Legislative Changes

a) Furlough

As part of the Spring Budget the Chancellor announced that the Coronavirus Job Retention Scheme would be extended until 30 September 2021. The level of grant available to employers will however be reduced from July 2021 onwards and employers will need to contribute towards the wages of furloughed employees. In summary, the level of employer contribution in July will be 10% and the government contribution will drop to 70%; and for August and September, the employer contribution per month will be 20% and the government contribution per month will drop to 60%. Employees will therefore continue to receive 80% of their salary for hours they were unable to work up to the cap of £2,500.

The Chancellor announced that £100 million has been put towards a new Taxpayer Protection Taskforce to crack-down on fraudsters who have exploited the COVID support schemes.

b) IR35

The IR35 rules which were delayed for 12 months in response to the pandemic before being extended to the private sector came into effect on 6 April 2021.  They were put in place to ensure that a person working from their own personal service company but who is working just like an employee pays broadly the same amount of tax and national insurance contributions that the employee would. 

Medium and large organisations in the private sector who engage personal service companies are now responsible for deciding the employment status of the worker and if IR35 applies, they will be responsible for making the necessary tax and national insurance deductions, as well as paying employer national insurance contributions and the apprenticeship levy, where applicable.

Employers will therefore need to review the position with regards to the employment status of contractors whom they engage to ensure that they are complying with their IR35 obligations.  They may also wish to review the economy of using contractors since the rules may operate to increase costs to business and will, inevitably, lead to fresh administrative burdens.

HMRC’s online tool for checking employment status for tax purposes can be found at: https://www.gov.uk/guidance/check-employment-status-for-tax.

c) Shielding

From 1st April 2021 the clinically extremely vulnerable were no longer advised by the government to shield from the coronavirus, and they will no longer be eligible to receive Employment and Support Allowance or Statutory Sick Pay on the basis that they have been advised to shield. They are however advised to take extra precautions to protect themselves such as reducing the number of social interactions that they have. 

As with everyone else, the clinically extremely vulnerable must continue to adhere to the regulations which are in place to include the restrictions on mixing with other households.  They are now advised to attend the workplace but only if they cannot work from home.  Where applicable and with the employer’s agreement, they may continue to be furloughed until the scheme ends on 30 September.

d) Minimum Wage

The National Minimum Wage which applies to workers of school leaving age has increased and the National Living Wage now applies to workers aged 23 and above. The new rates are as follows:

  • 23+                          up from £8.72 to £8.91
  • 21-22                     up from £8.20 to £8.36
  • 18-20                     up from £6.45 to £6.56
  • Under 18             up from £4.55 to £4.62
  • Apprentice         up from £4.15 to £4.30