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Friday 10 July 2020
by Angela Hankey

LWA Blog: All the information you need from the Government's Summer Economic Update

LWA

Yesterday, the Chancellor, Rishi Sunak, made a major announcement referred to as the Government's Summer Economic Update, and is the “second phase in response to the Coronavirus crisis.”

With some renewed support, plus enhancements to existing support, the team at LWA have picked out the key highlights for our clients below, and we will keep you updated as and when we know further details.  

CORONAVIRUS JOB RETENTION SCHEME (CJRS) BONUS

The CJRS ends in October and the Chancellor looked to cushion expected redundancies with the announcement of a Job Retention Bonus (JRB). The new scheme will give employers £1,000 for each previously furloughed employee they retain and keep in employment until January 2021, as long as they are paid at least £520 a month. Further details of the scheme are expected later in July. 

Plan for Jobs Government Information

KICKSTART SCHEME AND MEASURES TO HELP PEOPLE FIND WORK

In order to support people finding jobs, the Chancellor announced the Kickstart Scheme, which will provide £2 billion to support the creation of “high quality” six-month work placements for 16 to 24-year-olds on Universal Credit and at risk of long-term unemployment.

The Government will provide employers who offer the placements, funding equivalent to 100 per cent of the relevant level of the National Minimum Wage (NMW) for 25 hours a week. It will also cover the associated Employer NICs and minimum automatic enrolment pension contributions.

Rishi Sunak also outlined additional measures, including funding for traineeships and employers that hire new apprentices, as well as funding for several careers and job-finding programmes.

The apprenticeships funding will provide £2,000 to employers in England for every apprentice hired under the age of 25 and £1,500 for each newly hired apprentice aged 25 or older. This funding is in addition to schemes already in place to support employers in taking on apprentices.

More on the Plan for Jobs and the Kickstart Scheme

VALUE ADDED TAX REDUCED RATE FOR HOSPITALITY AND TOURISM SECTORS

The Chancellor outlined a VAT rate cut for the Hospitality and Tourism sectors from 20 per cent to five per cent. The measures relate specifically to food and non-alcoholic drinks and to accommodation and admission to attractions, with further details expected to be published later.

The VAT rate change comes into effect on Wednesday 15 July 2020 and will be in place temporarily until 12 January 2021.

EAT OUT TO HELP OUT 

The “Eat Out to Help Out” scheme will provide a discount of 50 per cent of up to £10 per person on eat-in meals, including non-alcoholic drinks, at participating establishments on Mondays, Tuesdays and Wednesdays for the month of August.

Restaurants, cafes and pubs can sign-up for the scheme on a new website on Monday 13 July 2020.

STAMP DUTY LAND TAX HOLIDAY

There is a temporary cut in Stamp Duty Land Tax (SDLT) from 8 July by raising the nil-rate band from £125,000 to £500,000 until 31 March 2021. The Treasury estimates that, as a consequence, around nine in 10 people buying a main residence will pay no SDLT.

RESIDENTIAL RATES ON PURCHASES FROM 8 JULY 2020 TO 31 MARCH 2021

If you purchase a residential property between 8 July 2020 to 31 March 2021, you only start to pay 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.

You can use the table to work out the SDLT due:

table

From 8th July 2020 to 31st March 2021 the special rules for first time buyers are replaced by the reduced rates for additional properties

Higher rates for additional properties

The 3% higher rate for purchases of additional dwellings applies on top of revised standard rates above for the period 8th July 2020 to 31st March 2021.

  The following rates apply: 

table 2

New leasehold sales and transfers

The nil rate band which applies to the ‘net present value’ of any rents payable for residential property is also increased to £500,000 from 8th July 2020 until 31st March 2021.

  The following rates will apply: 

table 3

Companies as well as individuals buying residential property worth less than £500,000 will also benefit from these changes, as will companies that buy residential property of any value where they meet the relief conditions from the corporate 15% SDLT charge.

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 8th July 2020.

Find out more about SDLT here

NOW IN FORCE - 30 DAY DEADLINE TO PAY CAPITAL GAINS TAX ON RESIDENTIAL PROPERTY DISPOSALS

If you’ve sold a residential property in the UK (that is not your main home) after 6th April 2020, new rules require you to declare and pay Capital Gains Tax (CGT) to HMRC within 30 days of disposal.

Due to the effect of Coronavirus on the economy, HMRC have allowed for any transactions completed on or after 6 April 2020 to 1 July 2020 and reported up to 31 July 2020 to not be subject to a late filing penalty.

If you're a second property owner, find out more here

PLEASE GET IN TOUCH WITH OUR TEAM

These new support measures from the Government's Summer Economic Update will hopefully bring much-needed respite to businesses and individuals as we come through the COVID-19 shutdown, and as mentioned above, we will provide further details as soon as we know more.

In the meantime, if you have any questions on any of the updates above, please feel free to contact a member of our team on 0161 905 1801 in Manchester, or 01925 830 830 in Warrington.