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The Chancellor Rishi Sunak leaving No.11 Downing Street on his way to deliver his budget speech

Budget 2021: Furlough extension takes centre stage


Chancellor Sunak has extended the furlough scheme (CJRS) to 30 September 2021, but support will tail off after 30 June. The eligibility of employees for the scheme has also changed.

3rd Mar 2021
Owner Kate Upcraft Consultancy Ltd
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The coronavirus job support scheme (CJRS) is estimated to cost £53.8bn to the end of September, beyond the proposed ending of lockdown in June.  Support for employers will reduce after 30 June, as shown in the table.

Jobs saved

The Chancellor expects these measures will save 340,000 jobs that would have been lost. But it’s a grim picture with 882,000 fewer people in work between February and November 2020, and the impact disproportionately affecting those aged 18 to 24, women and ethnic minorities, who are most likely to work in consumer facing sectors such as hospitality.

The eligibility for the scheme has also been amended to include, from 1 May 2021 onwards newly eligible employees who were employed on 2 March 2021, as long as a payment of earnings was reported on RTI between 20 March 2020 and 2 March 2021.

Furlough periods within: 1–31 Oct 2020 1 Nov to 30 June 2021 1–31 July 2021 1 August–30 September 2021
Employee wages covered by grant 60% of usual 80% of usual 70% of usual 60% of usual
Maximum wages per month covered by grant £1,875 £2,500 £2,187.50 £1,875
Employer NIC covered by grant? No No No No
Employer pension contributions covered by grant? No No No No
Employer must pay amount of furlough wages per month: 20% of usual up to £625 10% of usual up to £312.50 20% of usual up to £625
Employee should receive at least per month for furloughed periods 80% of usual up to £2,500 80% of usual up to £2,500 80% of usual up to £2,500 80% of usual up to £2,500
In an announcement that will send a powerful message to compliant employers, as well as a warning shot to fraudsters, HMRC will be recruiting an additional 1,265 staff to investigate CJRS fraud and error.

Tax and pension allowances and NI thresholds

The planned increases in the personal allowance to £12,570 and the 20% tax band will remain but then be frozen until 5 April 2026.

This is a huge relief operationally for both HMRC and employers, given that all the PAYE tax codes for 2021/22 have now been issued and payroll software updated to apply the personal allowance increases to suffix codes L, M and N. It is testament to the successful lobbying by representative bodies across the accounting and software industries.

Frozen levels of: 2021/22 – 2025/26
Personal allowance £12,570
20% tax band £12,571 - £37,700
40% tax band £37,701 - £150,000
40% tax threshold and Upper Earnings Limit/Upper secondary threshold and Apprentice Upper Secondary threshold for NIC £50,270
Pensions lifetime allowance £1,073,100


The NI lower earnings limit was already frozen at £6,240 for 2021/22 as it is CPI based. The NI primary threshold will rise to £9,568 and the secondary threshold to £8,840. There is no commitment for 2022/23 in respect to the setting of these thresholds.

National minimum wage

The previously announced rises will go ahead for the first pay period that begins on, or after, 1 April, so week commencing 5 April for weekly paid employees.

As the highest rate drops to age 23 from 25, employers will need to take care that there is still headroom for salary sacrifices such as pensions to be operated without pay dropping below NMW.

The government’s target is for the top rate of National Living Wage to be two thirds of median earnings, and extended to those aged 21 and over, by 2024.


The one-off payment for employers in England who hire apprentices of any age will be increased to £3,000. Skills funding is a devolved matter so it is for the other administrations to make decisions whether to replicate this.

Portable apprenticeships across multiple consecutive employers will be introduced from the summer of 2021.

Benefit in kind easements

Two of the benefit in kind easements relating to COVID-19 will be extended for 2021/22:

  • The provision by employers, or reimbursement to employees, of antigen tests, and
  • The reimbursement of expenses covering the cost of home office equipment

Fuel benefit and company car charges

These were announced in February and will rise by CPI. Legislation will be laid this month and tax codes issued to be effective from 6 April 2021. Company car benefit in kind values can be seen here.

NI exemption in Freeports

Eight Freeports were announced for England from late 2021 as had been consulted upon. These will be facilitated with an employer’s national insurance exemption effective from April 2022 until April 2026 and with a possible extension to April 2031.

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