The Budget is finally upon us and we all wait with bated breath to see what the chancellor has in store for us.
We know that with the ongoing pandemic and the financial protection measures in place, the UK economy will need bolstering and the budget is the first stepping stone to do this.
So what do we know so far?
IR35 In The Private Sector
So far there has been no indication that the roll-out of IR35 in to the private sector will be postponed or canceled. It is suspected that the Chancellor of the Exchequer, Rishi Sunak, will hold off on discussing IR35 reforms in the Budget.
The roll-out was delayed in 2020 due to the COVID-19 pandemic as well as the scrutiny it was placed under in Parliament. Despite this, the legislation was finalised over the summer and Government has given the view that it is now keen to press on with these changes to the off-payroll working rules as well as avoiding any further debate.
The changes are reportedly worth around £1.2 billion in tax revenue so it is unlikely it will be delayed any further.
National Living Wage
The big change is that anyone over the age of 23 (moved from 25) will receive the National Living Wage. Every employer will have to pay a minimum of £8.91 to every employee aged 23 and over.
|Category of Worker||Hourly Rate from 1st April 2021|
|Aged 23 and Above (National Living Wage Rate)||£8.91|
|Aged 21 to 22 inclusive||£8.36|
|Aged 18 to 20 inclusive||£6.56|
|Aged under 18 (but above compulsory school leaving age)||£4.62|
|Apprentices aged under 19||£4.30|
|Apprentices aged 19 and over but in the first year of their apprenticeship||£4.30|
Job Retention Scheme
This has now been extended until the end of September. It has been stated that ‘As Covid restrictions start to lift, employers will have to help cover part of the cost of their furloughed workers‘ salaries’ but no figures have been given as of yet.
Employee Personal Allowance
It’s going up, employee’s will gain an extra £70 tax-free, increasing the total to £12,570 per year.
New Class 1 NI Thresholds
This will mean that most people receiving a wage will see some benefit to their net wage.
|Class 1 National Insurance Thresholds||2020/21 tax year
(Per Year thresholds)
|New 2021/20 tax year
(Per Year thresholds)
|Lower Earnings Limit||£6,240||£6,240|
|Upper Secondary Threshold (under 21)||£50,000||£50,270|
|Apprentice Upper Secondary Threshold (Apprentice under 25)||£50,000||£50,270|
|Upper Earnings Limit||£50,000||£50,270|
Self-Employed Worker Support
It is likely that more support will also be announced for self-employed workers. Many of the newly self-employed last year will now be eligible for cash grants of up to £7,500. These will be available from next month for three months and has been expanded to allow those who started working for themselves in the 2019-20 financial year to make claims.
As and when we find out more we will update this information.