In light of a shrinkage in the economy, the announcements in the Chancellor’s Summer Statement continue to underpin the support for job retention and aim to try to prevent huge unemployment numbers and encourage a boost in economic activity. We aim to summarise the main announcements from the Chancellors Statement below with the detail currently available, more detailed guidance will be announced in the coming weeks and months and we will of course continue to update you as we receive these.
CORONAVIRUS JOB RETENTION SCHEME (CJRS)
As we know the Employee Job Retention Scheme (CJRS) is due to wind down and end in October 2020 and the Summer Statement gave no indication that the scheme would be extended. Instead, a number of incentives were announced to hopefully help businesses retain workers and provide younger employees and apprentices some opportunities.
NEW JOBS RETENTION BONUS
A new bonus of £1,000 will be paid to employers for bringing back and retaining furloughed employees until January 2021. Employees must be paid at least an average of £520 per month (and be compliant with minimum wage requirements) between November 2020 and January 2021.Payments will be made in February 2021. Further details of the claim process are expected shortly. With the tapering of the CJRS beginning from the 1 August are you beginning to review the business needs in terms of staff and resources?
Although the above measures are welcomed they should be considered as part of an overall business review to enable you to make the key decisions at the right time. We will be happy to discuss this further if you contact us.
A £2bn fund has been made available to fund 6 month work placements for 16-24 year olds who are currently on Universal Credit and are at risk of long term unemployment. Funding will be available to cover National Minimum Wage for 25 hours a week along with National Insurance contributions and minimum auto-enrolment pension contributions. The grant will pay the wages up to £6,000 for the first six months and there is no cap on the number of places available. Employers can make payments exceeding NMW should they wish.
TRAINEESHIPS AND APPRENTICESHIPS
For businesses in England offering work placements for trainees a £1,000 grant is available per trainee. This will be available from September 2020 with the Treasury indicating employers must offer ‘a high quality work placement of 60-90 hours’ to qualify. In addition to this, employers in England taking on new apprentices from 1 August 2020 to 31 January 2021 are eligible to claim a grant of £2,000 per apprentice aged under 25 and £1,500 per apprentice aged over 25. This being an extension of the current scheme for under 18’s would suggest that payments may well be made by the training provider but this is yet to be confirmed. For assistance with apprenticeship grants and national minimum wage requirements, please contact us.
STAMP DUTY LAND TAX (SDLT)
The current threshold for SDLT has risen rise from £125,000 to £500,000 for residential properties. The current rate bands will apply to the excess over £500,000. This means that from £500,001 to £925,000 SDLT will applied at 5%, from £925,001 to £1,500,000 it will be applied at 10%, and any excess over £1,500,000 at 12%.
This new Stamp Duty holiday is effective immediately and will apply until 31 March 2021. It is only applicable to purchases in England and Northern Ireland (different rules apply in Scotland and Wakes). It is not available retrospectively but if a property purchase is yet to complete you will benefit from the reduced charge. NOTE: The 3% additional SDLT for second properties is unaffected and will still apply in addition to the rates quoted above.
TEMPORARY VAT REDUCTIONS FOR LEISURE & HOSPITALITY SECTOR
From 15 July 2020 the rate of VAT for a lot of goods supplied within the Leisure and Hospitality sector has been reduced from 20% to 5% for the next six months. This will be a welcome relief to the sector which has been one of the most affected during the pandemic. The provisions outlined were as follows:
– 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.
– The reduced (5%) rate of VAT will apply to supplies of accommodation and admission to attractions across the UK, Including theme parks and cinemas. Businesses operating in this sector will need to review their business systems and processes to include:
– Accounting systems are updated appropriately so as to capture the change correctly when inputting their daily/ weekly takings. The current format of recording sales may need to be reviewed to ensure that the takings are split differently to be able to identify, for example, non alcoholic drinks from alcoholic drinks which may otherwise just be recorded as ‘wet sales’.
– Changes to EPOS systems and online booking systems.
– Pricing review, consideration should be given to whether the business wishes to pass some or all of the price reduction on to customers, internal systems and literature will need to be updated to reflect this.
– Special consideration needed for clients who operate under the TOMS scheme.
– When considering the above also consider the impact of the return to 20% in January and plan for the impact now.
– If you are in this sector and currently make use of the Flat Rate VAT Scheme, please note that the relevant flat rate percentages have been updated accordingly, to check your relevant rate please see the link below:
We can assist with the updating of accounting systems, preparation of VAT returns as well as business reviews to consider the impact of the VAT reduction on entering and leaving the scheme.
EAT OUT TO HELP OUT
The ‘Eat Out to Help Out’ scheme aims to encourage people to return to eating out. Every diner will be entitled to a 50% discount of up to £10 per head on their meal, at any participating restaurant, café, pub or other eligible food service establishments. The discount can be used unlimited times and will be valid Monday to Wednesday on any eat-in meal (including non-alcoholic drinks) for the entire month of August 2020 across the UK. Participating establishments will be fully reimbursed the 50% discount on a weekly basis. Businesses will need to sign up to the scheme using the link below. The scheme will close to applications on 31 August 2020.
You will be eligible to register for the scheme if your establishment:
– Sells food for immediate consumption on the premises
– Provides its own dining area or shares a dining area with another establishment for eat in meals
– You were registered as a food business with the local authority on or before 7 July 2020.
You will need to register using your own Government Gateway ID but please contact Afford Bond Chartered Accountants if you need assistance with scheme registration and reclaims.