Background
Last week, just four months after his first Budget, the Chancellor, Rishi Sunak, unveiled a summer economic update designed to mitigate the impact of the COVID-19 pandemic.
The Chancellor confirmed that the coronavirus Job Retention Scheme will end in October whilst outlining a number of tax cuts and grants aimed at supporting businesses in returning and retaining their workforces as the UK enters the second phase of recovery. In this week’s Muras Matters we will look at three of the main measures announced by the Chancellor.
Details
Stamp Duty
The threshold for paying stamp duty on residential property has been temporarily raised from £125,000 to £500,000, with immediate effect. The cut in stamp duty applies to companies as well as individuals buying residential property.
If you purchase a residential property before 31 March 2021, you will only start to pay Stamp Duty Land Tax (SDLT) on the amount that you pay for the property above £500,000. These rates apply whether you are buying your first home or have owned property before.
The 3% higher rate for purchases of additional residential property continues to apply, but on top of revised standard rates for the period 8 July 2020 to 31 March 2021.
On the 1 April 2021 the reduced rates will revert to the rates of SDLT that were in place prior to 8 July 2020.
VAT
The Chancellor announced a VAT cut for the tourist and hospitality sector from 15 July 2020 until 12 January 2021.
The VAT rate is reduced from 20% to 5% with the exception of alcohol.
The rules for food and drink sales by pubs and similar establishments appear straightforward:
- On-site consumption: All sales of food and drink will be subject to the reduced VAT rate, apart from alcoholic drinks, which are still subject to 20% VAT.
- Takeaway sales: If it is hot food or a hot drink being sold, and it is not alcoholic, it is subject to 5% VAT – otherwise 20%.
Please be aware that there are some anomalies amongst the items this covers. For example a packet of crisps purchased inside a pub will be subject to 5% VAT, but the same packet purchased for takeaway will be subject to the standard rate of 20%. This is because the 5% reduced rate applies to ‘hot and cold food’ on-site but only applies to ‘hot food’ for takeaway sites. Care is therefore required when applying the temporary reduced rate.
Coronavirus Job Retention Bonus
As an incentive for employers to retain employees, businesses will be paid a £1,000 bonus for every furloughed employee they bring back and retain until the end of January 2021.
The bonus will be conditional on the employee being paid at least £520 per month in November and December 2020, equivalent to the lower earnings limit for National Insurance contributions.
Further details regarding the bonus scheme and how it will work have yet to be announced by the government and we will provide more information on this when it becomes available.
Our updated working arrangement – We remain ‘Open for business’
Our staff have returned to office based working on a rota basis, each attending two days a week, whilst continuing to work from home at other times. They can still be contacted in the usual way either via email or by calling the office number where reception will divert your call to the appropriate staff member.
If you would like more information on any of the measures outlined above please speak to your usual contact at the firm.
To see our other news items please visit our Muras Baker Jones – Blog.