The Government has tried to help businesses since the start of the pandemic, with the aim of protecting jobs and mitigating the wider economic impact of Covid-19 on the UK. This started with VAT, PAYE deferrals, the availability of business loans and the much discussed Coronavirus Job Retention Scheme (CJRS), which has now paid out over £35 billion to UK employers and kept many peoples jobs alive, particularly in the retail, hospitality and manufacturing sectors.
However, as businesses return and the initial Government support starts to be withdrawn (CJRS support gradually comes to an end on 31 October), it becomes more difficult as business owners and key stakeholders have more decisions to make to protect the business in the short and longer term, and it is not easy to see what wider support/initiatives may be available to help reduce costs, as well as help businesses adapt to the new society we live in.
To help, we have highlighted some of the key announcements to be aware of:
1. Coronavirus Job Retention Scheme Bonus
For workers who were put on qualifying furlough and are still employed (and not under notice of redundancy/termination) as at 31 January 2021, the Government will pay the employer £1,000 for each furloughed worker in February 2021, providing they have returned to work and the employee is earning at least £520 per month.
Many businesses will find this payment critical in helping to protect jobs and ride the waves that Covid-19 has created in the economy. Details on how this can be claimed will be announced nearer the time but it is likely to be via a Government online portal, similar to how CJRS has been implemented.
2. The Apprenticeship Levy
The Apprenticeship Levy has been around for over 3 years and is a tax on employers of 0.5% where your total paybill in a tax year exceeds £3 million. This tax is then placed into an online digital account to be used to pay for qualifying apprenticeship training in England. Where your pay bill is less than £3 million or you exhaust your Levy pot, the Government will co-invest and provide a 95% subsidy to the qualifying training costs.
Alongside this, there are additional cost benefits of engaging apprentices:
- If an apprentice is under the age of 25, the employer will not pay any employer NIC on their pay (providing they are paid less than the Upper Earnings Limit (currently £50,000 per annum);
- The Chancellor announced that an additional £2,000 (or £1,500 if the apprentice is aged 25 or over) will be paid to employers who take on new apprentices in England between 1 August 2020 – 31 January 2021. This is on top of the existing £1,000 employers already get if they have employed an apprentice aged between 16-18 (or under 25 and has an education, health and care plan or has been in the care of their local authority)
Therefore, engaging apprentices of all ages and grades can be cost effective for the business and really help with structuring a reward training proposition internally, particularly when aligned with a reward package which increases with progression.
A traineeship is a skills development programme that includes a work placement. It can last from 6 weeks up to 1 year. Traineeships help 16 to 24 year olds – or 25 year olds with an education, health and care plan – get ready for an apprenticeship or job if they don’t have the appropriate skills or experience.
The Government have announced that £1,000 incentive payments will be made to employers who make traineeships available. However, there are no current details on this other than the information contained here.
4. Kickstart Scheme
This was announced in the Summer Statement and the Government has now released further information confirming the following:
- The Kickstart scheme provides 6 month placements to those aged 16-24 who are claiming Universal Credit and at risk of long term unemployment.
- The first placements are likely to be available from November.
- Kickstart will be made available via the Job Centre for those individuals who qualify
- Kickstart is not an apprenticeship, but participants may move on to an apprenticeship at any time during, or after their job placement.
- The Government will provide the employer with funding for 100% of the relevant National Minimum Wage for 25 hours a week, plus associated employer National Insurance contributions and employer minimum automatic enrolment contributions. The employer can choose to top up this wage should they wish.
- The Government will also give employers £1,500 per job placement to help with setup costs, support and training.
- Funding is only available following a successful application process. Applications must be for a minimum of 30 job placements. If an employer is unable to offer this many job placements they can partner with other employers.
- This scheme will initially be open until December 2021, with the option of being extended.
5. IR35 & Engaging Services Off Payroll
The Government support summarised above relates to creating employment opportunities. Alongside this, as employers look to recover and move forward, the need for flexible support, specialist consultancy advice and independent assistance could prove to be vital to how the business performs in the future.
Given this, employment status and IR35 remains a key area to manage. The changes being introduced from April 2021 (delayed from April 2020) potentially mean that employers will have the additional burden of undertaking an employment status assessment of all Personal Service Companies they engage and then deduct income tax and NIC from those where an employment relationship exists.
There are lots of opportunities for businesses to consider their strategy, structure and approach. The above examples may help manage costs as well as influence how businesses set themselves up to succeed in the new post Covid-19 economy.