SUMMER BUDGET 2020
A PLAN FOR JOBS MINI BUDGET – RECOVERY PHASE
An exciting mid-week announcement made by Mr Sunak on Wednesday 8 July detailed how the Government would provide ongoing support to businesses and individuals, while still winding down the multi-billion package of schemes and funding initially provided.
The Chancellor described this as the economy’s “recovery phase”, targeted towards supporting, protecting and creating jobs. A further “third phase” will be announced sometime in Autumn, turning medium-term policies in the recovery phase into and a long-term economic strategy.
We will highlight the key announcements made, what to be aware of, and what you need to do to ensure you take full advantage of what’s available.
JOB RETENTION BONUS
The £27.4 billion pound scheme (as of 7 July), and building, Job Retention Scheme has been injected with a further £9.4 billion pound bonus.
To qualify for the £1,000 bonus, each employee who had been placed on furlough at any point during the furlough scheme must:
- have been continuously employed through to the end of January 2021; and
- have been paid, on average, at least the lower earnings limit of £520 per month between November 2020 to the end of January 2021 and provided the employee has been continuously employed to the end of January 2021.
Further detail will be announced by the end of July, payments will be able to be claimed in February 2021.
At the time of publishing, there is currently no Government landing page for further guidance on the bonus.
The Government Kickstart Scheme will look to help find jobs for 16-24 year olds currently:
- unemployed; and
- claiming Universal Credit; and
- at risk of long-term unemployment.
For employers who create NEW JOBS, and we stress NEW, the Government will support the employer by covering the wage bill of eligible employees, for 6 months, up to the relevant National Minimum Wage (for 25 hours per week), plus associated Employer National Insurance and minimum Employer Pension Contributions.
The Chancellor also noted an additional “amount to cover overheads”, of which more detail is expected.
Companies will be able to apply for the scheme in August, and must be able to prove that the job is a new job, not replacing an existing job and are ‘above and beyond any jobs they were expecting to create.’
At the time of publishing, there is currently no Government landing page for further guidance on the scheme.
A traineeship is a course with work experience, that prepares the trainee for future work or an apprenticeship and lasts from 6 weeks to 6 months and is available for 16 to 24 year olds, or 25 year olds with an education, health and care plan (EHC).
Traineeships are geared towards those who don’t have the appropriate skills or experience to obtain a job or apprenticeship.
An employer offering a traineeship will receive a £1,000 grant from the Government to support the trainee.
Further information on offering traineeships can be found here.
An apprenticeship is a working and studying programme that employers can offer, supported by an organisation such as a college or training provider, to individuals aged 16 or over.
Apprenticeships must last at least one year but can, in certain circumstances, last up to 5 years.
Any employer who hires an apprentice between 1 August 2020 and 31 January 2021 will be supported by:
- a £2,000 payment for every apprentice hired under 25 years of age, or
- a £1,500 payment for every apprentice hired of 25 years of age and over.
This is in addition to the £1,000 payment the Government makes to those who employ an apprentice aged 16-18, or under 25 with a EHC plan.
At the time of publishing, there is currently no Government landing page for further guidance on the grant, existing information on the apprenticeship scheme can be found here.
EAT OUT TO HELP OUT SCHEME
Providing incentive for the public to get out and spend, while also supporting one of the hardest hit industries, Mr Sunak announced the creative Eat Out to Help Out Scheme, which will offer every diner a 50% discount on their meal, Mondays-Wednesdays between August 3rd – August 31st 2020, subject to a maximum of £10 per head.
The devil in the detail is that the meal must be a “sit down” meal, so takeaways are not covered, and alcoholic drinks are also excluded.
The eatery must also apply for the scheme to be eligible.
For the establishment to be eligible, they must:
- sell food for immediate consumption on the premises; and
- provide its own dining area or shares a dining area with another establishment for eat-in meals; and
- was registered as a food business with the relevant local authority on or before 7 July.
This means that the following businesses will be excluded:
- Those that offer only takeaway food and drink.
- Catering services for private functions.
- A hotel that provides room service only.
- Dining services (e.g. packaged dinner cruises).
- Mobile food vans/trailers.
The good news is that a customer purchasing a meal with the intention of eating it, but then takes it away, will still be eligible for the discount, taking the onus and responsibility of customer indecision away from the business.
Businesses must record:
- the total number of people who have used the scheme in their establishment; and
- the total value of transactions under the scheme; and
- the total value of discounts given.
The portal for registering will open on 13 July and close on 31 August. The portal for making claims to reimburse the discounts they’ve given will be available on the 7 August. The portal will then close on 30 September 2020.
Claims can be made on a weekly basis and will be reimbursed within 5 working days.
TEMPORARY HOSPITALITY, HOTEL AND HOLIDAY ACCOMODATION VAT CUT
A 15% VAT cut will be introduced from 15 July 2020 through to 12 January 2021 for certain supplies of food, non-alcoholic drinks, accommodation and attractions in the UK.
The affected supplies are roughly:
- Food and non-alcoholic beverages sold for on-premises consumption and hot takeaway food and hot takeaway non-alcoholic beverages.
- Sleeping accommodation in hotels/similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated facilities.
- Admissions to attractions not already within the cultural VAT exemptions, e.g. theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events and facilities.
The complex VAT rules and legislation means this initiative will be rolled out with considerable detail, so those affected should regularly check here for further information and use the VAT notices found in the more information section for more specific guidance.
Businesses within the Tour Operators Margin Scheme, using the Flat Rate Scheme or have taken advanced payments for bookings within the temporary VAT cut period should especially read the information here.
TEMPORARY STAMP DUTY LAND TAX (SDLT) CUT
Finally, to boost the housing market and increase buyer interest, Mr Sunak announced a temporary VAT cut, between 8 July to 31 March 2021, to SDLT.
The existing Nil Rate Residential Band of £125,000 has been temporarily increased to £500,000, which the Government forecasts 9 out of every 10 homebuyers will pay no SDLT at all as a result.
The 3% surcharge on additional properties will still apply throughout.
Further information can be found here.
FUTURE PENALTIES, HMRC ENQUIRIES AND INVESTIGATIONS INTO ABUSE OF GOVERNMENT SCHEMES
The Government and HMRC have recently enacted new legislation to deal with abuse, misuse and fraud relating to the schemes laid out to support the economy during Covid-19.
In addition, after a temporary halt into investigations during the height of the pandemic, HMRC have stepped up their investigations and tax enquiries on all areas of tax and business arrangements.
Now more than ever it is important you cover yourself against the risk of a costly investigation and, to assist our clients in keeping protected, we are offering a low cost Business Protection policy which will provide you with:
- Tax investigation Service – No excess and up to £100,000 fee indemnity.
- Access to Employment Law specialist providing pro-active HR advice helping you to manage your employees.
- Access to Commercial Legal consultants and experienced solicitors who will advise you on all areas of law including contract, corporate, property and landlord & tenant.
- Access to a Health & Safety support helpline.
We will be contacting our clients directly this week regarding this service, but please get in touch if you would like to discuss this further in the meantime.
A LINK TO THE FULL GOVERNMENT ANNOUNCEMENT CAN BE FOUND HERE