I enclose an truncated budget review, based on statements available on 8 July 2020 as applicable to our core clients, being small limited companies, landlords and individuals.
I also cover a general “where we are now” roundup on Covid-19 support and other issues.
Key points today:
We have had only skeleton supporting documents to the announcements today, so a lot of this is “we don’t know”, but I will update this statement in the coming days as details are published.
8 July 2020
Stamp Duty Holiday
SDLT is suspended on sales under £500,000 until 31st March 2021
As the rates below £500,000 have been reduced to nil, purchases over £500,000 will also save £15,000.
The main question for our clients is “does this include the extra 3% SDLT for landlords and second home buyers?” “No” seems to be the answer.
Temporary Reduction in VAT for Hospitality and Tourism
VAT is reduced to 5% for accommodation, (some) hospitality & attractions
From 15 July 2020 to 12 January 2021.
I would be surprised to see many menus being reprinted and prices changed for what is potentially an effective 12.5% price reduction. It’s more likely to be a top up to business income rather than lower prices for customers.
You should note that alcoholic drinks are not included, which is going to make headaches of a mathematical kind when it comes to working out what VAT is charged on licensed premises and trying to shoehorn that into accounting systems which did not predict two VAT rates on one bill.
As well as the bizarre mid month start and end dates we are going to end up with an “blended” rate of VAT, which will no doubt be keeping tax tribunals busy for years to come.
Furlough Return Scheme
£1,000 bonus per employee brought back from Furlough
If employees on furlough are bought back into work and remain on your payroll earning over £520 a month until the end of January, than the bonus will be paid. There are some caveats, but this sounds surprisingly generous. It is costed as £9bn in the backing paperwork, which is more than all the other measures put together. The devil no doubt will be in the detail. When someone works that out.
Job Subsidies for Trainees
New subsidised training roles under the “Kick Start” scheme to pay 25 hours a week at minimum wage to workers under 24 on a training programme.
This sounds very much like a reheat of the old training grants which seemed to make little difference to the number of training spaces but just subsidised low paid and unskilled temporary work. Details are sketchy, but before you ask I very much doubt you can ’employ’ your teenage children in your small limited company and claim a grant.
30 Day Payment Deadline for CGT
As noted several times, if you sell a let property in the UK, CGT is now due to paid within 30 days of sale, for all UK property sales.
This is a very significant change in the operation of the tax system and requires essentially an interim tax return when you dispose of a property.
You must let us know if you sell a residential property that has not been your main home for the whole duration of your ownership.
IR35 Changes Still Coming
The postponed changes to the IR35 rules for contractors which were due to come in force 1 April 2020 will come into force from 1 April 2021, unless further deferred. This is in respect of moving the risk of deemed employment from your personal service company to your end client.
If you anticipated being affected earlier in 2020 it looks like you will be in the same position by April 2021. The House of Lords actually removed the clause from the Finance Act, demanding a proper review and deferral for several years, but their amendment was pulled out and the original clause put back in.
Sole Trader Grant (SEISS Claims)
Firstly, an important deadline: 13 July for claims.
If you are eligible for a claim you only have a few days left to make it. HMRC will have contacted you in May.
SEISS II Scheme
As announced some weeks ago, there is a second scheme running July to September which can be claimed from mid-August. We expect HMRC to be contacting claimants as before, but in brief
I have already contacted on an individual basis clients who are potentially eligible for SEISS, and those clients who fall outside of the rules.
Director’s Furlough Scheme
There are no changes to the eligibility criteria for director’s furlough for annual payrolls.
Claims for the first period to end of June, close on 31 July, so this issue looks to be all over I am afraid. Whilst I think everyone appreciates the line had to be drawn somewhere, I remain bitterly disappointed to be unable to make these claims for our clients due to an arbitrary processing date.
I was a bit rude about Rishi in the budget back in the ancient past of early March
But 3 months into the job and he seems to come across well with the basics of sounding like he actually prepares for public speaking, does so in a calm measured manner and even a little bit of humility once in a while. He doesn’t seem to be making up on the spot and then refusing to apologise. He also seems to take his role seriously in sharp contrast to Boris who seems to think it’s all a bit of a laugh from catching the final few minute of Prime Minister’ Questions. Rishi was still banging in Cumming’s nonsense slogan about “leveling up” but most of the pantomime rubbish from the original budget was gone and he was all over in 30 minutes, even including the ten minute traditional reannounce, renounce and reannounce of any possible spending plan.
Overall in the past 3 months his general thrust of the Covid-19 support seems fairly sound, quite how he is ever going to arrange to pay back the money we still don’t have a clue. My bet is still on Quantitative Easing, (ie the bank of England just strike out No.11’s overdraft and say ‘what debt?’) but we will see.
In preparation for the
Emergency, sorry Summer Budget Light Rishi has been busy flying a number of kites, including a widely derided VAT reduction (people are not spending due to worrying about dying, rather than things being 2% too expensive) which has been scaled back to just Leisure and Tourism and unlikely sounding voucher scheme, which has been scaled back from a £500 per head voucher to £10 off an August pub lunch in August. The biggest change quite frankly is the attempt to restart the Housing Market with the SDLT holiday. The rest of it will probably come to very little, the training grants tend to end up only being claimed by larger business who were going to train people anyway. The £1,000 “singing back” bonus for employees coming off Furlough and retained until January sounded quite savvy to start with, but I am unsure it would really change a hiring or firing decision so it seems to be (big) money down the drain subsiding the majority of staff who would have been back anyway.
As for the Red Team, the response from Anneliese Dodds, the shadow Chancellor in Labour (yes I had to look that up too) sounded fairly competent and switched on, albeit strayed into some fairly lame political point scoring at the end. A world away from McDonald’s bumbling and without the shrill edge of Corbyn’s campaigning style. Boring but vaguely credible on both sides of the house – it makes a refreshing change.
Anyhow, Mr Sunak is having another go in the Autumn apparently. Which seem to be mean any time between October and early December.