Summer Economic Update Announcements

The Chancellor announced a package of measures last week during his Summer Economic Update. Here’s some of the highlights:

CUT IN VAT FOR THE HOSPITALITY SECTOR

Last week the Chancellor announced a cut in the rate of VAT from 20% to 5% for the hospitality sector including: –

  • Restaurants
  • Pubs
  • Bars
  • Cafes
  • Hot takeaway food

The reduced rate applies to food, accommodation and non-alcoholic beverages starting from Wednesday 15 July 2020 until 12 January 2021.

This change is a much needed break for the sector but could prove challenging for some given the short timescale to introduction.

Some things to consider: –

  • The need to distinguish for the first time the different VAT rates applying to alcoholic and non-alcoholic drinks.
  • Software and till updates necessary to facilitate the change.  Good news is that we already have a 5% reduced rate for VAT in place so most systems will have this rate built in. Best to contact providers as soon as possible to understand what changes are needed.
  • Deposits, it may be possible to charge the lower rate of VAT on deposits if the sale is taking place after the change.
  • If you intend to reduce prices consider the impact on cash flow and existing VAT liabilities.
  • The interaction between the reduced rate of VAT and the Eat Out to Help Out voucher scheme is not yet clear and will need to be considered.

If you have any questions you can call our Jayne Tressler on  01243 782 423!

 

 

STAMP DUTY LAND TAX CUT 

The chancellor has announced that the rates of Stamp Duty Land Tax (‘SDLT’) were reduced from 8 July 2020 and will remain reduced until 31 March 2021.

This means if you are contemplating your next property purchase, the reduction in SDLT is a good reason to progress with your purchase in the coming months.

The new scale rates are as follows: 

Old RatesNew Rates
£%£%
0 – 125,00000 – 500,0000
125,001 – 250,0002  
250,001 – 925,0005500,001 – 925,0005
925,001 – 1,500,00010925,001 – 1,500,00010
>1,500,00012>1,500,00012

As you have seen from the above, the actual rates of SDLT remain unchanged (although the 2% slice is now not applicable), but the change is with the shifting of the property value bands. The resetting of the SDLT bands will be welcome relief for property purchasers.

Note that the higher rates of SDLT for additional properties still apply. So, if the residential property acquisition is not going to be your home, your rates will probably be 3% higher than those stated above.

Whilst the 3% additional rate will still apply to other purchasers, landlords will have been subject to the additional 3% in any event. Given that landlords have been subject to less favourable tax treatment in recent years, yesterday’s announcement is a pleasant surprise – it is the first tax break given to landlords for many years.

Call 01243 782 423 and ask for Shaun Dodson if you have any questions!

 

JOB RETENTION SCHEME BONUS

A new Job Retention Bonus was announced, which will provide employers with a one-off £1,000 bonus for each furloughed employee who is still employed as of 31 January 2021.

The government hopes the Job Retention Bonus will incentivise firms to retain furloughed workers rather than making redundancies.

Employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021. Payments will be made from February 2021 and further details about the scheme will be announced by the end of July.

If you have any questions or would like to discuss your situation with a member of our team you can call us on 01243 782 423!