SUMMER ECONOMIC UPDATE
Chancellor Rishi Sunak presented the Government’s Summer Economic Update on Wednesday 8 July 2020, setting out his ‘Plan for Jobs’ and measures to boost economic recovery.
TEMPORARY SDLT CUT
Reduced rates of Stamp Duty Land Tax (SDLT) will apply for residential properties where completion takes place on or after 8 July 2020 and on or before 31 March 2021. Where a residential property is purchased in that period, no SDLT is payable on the first £500,000 of the consideration. The reduced rates apply regardless of whether the purchaser is buying their first home or whether they have owned property before.
Those buying second or subsequent homes will also benefit from the reduction as the 3% supplement is charged on top of the reduced rates.
The rates applying in respect of non-residential and mixed properties are unchanged, with SDLT remaining payable where the consideration exceeds £150,000.
The rates applying to residential properties where completion is between 8 July 2020 and 31 March 2021 are as set out in the following table.
Property value Main home Additional properties
Up to £500,000 Zero 3%
Next £425,000 (£500,001 to £925,000) 5% 8%
Next £575,000 (£925,001 to £1.5 million) 10% 13%
The remaining amount (over £1.5 million) 12% 15%
In the Summer Economic Update, the Chancellor announced a temporary reduction in the rate of VAT applying to certain supplies of hospitality, hotel and holiday accommodation and admissions to certain attractions.
From 15 July 2020 to 12 January 2021, the rate of VAT will be reduced from 20% to 5% in respect of the following supplies:
• food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafes and pubs;
• hot takeaway food and hot takeaway non-alcoholic beverages;
• sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents and associated facilities;
• admissions to theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events and facilities which do not already benefit from the cultural VAT exemption.
It should be noted that where a supply benefits from the existing cultural exemption, that exemption takes precedence.
JOB RETENTION BONUS
The Coronavirus Job Retention Scheme comes to an end on 31 October 2020 and employers will need to meet the full wage costs of their employers from 1 November 2020. To encourage employers to keep on employees who are furloughed, the Government are to pay a bonus to UK employers of £1,000 for each furloughed employee who remains continuously employed until the end of January 2020. To qualify for the bonus, the employee must be paid above the level of the lower earnings limit on average from the end of the Coronavirus Job Retention Scheme until 31 January 2021. The lower earnings limit is set at £120 per week (£520 per month) for 2020/21.
The above measures were correct at the time of writing. However, the Government are making new announcements daily. Please check the Gov.uk website for the latest information.
FLEXIBLE FURLOUGH AND JOB RETENTION SCHEME CHANGES
Time is running out for claims under the initial Job Retention Scheme for periods to 30 June 2020, which must be submitted to HMRC by 31 July 2020. If this deadline is not met, no claims will be allowed for either the first scheme, or the new scheme commencing from 1 July 2020.
The new scheme from 1 July 2020 allows more flexibility and if you require more details of this, please contact us.
CAPITAL GAINS TAX RETURNS
For sales of residential property that is not your home after 5 April 2020, a return and payment of tax has to be made to HMRC within 30 days of completion date or a penalty will be charged. A temporary waiver for sales up to 1 July 2020 has been granted so that the return for any sales to that date has a filing deadline of 31 July 2020.
Where an employer provides a company car, but the employee pays for the fuel, the employer may pay a mileage allowance for business journeys. HMRC accepts that payments not exceeding the ‘advisory fuel rates’ are reimbursements of expenses, not subject to income tax or Class 1 national insurance contributions.
These rates may be used to reclaim input VAT in respect of fuel used for business journeys (remembering that VAT receipts to cover the amount claimed are required). These rates are scheduled to change quarterly and the current rates can be found at: https://www.gov.uk/government/publications/advisory-fuel-rates.