VAT, Stamp Duty and the Job Retention Bonus – what the ‘mini Budget’ means for you
In last week’s ‘mini Budget’ Chancellor Rishi Sunak unveiled further help to kick start the UK economy which included cuts to VAT and Stamp Duty. Here’s what the changes mean for you and what we think of them:
VAT – The rate of VAT on hospitality & tourism will be cut from 20% to 5% from 15 July 2020 to 12 January 2021. The reduced rate applies to food, non-alcoholic drinks, admission to attractions and accommodation.
Says Julia Gallagher, tax partner at Curo Chartered Accountants “This is a welcome relief to businesses in the hospitality and tourism sectors but we’d like to have seen it extended to other sectors, particularly retail. Understandably, online retailers have benefitted during lockdown but if the government wants to boost consumer spending on the high street, this VAT cut should apply there too. We’re also keen to see businesses pass the VAT cut onto consumers as they failed to do so last time.”
Stamp Duty Land Tax (‘Stamp Duty’) – From 8th July 2020 until 31 March 2021, homebuyers in England and Northern Ireland will not pay tax on purchases up to £500,000. In November 2017 the Chancellor announced a Stamp Duty exemption for first time buyers on purchases up to £300,000 so we’re expecting to see more transactions around the middle of the market.
Julia comments “We act for a number of property developers who have welcomed this news and are making plans to build more houses. We don’t expect to see significant activity at the lower end of the market as there was already an exemption in place; unless sales pick up significantly, we’ll be calling for the Chancellor to extend the scheme and possibly increase the threshold. This measure should stop redundancies as we know of larger contractors previously considering the redundancy option.”
Job Retention bonus – employers who bring back previously furloughed workers and keep them in continual employment until January 2021 will receive a bonus of £1,000 per worker.
Says Julia “There’s been lots of criticism of this scheme as may companies are eligible to claim the money, even though they’d have kept staff on anyway. With high profile employers such as Primark refusing to claim the bonus, all eyes are on other brands to do the same where they can afford to. We’d urge businesses to claim in good faith or risk alienating consumers and losing customer loyalty.”
What we’d like to have seen….
A cut in Employers National Insurance to encourage recruitment, keep staff in jobs and ensure more people are paying than taxes instead of claiming benefits.
Enhanced tax relief on changes to work premises to make them ‘Covid safe’ for workers and customers. Many businesses have taken a huge hit due to Covid and we feel this should be compensated for by extra tax relief on changes they have to make through no fault of their own.
More help for the self-employed. 3m workers have been excluded from the Chancellor’s £30bn support package, including newly self-employed freelancers and small business owners earning above £50k in average trading profits.
We understand the issues your business is facing and are well placed to advise on accessing financial support and the various financial lifelines available. Please get in touch with Julia Gallagher who will guide you through your options and help you through this challenging time.