8th July 2020
The Chancellor has today made some key announcements that will effect businesses and individuals. Below we sum up the main points raised.
Job Retention Scheme Bonus
A bonus scheme will be in place to reward those employers who bring back furloughed staff when the Job Retention Scheme ends on 31 October 2020. This scheme will see a bonus of £1,000 paid to businesses, for each employee brought back from furlough.
In order to qualify, the following conditions must be met:
The Chancellor also mentioned that it is important staff are not returning to work ‘for the sake of it’ and must be doing ‘decent work’ to qualify.
VAT Cuts – Hospitality Sector
The rate of VAT on food, accommodation and attractions will be reduced from 20% to 5%. This cut will be temporary and will apply from 15 July 2020 to 12 January 2021.
This reduction will apply to takeaway food (hot or cold) plus eat-in food and non-alcoholic drinks purchased from restaurants, cafés and pubs. It will also include accommodation charges for B&Bs, hotels, campsites and caravan sites. The scheme will also extend to visitor attractions such as theme parks and cinemas.
Eat Out to Help Out Discount
For August 2020, businesses that opt to take part, will be able to offer customers a 50% discount for eating out at their restaurants. Below are detailed some key features of the scheme:
Businesses that offer the discounts will first of all have to pay the discounts themselves before claiming the cash back online. There should not be too much of a cash flow issue as it is aimed for repayments to be made within 5 days of application.
Stamp Duty Land Tax (SDLT) Changes
The SDLT lower threshold of 0% has been increased from £125,000 to £500,000. This will apply to the purchase of all residential properties between 8 July 2020 and 31 March 2021 only. This will lead to significant SDLT savings.
For example an individual purchasing a property for £250,000 could save up to £2,500 in SDLT. An individual purchasing a residential property for £500,000 could save up to £15,000 in SDLT!
This change will not only apply to first time buyers. Individuals buying a new residential property may also potentially benefit.
SDLT Purchase of an Additional Residence
The higher rates of SDLT for the purchase of residential properties will remain in place. However, the rate of SDLT will be 3% on the first £500,000, 8% on the next £425,000, 13% on the next £575,000 and 15% on anything over £1.5m.
Rather than having 3% on the first £125,000, then 5% on the next £125,000 and 8% on the next £675,000.
This means an individual purchasing an additional residential property for £500,000 will save £15,000 in SDLT. Before 8 July £30,000 of SDLT would have been due but post 8 July 2020 only £15,000 SDLT is due.
Traineeship Grant
Under this scheme, firms will be awarded £1,000 for each new work experience placement that they offer.
Traineeships last from 6 weeks to 6 months and are targeted at those aged between 16-24. Providers are required to offer an interview for an apprenticeship or a job at the end of the trainee period.
Coronavirus Tests – Tax Cost
It was announced that workers that have Coronavirus tests paid for by their employer will not suffer an income tax charge.
HMRC had earlier stated that the cost of these tests would be a taxable benefit in kind. Instead the cost of providing these tests will be a tax exempt employment benefit for the 2020/21 tax year.
For advice or guidance on any of the above updates get in touch with our offices. We are here to help.
