A Midsummer Sale & Bonus Bonanza to stimulate economic activity and protect jobs.
Listening to and reading some of the financial press today we couldn’t quite believe our eyes and ears. We really are in unchartered waters at present. If someone had said even 6 months ago HMRC are going to give Tourism and Hospitality a 75% reduction in their VAT liability they would have been laughed at.
Today (July 8th 2020) the Chancellor Rishi Sunak unveiled £30bn worth of stimulus to increase economic activity, protect jobs and stimulate activity in the housing market. The challenges are all to well known and overall the measures have been welcomed. Some believe they don’t go far enough with others wondering how this will be repaid, worried about tax rises and spending cuts in the future to cover the ever increasing shopping spree of the government.
Measures announced by the Chancellor 8 July 2020
The following temporary measures to simulate more economic activity, protect jobs and boost activity in the housing market over the next 6 – 12 months have been introduced.
- The Eat Out to Help Out Scheme: During August, diners can get 50% off Monday to Wednesday on meals and non-alcoholic drinks, up to £10 per person, when eating at participating restaurants, bars, cafes and other establishments that have registered. Essentially take your loved one out for a meal on HMRC. It’s pretty much buy one get one free! No champagne to celebrate just a sparkling water. Thanks Rishi, don’t mind if we do.
- VAT reduction: From 15th July until January 12th 2021, the UK government will cut VAT from 20% to 5% on any eat-in or hot takeaway food and drinks from restaurants, cafes and pubs, excluding alcohol. This VAT reduction also applies to all holiday accommodation in hotels, B&Bs, campsites and caravan sites, as well as attractions like cinemas, theme parks and zoos. This announcement has been very much welcomed here in Northern Ireland and it will be interesting to see how the Republic of Ireland will respond to this. Colin Johnston, general manager of the Galgorm Resort, described the new measures as “pretty much a game changer”, with Howard Hastings, managing director of Hastings Hotels, said they would “go a long way in helping the local economy recover”.
- An increase in the Stamp Duty Land Tax (SDLT) threshold in England and Northern Ireland: Increasing the threshold under which no SDLT is paid on the purchase of a main home from £125,000 to £500,000, with immediate effect until 31 March 2021. This could be of real benefit in the Northern Ireland housing market to stimulate activity not just for first time buyers but also in situations where people are up sizing or down sizing their property. The Chancellor believes this will save the average house buyer £4,500. Reports in the financial press coming out today are hinting at the possibility of buyers needing a 20% deposit to secure a mortgage which is going to be a big challenge for a large number of buyers.
- Introduction of the Job Retention Bonus – This is a one-off payment of £1,000 to employers that have used the Coronavirus Job Retention Scheme (CJRS) for each furloughed employee who remains continuously employed until 31 January 2021. The bonus will provide additional support to retain employees.
To be eligible for the Job Retention Bonus, employees will need to:
- Earn at least £520 per month (above the Lower Earnings Limit) on average for November, December and January
- Have been furloughed by you at any point and legitimately claimed for under the Coronavirus Job Retention Scheme
- Have been continuously employed by you up until at least 31 January 2021.
Employers will be able to claim the bonus from February 2021 once accurate RTI data to January 31st has been received. More information about this scheme will be available by 31 July and full guidance will be published in the Autumn.
Updates on CJRS scheme
We would also like to make you aware of some key dates on the CJRS scheme that might affect you:
Claiming for employees furloughed on or before June 30th 2020.
- You need to claim by July 31st for employees furloughed through the Coronavirus Job Retention Scheme (CJRS) for periods ending on or before June 30th.
Get ready for changes from August 1st 2020.
- You will no longer be able to use a CJRS grant to cover National Insurance (NI) and pension contributions for furloughed employees from August.
- You can submit your August claim in advance, from July 20th.
Working out your claims
- You can use HMRC’s online examples and calculator to help you work out what you can claim, for claims ending on or before July 31st.
- From July 10th you will also be able to use these to help you work out claims ending on or before the 31st of August. Click here to calculate how much you can claim using the Coronavirus Job Retention Scheme on GOV.UK.
Made a mistake on your claim?
- You can now delete a claim online within 72 hours of submitting it. Find out how HERE.
Calls to customers
- HMRC are contacting selected employers to discuss their claims. These calls will be to check they haven’t made any mistakes and to help make sure they’re claiming the correct amount.
Finally a note from us here at Exchange Accountants
Lots in this we know, but we are here to help you navigate your way through this. We know you will have loads of questions on these measures so please get in touch with any member of the Exchange team.
We hope this information helps you and your business, and we’ll continue to keep you updated on developments over the coming weeks.
Best wishes and stay safe. We are in this together and let’s grow together.