Covid-19: The Chancellor's Summer Update
Date: Thursday, 9 July 2020
The Chancellor Rishi Sunak announced further measures yesterday to support individuals and businesses mitigate the serious impact of the COVID-19 epidemic. We take a closer look at the measures announced.
From 15 July 2020 to 12 January 2021 a temporary VAT cut for the hospitality, accommodation and attractions sectors, reducing VAT from 20% to 5% will be introduced (although alcoholic drinks are excluded from these measures). Aside from the usual operational complications of adjusting VAT rates in software and whether to adjust sales prices or not; these changes will assist businesses retain more of the income they generate and boost consumption in these sectors. Further guidance on the scope of this relief will be published by HMRC in the coming days. If your business operates in the sectors the scheme is designed to help and you wish to discuss the implementation of changes or the implications for your profitability please do get in touch.
Stamp Duty Land Tax Cut
The government will temporarily increase the nil rate band of Residential SDLT in England from £125,000 to £500,000. The increase is effective immediately and will last until 31 March 2021. Though the uplift to the nil rate band will assist all purchasers during this period including investors, it is important to note that the additional 3% higher rate stamp duty due on additional dwellings and for properties purchased by Companies remains.
Jobs Retention Bonus
There was no announcement to extend the furlough scheme in certain sectors beyond the current closing date of 31 October as had been called for by some. However, one surprise announcement was that for every furloughed member of staff that is retained by their employer and earns at least £520 per month through to the end of January 2021, a £1,000 bonus will be paid to their employer in February 2021. Further details about this scheme will be released by the end of July.
Eat Out to Help Out
A novel approach to targeting assistance to the hospitality industry was the announcement of the Eat Out to Help Out scheme which aims to encourage people to return to eating out. The scheme will entitle every diner to a 50% discount of up to £10 per head on their meal, at any participating restaurant, café, pub or other eligible food service establishment. The discount can be used unlimited times and will be valid Monday to Wednesday on any eat-in meal (including on non-alcoholic drinks) for the entire month of August 2020. Participating establishments will be fully reimbursed for the 50% discount. Restaurant, pub and café businesses will be able to register to participate in the scheme and the full details will be released in the coming days.
There were a wide range of packages announced to help people into work, from the new “Kickstart” scheme to help create new jobs for young people by covering employer’s costs, to expanded assistance for training and apprenticeships and additional funds to expand and enhance the existing training and job search support schemes. Our clients might be particularly interested in the “Kickstart” scheme which aims to create hundreds of thousands of high quality 6-month work placements aimed at those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment. Funding available for each job will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions.
Green Homes Grant
The government will introduce a £2 billion Green Homes Grant, providing at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, up to £5,000 per household. For those on the lowest incomes, the scheme will fully fund energy efficiency measures of up to £10,000 per household.
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