Employment tax updates from the Budget
The Chancellor maintained his support for jobs and employment by extending the Coronavirus furlough scheme until the end of September 2021, but has introduced some contributions from employers from August 20021 onwards.
The extension of the off-payroll labour rules to the private sector was not postponed further and employers need to be mindful of these rules from 6 April 2021.
A summary of the measures from the budget are below:
Coronavirus Job Retention Scheme extended to September 2021
CJRS, also known as the furlough scheme will continue to operate in its current form until June 2021 which means:
- Employees will continue to receive 80% of pay for hours not worked (subject to the cap)
- Employers will pay national insurance and pension contributions.
Between July and September 2021 the employer will still be responsible for paying national insurance and pension contributions, but in addition will also start to contribute to the 80% of employee pay on a tapered basis.
Employees who started after 30 October 2020, were employed on 2 March 2021 and have had earnings reported to HMRC under RTI between 20 March 2020 and 2 March 2021 are now able to be furloughed and claimed for with effect from May 2021 onwards.
IR35 in the Private Sector
The implementation of the off-payroll labour rules to the private sector will proceed as expected from 6 April 2021.
This means that if an employer engages workers who are paid off payroll, via a Personal Service Company (PSC) or other intermediary, they will have to assess if the IR35 rules apply for all contracts in force on or after 6 April 2021. If they do then tax and National Insurance Contributions (NIC) may be required on payments made to a PSC and there will be an employer’s NIC liability for the paying party.
If you need assistance with either CJRS or IR35 then please reach out to your usual BDO contact.