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United Kingdom: Budget 2021 Summary – Payroll

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published on 29 March 2021 | reading time approx. 3 minutes

 

 

1. Extension of Coronavirus Job Retention Scheme

The Coronavirus job retention scheme has been extended until 30th September 2021 which was due to end on 30th April 2021.

 
Governments contribution will be 80 per cent of employees’ usual salary for hours not worked and employers are only required to contribute employers class 1 national insurance and minimum auto enrolment pension contributions. The governments contributions will slowly reduce to 60 per cent as shown in the table below:
 

Employers can only claim in respect of employees who were on payroll on 2nd March 2021. This means, the employers must have made an RTI submission to HMRC between 20th March 2020 and 2nd March 2021.


2. Continuation of Statutory Sick Pay (SSP) Reclaim Scheme

The SSP Reclaim will continue to be made available to eligible businesses until further announcements.

 

The scheme allows the eligible mid-sized employers with less than 250 employees to claim back up to two weeks SSP per employee from government for sickness related to coronavirus.

 

3. Home-Office Equipment Expense

Legislation which was introduced in 2020 to make reimbursement of home-office equipment cost, tax and NI free, will continue to cover tax year 2021/2022.

 

Home-office equipment expenses’ are expenses incurred by the employee in respect of equipment obtained for the sole purpose of enabling the employee to work from home during the Covid-19 (coronavirus) pandemic. There must be no significant private use to claim the exemption.

 

4. Tax & National Insurance (NI) implications of Coronavirus tests through Employer

   

5. Car & Van Benefits

 

As per the announcement in Budget 2020 last year, which will now become part of legislation in due course, Van benefit charge will be reduced to zero for 2021/2022 tax year onwards for van’s producing zero carbon emissions.

 

6. Cycle to work Scheme

To be eligible for schemes, the cycles and the equipment’s must be used for qualifying journeys i.e. for work only. Due to lockdown and Covid-19, government has eased the conditions as follows:

 

  • Employees who joined the scheme before 20th December 2020: The restrictions on personal use of cycles’ and safety equipment’s obtained through will not apply until after 5th April 2022.
  • Employees who joined the scheme on or after 21st December 2020: Still needs to meet all the qualifying conditions for exemption.

 

7. Salary Sacrifice Arrangements  & Statutory Parental Bereavement Pay (SPBP)

On 6 April 2020, a new statutory payment, SPBP, was introduced through the Parental Bereavement (Leave and Pay) Act 2018. The SPBP is payable to employed parents or partners of a parent who loses a child (biological, adoptive or born to a surrogate) under the age of 18 or suffers a stillbirth from 24 weeks.

 

As this was introduced in 2020, it was not part of original Optional Remuneration Arrangements legislation introduced in 2017 which removed the income tax and NIC advantages for many employment-related benefits provided via salary sacrifice schemes. In certain cases, the old rules were permitted to continue until 5 April 2021 provided there is no variation in the employees’ employment contract.

 

Backdated legislation will be introduced to ensure that the receipt of Statutory Parental Bereavement Pay does not count as a contract variation for this purpose.

8. Enterprise Management Incentive (EMI)

The Enterprise Management Incentive (EMI) is a tax-advantaged employee share option (ESOP) scheme designed for small and medium-sized companies. There are working time requirements as one of the eligibility criteria.

 
As due to Covid-19 and furlough many employees may not be able to fulfil the working time condition, as a result the Finance Bill will legislate to ensure that such employee options issued between 19th March 2020 and 5th April 2022 are treated as qualifying EMI options.

 

9. Off Payroll Working

This legislation is coming into effect from 6th April 2021 and will change the way many contractors pay the tax. This was previously due to come into effect on 6 April 2020 and was delayed due to pandemic.

 
The off-payroll working rules are designed to ensure individuals working like employees but through their own limited company, or other intermediary, pay broadly the same Income Tax and National Insurance contributions (NICs) as individuals who are directly employed.

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