver a satisfactory economic stimulus to help the country bounce back from the pandemic. But to be fair, we didn’t think it was too bad.

Backed by optimistic statistics about the future of the economy from the Office for Budget Responsibility, Mr Sunak resisted calls to immediately raise personal taxes and cut spending to repay the unparalleled public borrowing that Covid has forced upon the Government. Instead, the Chancellor has maintained many of his costly job protection measures and aimed a delayed taxation increase largely at super-profitable businesses. We would still like to see some measures that capture appropriate tax revenue from the likes of Amazon and Google.

Here are the main points of note:

  • The furlough scheme will continue until September 2021. Employees will continue to receive at least 80% of their gross pay and this can still be topped up by employers who must also continue to cover the cost of NI and pension contributions.

  • Additionally, eligibility for the furlough scheme increases. From 1 May 2021, staff who were employed from 2 March can be furloughed. Currently the cut-off date is 30 October. Also, you’ll be able to use the scheme even if you haven’t used it previously.

  • In July, furlough grants will reduce to 70% of wages and to 60% of wages in August and September. Employees must still be paid at least 80% of normal pay so the 10% & 20% reduction in grants must be covered by employers if they wish to maintain staff on the scheme.

  • We see this “tapering off” of the grant as a signal to employers that it’s time to take stock and make a call on the tough decisions regarding employees that the furlough scheme has enabled them to delay.

  • Self employed grants will also continue. There will be a fourth grant covering February to April (at 80% of average profits). There will also be a fifth and final self-employed grant for May onward. Some previously excluded self-employed workers will be able to claim the 4th and 5th grants so long as they submitted their 2019/20 tax return before midnight 2nd March.

  • The National Living Wage sees a modest increase to £8.91 from April 2021. Remember this is the minimum hourly rate for those aged 25 and over. There were also modest increases for the National Minimum Wage.

  • Personal Allowances will still increase to £12,570 for the 21/22 tax year with the higher rate band will going up to £50,270. However, these will then be frozen until April 2026. This is the closest thing to a tax increase that the chancellor imposed as 100% of any pay increases that employees are awarded will be taxed in some form.

  • The Employer cash bonus incentive scheme for taking on apprentices will rise to £3K per apprentice regardless of the apprentice’s age and the scheme is extended by 6 months to September 21.

Another point of note was the announcement of the “Help to Grow Scheme”. This is a 12 week, partially funded education programme, to support senior managers of small and medium sized businesses to boost their business’s performance, resilience, and long-term growth.

Whilst the training will be delivered by business schools and universities, its introduction does endorse the benefits of the Leadership and Management Training that we have been delivering for years. Clearly the Government recognises that to drive an effective economic recovery, businesses need to have senior decision-makers who are capable of leading and who understand the consequences of their actions and decisions.

Our own Accredited Training Course schedule is in full swing and 100% funding is still available for businesses in the Worcestershire, Swindon & Wiltshire, Bristol & West of England and Heart of the South West LEP areas. Take a look at the details on our website or contact us for further information on 01452 331331 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Read 196 times Last modified on Thursday, 04 March 2021 21:44

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