Summer Budget 2020Back to News
The Chancellor Rishi Sunak delivered his ‘Summer Budget’ announcing the following measures including a temporary reduction to the Standard Rate of VAT from 20% to 5% for the hospitality sector. This VAT cut, which is in place until 12 January 2021, is designed to boost customer demand in response to the economic crisis caused by the Covid-19 pandemic.
Job Retention Bonus
The Government announced that the Coronavirus Job Retention Scheme (CJRS) would not be extended beyond 31 October 2020. Up to 9 million employees have been furloughed to date.
Instead of extending the CJRS, employers will be paid a bonus of £1,000 for every employee who has been furloughed at some point but who returns to work and remains continuously employed to the end of January 2021. Payments will be made from February 2021.
These employees must be paid at least the NIC Lower Earnings Limit of £520 per month and, of course, paid at least the National Minimum Wage/National Living Wage for the hours worked. Further information on the conditions of the employment have yet to be announced.
Further details on the Scheme are expected to be announced by the end of July.
Stamp Duty Land Tax Cut on Residential Property
The Chancellor announced a temporary ‘nil rate band’ for SDLT on the first £500,000 of the purchase price of residential property in England and Northern Ireland from 8 July 2020 to 31 March 2021.
The current rate bands will apply to the excess over £500,000. This means that the next £425,000 (£500,001 to £925,000) will carry SDLT at 5%, the next £575,000 (£925,001 to £1,500,000) at 10%, and any excess over £1,500,000 at 12%.
If the purchaser is acquiring an additional property, the existing additional 3% charge will apply on top of the above figures.
Temporary VAT cut for food and non-alcoholic drinks
From 15 July 2020 to 12 January 2021, the reduced (5%) rate of VAT will apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK.
Temporary VAT cut for accommodation and attractions
From 15 July 2020 to 12 January 2021, the reduced (5%) rate of VAT will apply to supplies of accommodation and admission to attractions across the UK. As with the previous VAT reductions, businesses will need to decide whether the pass the reduction onto the consumer or hold their prices.
Eat Out To Help Out Scheme
In order to support around 130,000 businesses and to help protect the jobs of their 1.8 million employees, the Government will introduce the “Eat Out to Help Out” scheme to encourage people to return to eating out. This will entitle every diner to a 50% discount of up to £10 per head, including children, on their meal, at any participating restaurant, café, pub or other eligible food service establishment. The discount can be used unlimited times and will be valid all day Monday to Wednesday on any eat-in meal (including on non-alcoholic drinks) for the entire month of August 2020 across the UK.
Participating establishments will be fully reimbursed for the 50% discount - businesses will need to register through a website, which will be open from 13 July. Each week in August, businesses can then claim the money back, with the funds in their bank account within 5 working days.
As ever, if you have any questions, queries or need assistance with any of the above then we are here to help.
Take care and stay safe