The Chancellor started his speech emphasising the support that had been given to the economy before announcing the extension of many of the schemes to later in the year which should, hopefully, be after the restrictions can be eased. The support is being tapered away to try to avoid any “cliff edge” scenarios.
The certainty that this presents should help businesses plan for their reopening. The overall cost of the support is expected to be £407bn and, unsurprisingly, later in his speech, the Chancellor addressed how he plans to start rebalancing the books.
The Coronavirus Job Retention Scheme (CJRS), which was due to end in April 2021, has been extended to the end of September 2021. The scheme will provide the same level of support until June 2021. From July, the Government will introduce an employer contribution towards the cost of unworked hours of 10% in July, 20% in August and 20% in September. Employees will continue to receive 80% of their current salary, capped at £2,500 per month, for hours not worked. The employer contributions are to reflect the fact that the economy is expected to be picking back up at that stage.
The Treasury has come under criticism for the design of the support packages including their susceptibility to fraud. To combat this threat the Government will invest over £100 million in a Taxpayer Protection Taskforce of 1,265 HMRC staff. This represents one of the largest responses to a fraud risk by HMRC. In addition, the Government have stated they will raise awareness of enforcement action in order to deter fraud and will significantly strengthen law enforcement for Bounce Back Loans. The support schemes can be complex to implement and there will be more complexity as the schemes taper away. It is essential that businesses ensure that they are fully conversant and compliant with the rules so that they can deal with any HMRC enquiries.
If you have any queries on the topics covered in our UK Budget 2021 report, please contact Johnny Hanna, partner in change, KPMG in Belfast.