The Summer Statement has provided food for thought, with its tag of “A Plan For Jobs”.
Initial Government guidance is detailed here but our highlights follow below:
VAT cut for tourism and hospitality sectors
Government has announced that VAT will be reduced from 20% to 5% on food, accommodation and tourism attractions for six months as a mechanism to help support the tourism and hospitality sector, providing much needed income and jobs.
- Temporary VAT cut for food and non-alcoholic drinks
From 15/07/20 to 12/01/21, to support businesses and jobs in the hospitality sector, the reduced (5%) rate of VAT will cover any eat in or takeaway food and drink from restaurants, cafes, pubs and similar premises across the UK but exclude alcohol.
This VAT reduction also applies to all holiday accommodation in hotels, B&Bs, campsites and caravan sites, as well as attractions such as cinemas, theme parks and zoos.
Further guidance on the scope of this relief will be published by HMRC in the coming days.
- Temporary VAT cut for accommodation and attractions
From 15/07/20 to 12/01/21, to further support businesses and jobs, the reduced (5%) rate of VAT will apply to supplies of accommodation and admission to attractions across the UK. Further guidance on the scope of this relief will be published by HMRC in the coming days.
Initial guidance is detailed here – https://www.gov.uk/guidance/vat-reduced-rate-for-hospitality-holiday-accommodation-and-attractions
Eat Out to Help Out
In order to support around 130,000 businesses and to help protect the jobs of their 1.8 million employees, the government will introduce the Eat Out to Help Out scheme to encourage people to return to eating out.
This 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 non-alcoholic drinks) for the entire month of August 2020 across the UK.
Participating establishments will be fully reimbursed for the 50% discount.
Businesses that would like to take part in the scheme will have to register through a website that opens on 13/07/20. Further details will follow when available.
Job Retention Bonus
The government will introduce a one-off payment of £1,000 to UK employers that have used the Coronavirus Job Retention Scheme.
This will apply for every furloughed employee who remains continuously employed through to the end of January 2021. Employees must earn above the Lower Earnings Limit (£520 per month) on average for November 20, December 20 and January 21. Bonus payments will be made from February 2021.
Further details about the scheme will be announced by the end of July, with full guidance provided in the Autumn
The Government announced the introduction of a new Kickstart Scheme, a £2 billion fund to create 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, up to a maximum of about £6,500.
Employers who provide work experience for 16-24-year-olds in work placements and training will receive a payment of £1,000 per trainee.
Provision of traineeships and eligibility for them will be extended to those with Level 3 qualifications and below, to ensure that more young people have access to training.
It can last from six weeks up to six months. Whilst trainees usually complete a minimum of 100 hours and a maximum of 240 hours of work experience over six months, the new guidance suggests a lesser commitment for providers of 60-90 hours
The Chancellor has announced a £2,000 bonus for businesses to hire young apprentices and £1,500 for hiring apprentices aged 25 and over.
The bonus can be claimed during the next six months.
SDLT threshold increase
The Government have increased the threshold under which no SDLT is paid on the purchase of a main home from £125,000 to £500,000, with immediate effect until 31/03/21. This may not affect many first time buyers who are likely to spend less on their first home, but will hopefully stimulate the housing market over the coming months.
Note the special rules for first time buyers are replaced by the reduced rates for additional properties
Further Government guidance is available here.
You can use the table to work out the SDLT due:
- Property or lease premium or transfer value SDLT rate
- Up to £500,000 Zero
- The next £425,000 (the portion from £500,001 to £925,000) 5%
- The next £575,000 (the portion from £925,001 to £1.5 m) 10%
- The remaining amount (the portion above £1.5 m) 12%
Higher rates for additional properties
The 3% higher rate for purchases of additional dwellings applies on top of revised standard rates above for the period 08/07/20 to 31/03/21.
- Property or lease premium or transfer value SDLT rate
- Up to £500,000 3%
- The next £425,000 (the portion from £500,001 to £925,000) 8%
- The next £575,000 (the portion from £925,001 to £1.5 m) 13%
- The remaining amount (the portion above £1.5 m) 15%
Companies as well as individuals buying residential property worth less than £500,000 will also benefit from these changes, as will companies that buy residential property of any value where they meet the relief conditions from the corporate 15% SDLT charge.
- Green Homes Grant – a £2 billion scheme under which homeowners can get a voucher of up to £5,000 (£10,000 for lower income households) to make their homes more energy efficient. However it appears that solar panels have been left out of the purview of the scheme. This will start in September, and the government will pay at least 2/3rds of the cost subject to the limits of £5,000 (or £10,000). This will apply to landlords too.
- Incentives to create “green” jobs
Rishi Sunak plans to complete a Budget and Spending Review in the Autumn, which will hopefully outline the medium term commitments to help us all, rather than short term incentives.