On the 8th July, the Chancellor announced a mini budget which included a range of new measures to try and boost the UK economy.  Below we’ve summarised the key changes for:

  • employers
  • the hospitality and leisure industry, and
  • the property market

Employers:

£1,000 Furlough Bonus

A one-off bonus of £1,000 will be paid to all UK employers for each furloughed employee who remains employed continuously  through to 31st January 2021.  Employees must earn above £520 per month (the Lower Earnings Limit) on average from November to the 31st January 2021.  Payments are expected to be made from February 2021.

Further details are expected to be announced over the next few weeks.

Kickstart Scheme

The scheme will fund employers to take on 16 to 24 year olds for a minimum 6 month work placement of a minimum of 25 hours per week at the National Minimum Wage (NMW) and cover the cost of employment.

Apprentice Bonus

A payment of £1,000 for each new trainee hired and £2,000 for each new apprentice hired aged under 25.  Plus a £1,500 bonus for each new apprentice hired aged 25 and over.  All applicable from 1st August 2020 to 31st January 2021.

For The Hospitality And Leisure Industry:

Temporary VAT cut for restaurants, bars and cafés

From the 15th July 2020 to the 12th January 2021, 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.

Temporary VAT cut for accommodation and attractions

From the 15th July 2020 to the 12th January 2021, the reduced 5% rate of VAT will apply to suppliers of accommodation and admission to attractions across the UK including Zoo’s, Cinemas and Theme Parks.

How will this work?

Further guidance is expected over the coming weeks.  Businesses will have to act quickly to implement the changes to the VAT rate.  If you use cloud based software such as Xero, there is already a 5% tax rate set up and you will have to apply that rate for any sales post 15th July, note you may also need to reduce the rate to 5% for any relevant business purchases.

If your prices are vat inclusive you can use the fraction 1/21 to calculate the vat at 5%.  Bear in mind that alcoholic drinks remain at 20% VAT so these will need to be split carefully.

Flat rates are expected to be adjusted for the change, we are waiting for HMRC’s guidance on this.

Eat Out to Help Out

The Eat Out to Help Out scheme will be introduced to encourage people to return to eating out.  This scheme entitles every diner (including children) to a 50% discount capped at £10 per head on their meal at a participating restaurant, café, pub or other eligible food service establishment.  The discount can be used unlimited times and is valid Monday to Wednesday on any dine-in meal for the entire month of August.  Participating establishments will be required to register their business online when the portal opens.

For the Property Market:

Temporary Stamp Duty cut

The Nil Rate Band of Residential Stamp Duty Land Tax (SDLT) in England and Northern Ireland has been increased from £125,000 to £500,000.  This will apply from the 8th July 2020 until the 31st March 2021 and cut the tax due for everyone who would have paid SDLT.

Green Homes Grant

This £2 billion Green Homes Grant scheme provides at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, capped at £5,000 per household.  For those on the lowest incomes, the scheme will fully fund energy efficiency measures of up to £10,000 per household.