Summer newsletter – 10 July 2020

I have deliberately not described this as another Coronavirus update, as I just wanted to remind you of imminent deadlines that relate to three points that have been covered in previous newsletters, and also give you a brief summary of the Chancellor’s announcements on Wednesday.

IMMINENT DEADLINES

Monday 13 July – Final date to make a claim for the first Self Employed Income Support Scheme grant – see https://www.busbys.co.uk/Coronavirus_Update_8/ for full details of how to claim. You must complete the online form to claim this – WE CANNOT DO IT FOR YOU!

Friday 31 July – Final date by which all Coronavirus Job Retention Scheme claims must be made for any period ending on or before 30 June 2020. See https://www.busbys.co.uk/Coronavirus_Update_11/ for more details.

Friday 31 July – This is not really a deadline anymore, but normally the second payment on account for income tax and national insurance for 2019/20 would be due on 31 July. This may be deferred, interest free, until 31 January 2021, and there is no need to make any application to HMRC to defer payment. If you wish to, you can always make interim payments before 31 January 2021 to spread out your tax liabilities.

CHANCELLOR’S STATEMENT

There were quite a few announcements on Wednesday, all of which are designed to protect jobs, in a number of different ways. At the time of writing, the detail is very limited but here are the main points:

• A one-off £1,000 per employee grant to employers who still employ a previously furloughed member of staff continuously through to 31 January 2021. It seems that this will be paid for any member of staff who was furloughed at any time since the scheme was introduced, as long as they are paid at least £520 per month from November 2020 to January 2021 inclusive. Employers will be able to claim the bonus in February 2021. 
• A reduction in VAT from 20% to 5% on any eat-in or takeaway food and non-alcoholic drinks from restaurants, pubs and cafes sold between 15 July 2020 and 12 January 2021. A similar reduction in VAT will also apply to all “holiday” accommodation in hotels, B&Bs, campsites and caravan sites, and also to attractions like cinemas, theme parks and zoos, between the same dates. The guidance from HMRC uses the word “holiday”, but it seems that the reduced rate of VAT applies to all accommodation – see https://www.gov.uk/guidance/vat-reduced-rate-for-hospitality-holiday-accommodation-and-attractions for more details. There is separate guidance for attractions – see https://www.gov.uk/guidance/vat-on-admission-charges-to-attractions
• An increase in the lowest Stamp Duty Land Tax (SDLT) threshold for residential property from £125,000 to £500,000. Where a purchaser is a single property owner (or first-time buyer), then no SDLT is payable on the first £500,000 of the purchase price. If the purchaser already owns (and is keeping) another property, then the additional 3% surcharge will still apply. This change took effect on 8 July and will continue until 31 March 2021. Remember that SDLT is charged on the basis of the completion date.
• The Chancellor also unveiled two job recruitment schemes - a Kickstart Scheme was announced that will aim to create subsidised six month work placements for young people who are at risk of long term unemployment; and then there is also going to be a cash grant to support apprentice recruitment. £2,000 will be paid if a new apprenticeship is created for someone who is 24 or under, and £1,500 will be paid if the apprentice is 25 or over.
• There is going to be a new Green Homes Grant launched from 1 September, which will be a voucher scheme paying up to 2/3rds of the cost of qualifying environmental improvements, up to a maximum of £5,000 per household.
• And finally, the “Eat Out to Help Out” scheme will enable diners to claim a 50% discount (subject to a maximum of £10 per person) off the cost of a meal and accompanying non-alcoholic drinks during the month of August. Whilst diners can have as many meals as they want, the discount will only apply on Mondays, Tuesdays and Wednesdays, and the restaurant will need to be in the scheme in order to claim the discount back from the government. See https://www.gov.uk/government/publications/get-more-information-about-the-eat-out-to-help-out-scheme for more information about this scheme, and how to register. You can register from 13 July.

So, the main action point is for those businesses that are going to be able to reduce your VAT rate – make sure you are ready to implement this next Wednesday. Do also remember that a reduction in VAT from 20% to 5% is not a 15% reduction in your price – it is only a 12.5% reduction. And also make sure that you decide whether you will want to pass on all of the VAT reduction to your customers as a straight forward price per item reduction, or whether it might be better to show the reduction as a discount on the cost of a meal. Customers will be very keen to see the discount next week, but they may not be as enthusiastic about an equal and opposite price rise in January!

We will provide more details on the new announcements, as more detailed guidance is published.