Coronavirus Mini Budget July 2020
Although called a ‘Mini-Budget’ due to the COVID 19 situation there have been some big announcements in the budget last week. Please read below for details of what effect this will have on you and your business.
Help for Jobs and Training
Job Retention Bonus for furloughed workers:
A ‘Job Retention Bonus’ will be introduced to help firms retain furloughed workers. UK Employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed at 31 January 2021. To qualify, the employee must earn a minimum of £520 a month.
This scheme applies from 1 August 2020 to 31 January 2021. Businesses will receive £2,000 for each new apprentice under the age of 25 that they employ. This is in addition to the £1,000 payment the Government already provides for new 16-18-year-old apprentices and for those aged under 25 with an Education, Health and Care Plan.
This is still currently under further consideration, however, what we do know is that people aged 16-24 claiming Universal Credit and ‘at risk of long-term unemployment’ will be eligible for this scheme. Funding will be available for each six-month job placement and will cover 100% of the National Minimum Wage for 25 hours a week. Employers will be able to top up this wage. A timescale has not yet been announced for this measure as yet. Minimum wage hourly rates from 1st April 2020 are:
- Age 25 and over £8.72
- Age 21 to 24 £8.20
- Age 18 to 20 £6.45
- Age under 18 £4.55
Greening up the recovery
The government has announced a £3bn package of green investment in the hope of creating thousands of jobs which will benefit both the private and public sector.
Homeowners and landlords in England will be able to apply for vouchers from a £2 billion Green Homes Grant scheme to pay for improvements which include loft, wall and floor insulation. This could save some households hundreds of pounds a year on their energy bills and the aim is to create thousands of jobs for tradespeople. Poorer households (how is this defined?) could get up to £10,000 to make these upgrades.
We await further details and timescales of this scheme.
Green Jobs Challenge Fund
Up to £40m will be provided for a Green Jobs Challenge and £100m of new funding has been set aside for direct air capture, a technology that takes carbon dioxide out of the air, while an extra £10m will be given for new electric car development projects.
Housing Market and Stamp Duty Land Tax Rates (SDLT):
The Chancellor announced temporary reductions in residential property SDLT rates from 8 July 2020 to 31 March 2021. If you purchase a residential property between 8 July 2020 and 31 March 2021 you will only pay SDLT on the amount that you pay for the property above £500,000. This rate applies to both first time buyers and existing homeowners. The temporary SDLT rates are as follows:
|Property or lease premium or transfer value||SDLT Rate|
|Up to £500,000||Zero|
|The next £425,000 (from £500,001 to £925,000)||5%|
|The next £575,000 (from £925,001 to £1.5 million)||10%|
|The remaining amount (above £1.5 million)||12%|
The existing rules for first-time buyers are replaced by the reduced rates set out above. The 3% higher rate for additional dwellings applies on top of the above rates, so for example, on a buy to let or second home, the temporary rates become:
|Property or lease premium or transfer value||SDLT Rate|
|Up to £500,000||3%|
|The next £425,000 (the portion from £500,001 to £925,000)||8%|
|The next £575,000 (the portion from £925,001 to £1.5 million)||13%|
|The remaining amount (the portion above £1.5 million)||15%|
Companies buying residential property worth less than £500,000 will also benefit from these changes remembering that companies have an additional 3% SDLT rate as shown in the second table above.
On 1st April 2021, the reduced rates shown in the above tables will revert to the rates of SDLT that were in place prior to 8 July 2020. Further guidance can be found here and the government’s SDLT calculator can be found here and has been updated to take account of the temporary changes detailed above.
Help for the Hospitality Sector
Eat Out to Help Out discount scheme:
Designed to encourage people to return to eating out, the Government’s discount scheme will provide a 50% reduction up to a maximum of £10 per head for sit-down, eat-in meals in cafes, restaurants and pubs across the UK from Monday to Wednesday throughout August 2020. This discount applies to any participating restaurant, café, pub or other eligible food service establishment and can be used an unlimited number of times across the UK. Participating establishments will be fully reimbursed for the 50% discount.
VAT reduction on most tourism and hospitality related activities:
For the period from 15th July 2020 to 12th January 2021 a reduced (5%) rate of VAT will apply to:
- Food and non-alcoholic drinks supplied by restaurants, pubs, bars, cafés and similar premises across the UK.
- Accommodation costs and admission to attractions across the UK.
We expect further guidance on the scope of this relief will be published by HMRC in the coming days.
Some of that statistics that were announced in the budget with respect to the costs involved in supporting the economy are quite astonishing!:
- Direct Support (grants, Job Retention Scheme, rates relief etc.): £158.7 billion
- Loans, Guarantees and tax deferrals: £122.8 billion
Included in the £122.8 billion figure above are:
- 53,000 loans have been made under the Coronavirus Business Interruption Loan Scheme (CBILS) worth a total of £11.5 billion.
- £30.9 billion of loans have been made under the Bounce Back Loan Scheme (BBLS)
- £38 billion of VAT has been deferred between 20 March and 30 June 2020 and becomes repayable by 31 March 2021.
So I guess that in the coming months and years we will have to find a way to address this….somehow.
That about covers the ‘Mini-Budget’ for July 2020 and links to further guidance on Rishi Sunak’s speech can be found here.