The Budget 2021: How it Affects Payroll
The Budget was announced by Rishi Sunak yesterday, declaring the Government’s plans for spending and taxation for the upcoming financial year 2021-22. We’ve summarised the key facts that payroll professionals need to know below.
Coronavirus Job Retention Scheme (CJRS)
- The Budget confirms the continuation of the Coronavirus Job Retention (furlough) Scheme in its current form until the end of June 2021.
- As the economy reopens and demand returns, the government will introduce employer contributions towards the cost of unworked hours until September 2021.
- From July, the employer contribution towards the cost of unworked hours will be 10% in July, 20% in August and 20% in September.
- The income tax Personal Allowance and higher rate threshold (HRT) will be updated in line with Consumer Price Inflation (CPI) as planned in April 2021, then maintained at that level until April 2026.
- Personal income tax allowance will be frozen at £12,570 from April 2022 to 2026.
- Higher rate income tax threshold to be frozen at £50,270 from 2022 to 2026.
National Insurance Contributions (NICs)
- As previously announced and legislated for in February 2021, in 2021-22 NICs thresholds will rise with CPI, bringing the NICs Primary Threshold / Lower Profits Limit to £9,568 and the Upper Earnings Limit (UEL) / Upper Profits Limit (UPL) to £50,270, in line with the income tax HRT.
- The UEL / UPL will then remain aligned with the HRT at £50,270 until April 2026. All other NICs thresholds will be considered and set at future fiscal events. NICs thresholds apply across the UK.
Want to find out more?
Join our webinar for a clear and detailed breakdown of the key announcements that will affect your payroll processes. Plus, you can ask questions in a live Q&A with our payroll expert.