Summer Statement - Mini Budget

On Wednesday 8th July 2020 the Chancellor Rishi Sunak held a Mini Budget in a bid to boost the economy and kickstart recovery, pledging to “protect, support and create jobs” and giving a little something for everyone.

Help for Hospitality

VAT

The government have announced a temporary reduction in VAT from 20% to 5% on any eat-in or hot takeaway food and non-alcoholic drinks purchased from restaurants, cafes and pubs. This will also apply to holiday accommodation in hotels, B&Bs, caravan and campsites, as well as attractions like cinemas, theme parks and zoos. This will come into effect from 15 July 2020 and will remain until 12 January 2021.

This has been granted as an attempt to boost spending and to help households save money. This was quoted as a “£4billion catalyst for the hospitality and tourism sectors, benefiting over 150,000 businesses and consumers everywhere”.

Undoubtedly the impact on independent food outlets is going to be huge with regards to their admin burden, for instance adjusting the till system, accounting system and menu prices. Some food outlets may therefore choose not to pass on the saving to the customer, especially if this means changing menus, and this is the choice for each individual business to make, and thus it may not always benefit consumers.

Eat out to help out scheme

This is a scheme that enables sit-in restaurants and cafes to offer a 50% discount on food and non-alcoholic drinks up to a maximum of £10 per person (excluding service charges). It will be effective all day from Monday to Wednesday throughout August. The business will need to make a claim from HMRC for the repayment if they opt in and register for the scheme, and registration opens 13 July 2020 via your business government gateway. As claims will be made on a weekly basis, the first claim you will be able to make will be on 7 August. You need to wait seven days from the date of registration to make the first claim so register at the earliest opportunity. Payment will be made within 5 working days of the claim being made. Further guidance from HMRC will be available once the registration scheme opens.

Boost the Housing Market

Stamp Duty Land Tax

The Chancellor announced an immediate increase to the Stamp Duty Land Tax (SDLT) threshold to help stimulate the housing market, effectively scrapping SDLT on the first £500k on residential property purchases from now until 31 March 2021.

For anyone currently in the process of buying a home, or considering buying in the next 8-9 months, this is effectively a bonus of up to £15k by way of an SDLT saving as you will only pay SDLT on the part of the purchase price over £500k. This may well be an incentive for people to buy.

Although the threshold has been reduced, the 3% additional SDLT charge still applies on additional properties purchased if not the main home and also for properties bought through a company.

Green Investment Package

There will be funds available for homeowners and landlords to apply for a grant for green improvements that will cover up to two thirds of the cost up to £5,000, with the intention of improving energy efficiency of homes. Further guidance is to be issued shortly, and the scheme is expected to start in September.

A Plan for Jobs

Job Retention Bonus

The government will pay employers a Job Retention Bonus of £1,000 per employee for each employee that they bring back from furlough, so long as they continue to employ them until 31 January 2021. To be eligible, an employee will need to have earned at least £520 per month on average for November, December and January. For more information on the furlough rules, please see our recent blog here. The claim for the bonus will be available from February 2021 and further guidance is expected to be published by 31 July.

Young Workers

The government are putting in place a £2billion Kickstart Scheme to subsidise jobs for young people. The scheme will be available for 16 to 24 year-olds claiming Universal Credit and at risk of long term unemployment. The funding for each 6 month job placement will cover 100% of the National Minimum Wage for 25 hours per week and will be paid by the government.

Additional funding will be given to business to support apprenticeships by way of a £2,000 grant for each new apprentice they hire under the age of 25. This is in addition to the £1,000 already given under the existing scheme for 16 to 18 year-old apprentices.

Hopefully this mini budget will provide some much needed support to individuals and businesses and go some way towards helping the economy recover from the last few months.

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FUSE is an independent Chartered Certified firm of accountants and tax advisors based in Highgate Village, North London. We provide a dynamic range of services to clients working in property, media, entertainment and professional services. Our clients vary in size from self employed sole traders, small enterprises and medium size businesses. We believe that comprehensive financial planning and sound business financial advice are the keys to growth and profitability.