COVID-19 mini-budget 2020: an overview
Last week, the Chancellor delivered a mini-budget that laid down the Government’s plan to boost the recovery of the UK economy due to the Coronavirus pandemic. Some of the initiatives revealed during the speech include discounted restaurant meals in August, a six-month VAT cut for businesses in the hospitality and tourism industry, and elimination of stamp duties for first-time homebuyers provided the house is worth £500,000 or less. The announcements most relevant for businesses include:
1. Job retention bonus
Once the Coronavirus Job Retention Scheme (CJRS) will ultimately wind down in October, the Government aims to pay a bonus worth £1,000 per employee to businesses for furloughed staff retention. This amount will be payable in January 2021 provided the furloughed employees stick around until that time and draw an average salary of £520 per month.
The scheme is not applicable from February 2021 onward owing to data and RTI checks. The Government hopes that this monetary support helps businesses retain employees once the furlough scheme is lifted. More details about the bonus to follow later this month.
2. VAT reduction
A 5% VAT was announced on attractions, food and accommodation, starting from 15 July 2020 to 12 January 2021. Although this is a massive change from 20% VAT, the key reason here is to get the hospitality sector up and running.
However, whether the public will see the prices fall when they go out to eat at pubs and restaurants depends entirely on the latter who may pass on the VAT cut to the customers or simply hold their prices.
This also calls for businesses to amend their VAT receipts and sales invoices, review existing contracts and make system changes to ensure the correct amount of VAT is charged and subsequently declared to HMRC.
More information about this arrangement is expected from the Government this month.
3. Kickstart scheme
This is a new job creation arrangement explicitly designed to employ young people aged between 16-24 who are on Universal Credit and at a higher risk of long-term unemployment. The plan is to pay 100% of wages for six months (including Auto-enrolment payment and employers NIC) to these workers while they hunt for jobs. There is no cap on the number of jobs or places that will be available under the kickstart scheme.
4. ‘Eat out to help out’ scheme
In a further attempt to support the hospitality sector, the Government has announced a 50% discount on meals eaten out in August, capping at £10 per person. Only participating eateries are allowed to give a 50% discount.
To be eligible for the scheme, you must register your business on the website recently launched by the Government.
This discount does not apply to takeaways and is only applicable every Monday, Tuesday and Wednesday. The scheme also does not cover alcohol, but it aims to support local pubs, cafes and restaurants.
At Adderley, Hill, we can help your business register to be a part of the scheme, and manage your day-to-day accounting and reporting while you get busy doing what you love, i.e., serving your customers.
5. Training and apprenticeships
The Government has announced an investment of £32 million in the National Careers Service (NCS) with a good intention to double the jobcentre work coach numbers. Professionals working with the NCS are entitled to a payment of £2,000 for each young apprentice (below the age of 25) that they take under their wing and £1,500 for each apprentice aged 25 or above.
6. Stamp duty
The Government has also increased the stamp duty threshold from £125,000 to £500,000, effective immediately under 31 March 2021. This measure has been taken to stimulate the struggling property marketing in the UK.
For instance, for first-time homebuyers, no stamp duty will be payable if the house is worth £500,000 or less. However, this is only if the main home is in England or Northern Ireland. The 3% surcharge on second homes will continue to apply.
7. Greener homes
The Government has launched a £3 billion energy-efficiency plan for householders and public buildings that will support 140,000 jobs, save households money (up to £300 on average) and reduce carbon emissions.
There is also a £2 billion green homes grant which will be rolled out in September to provide homeowners and landlords to cover at least 75$ of the costs of insulation and other energy-efficiency arrangements.
The mini-budget has been designed to aid the worst affected sectors of the UK, with the promise of averting the danger of mass unemployment – the worst recession to hit in our lifetime. At Adderley, Hill, we understand businesses today are having to function in an increasingly competitive, complex and dynamic environment.
If you need help understanding the budget and how it affects you, or want us to look after your accounting, taxation, cash flow or anything, hop on a call with us, and we will figure it out!