ICAEW.com works better with JavaScript enabled.

ICAEW's Tax Faculty's provides a summary of the announcements on employment taxes in the Spring Budget 2021, including COVID-19 support measures, benefits, expenses and national insurance.

Class 1 national insurance

The inflationary uprating of national insurance limits announced at the spending review was confirmed.

The limits and thresholds are as follows: 



Lower earnings limit

£120 per week

£120 per week

£520 per month

£520 per month
£6,240 per year £6,240 per year

Primary threshold

£184 per week

£183 per week

£797 per month

£793 per month

£9,568 per year

£9,500 per year

Secondary threshold

£170 per week

£169 per week

£737 per month

£732 per month

£8,840 per year

£8,788 per year

Upper earnings limit /
Upper secondary threshold /
Apprentice upper secondary threshold

£967 per week

£962 per week

£4,189 per month

£4,167 per month

£50,270 per year

£50,000 per year

The class 1 national insurance upper earnings limit and upper secondary thresholds are aligned with the income tax higher rate threshold which is being frozen at £50,270 from 6 April 2021 until 5 April 2026.

Car, van, and car and van fuel benefit charges 

The van benefit, and the car and van fuel benefit figures had been announced in a written ministerial statement on 4 February 2021. The van benefit charge and fuel benefit charges for cars and vans will be uprated by the September 2020 CPI. 



Van benefit charge



Car fuel benefit multiplier



Van fuel benefit charge



From April 2021, the van benefit charge for zero-emission vans will be £nil.

Enterprise management incentives: call for evidence

HMT has published a call for evidence to find out whether the enterprise management incentive (EMI) scheme provides support for high-growth companies to recruit and retain the best talent so they can scale up effectively, whether more companies should be able to access the scheme, and whether and if so how the scheme should be expanded. The deadline for responding is 26 May 2021.

Statutory parental bereavement pay and optional remuneration (alias salary sacrifice) arrangements

Statutory parental bereavement pay (SPBP) will be excluded from being treated as a variation in contract in relation to relevant long-term salary sacrifice benefit arrangements. This will ensure that employees who receive certain long-term salary sacrifice benefits, such as employer-provided vehicles and living accommodation and relevant school fees arrangements, do not lose entitlement to the tax advantage if they also begin to receive SPBP. This will apply retrospectively from when SPBP was introduced (ie, 6 April 2020).

Termination payments and post-employment notice pay for income tax

The draft legislation published by HMRC on 21 July 2020 will be reproduced unchanged in FB 2021. The changes are designed to remove unintended outcomes and provide fairness and clarity in the current legislation. The changes will apply from 6 April 2021, but HMRC has exercised its managerial discretion to apply alternative calculations where it is advantageous to an employee since October 2019.

COVID-related employment tax reliefs and NIC disregards

Home office expenses

The temporary income tax exemption and class 1 national insurance contributions (NIC) disregard for employer-reimbursed expenses that cover the cost of relevant home office equipment purchased by staff will be extended until 5 April 2022. Relevant home office equipment is the equipment deemed necessary for the employee to work from home as a result of the coronavirus outbreak, and can include for example a laptop, a desk and necessary computer accessories. The exemption is to ensure that employees can receive full reimbursement free from income tax and class 1 NIC.

The time limited exemption and disregard have been introduced because, under the normal rules, where an employee buys home office equipment and is reimbursed by their employer, they will currently not be entitled to tax relief. This is because the expense incurred puts the employee in a position to perform their duties, rather than being incurred in the performance of their duties.

Find out more:

Cycle-to-work scheme

Legal vires will be provided for the previously announced time-limited easement to the employer-provided cycle exemption which disapplies the condition which states that employer-provided cycles must be used mainly for journeys to or from or during work. The relief is available to employees who joined a scheme and were provided with a cycle or cycling equipment on or before 20 December 2020. It will be in place until 5 April 2022, after which the normal rules of the exemption will apply.

Find out more:

Employer provided and reimbursed COVID-19 antigen tests

Legal vires will be given for the previously announced easement exempting payments that an employer makes to an employee to reimburse the cost of a relevant coronavirus antigen test for the tax year 2020/21 and for continuing the tax and NIC exemptions for both employer provided and reimbursed antigen tests until 5 April 2022.

Find out more:

Enterprise management incentives (EMI) time-limited exception to working time requirements

Until 5 April 2022, individuals who are furloughed or who have their working hours reduced below the current statutory working time requirement for EMI as a result of COVID-19 will retain access to the scheme’s tax advantages. This will apply both to existing participants of EMI schemes and in circumstances where new EMI share options are being granted.

Find out more:

Statutory sick pay (SSP) rebate scheme

SME employers across the UK will continue to be able to reclaim up to two weeks of eligible SSP costs per employee. As this scheme is a temporary COVID-19 measure, the government will set out steps for closing it in due course.

Off-payroll working/IR35

Technical changes will be made to the off-payroll working (OPW) legislation to ensure that the rules operate as intended when they are extended to the private sector from 6 April 2021. These technical changes include:

  • A new provision to address the unintended widening of the definition of an intermediary where it is a company. This provision states that the company will meet the conditions of an intermediary where the worker has a less than material interest, but only where the payment that the worker will receive would not already be taxed as employment income. This means that umbrella companies, agencies and other third-party companies providing a worker’s services will not be in scope of the rules.
  • A targeted anti-avoidance rule (TAAR) to deter against arrangements devised to circumvent the definition of an intermediary to gain a tax advantage.
  • Changes to improve the operation of the rules, including allowing an intermediary to confirm if one of the conditions for an intermediary is met where the worker has not done so. This will make it easier for end clients to ascertain whether they need to consider the rules.
  • A further change to extend the consequences of providing fraudulent information to include any UK-based party in the labour supply chain, so that, where someone other than the worker provides fraudulent information claiming that the rules do not apply, the subsequent liability will rest with that party instead of the client organisation or deemed employer.

HMRC has published separately updated policy costings to reflect the one-year delay to April 2021 and a revised assessment of the administrative burdens on businesses. 

HMRC has also updated its guidance on OPW in ESM10000 to include:

  • New pages to provide practical details on the technical changes mentioned above.
  •  A new page on how to calculate a worker’s statutory payment entitlement.
  • Updates to existing pages to clarify when a status determination statement should be issued, what constitutes reasonable care, payroll processes and calculating statutory payment entitlements.
  • A number of smaller changes to clarify sections of the guidance following feedback.

Find out more:

ICAEW Know-How from the Tax Faculty

This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.

More on Budget 2021

Read the rest of the Tax Faculty's summary of the tax related announcements in the Budget on 3 March 2021.

Read now