Welcome to the July 2020 Mini-Budget newsletter from Chamberlains

Hello again!  Work has been carrying on here fairly normally, although we haven’t been in the office much and client meetings are almost non-existent except on Zoom.  Working from home has been perfectly possible, although perhaps not quite so efficient, and we’ve kept in touch regularly. 

The last formal Budget in March was immediately superseded by the measures designed to help many of us affected by Coronavirus pandemic. Not everyone benefited, especially the self-employed, but there’s no doubt that the temporary subsidies, loans and delays in payment of tax have relieved some of the pain.

However, the help is not going on forever, and we know that the Job Retention Scheme grants are being phased out over the next few months and that the delayed taxes will need to paid in early 2021.  These all helped cashflow, but there are some nasty-looking crows coming home to roost in the new year.  As a reminder, the half-yearly payments on account for individuals due by 31 July can be deferred until next 31 January, but that will make for a heavy bill with payments concertinaed together.  And the VAT originally due for payment between April and June 2020 will instead fall due by 31 March 2021 – very painful then!  Businesses must make sure that they have funds available.

In the meantime, despite all the government is trying to do, many businesses are facing the reality of reduced demand – they will not be able to continue with current levels of staff or in their current premises.  This will create many personal tragedies of people out of work and many landlords will also be struggling.  For good reasons, landlords are not universally popular – but many pension funds have relied on commercial property investments as a source of income.

So what is the government promising now?

Help for the hospitality industry

The rate of VAT will be cut from 15 July until 12 January 2021 from 20% to 5% for supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK.  It’s up to the individual businesses whether to reduce prices for customers.

The same 5% rate of VAT will also apply for the same period to supplies of
accommodation and admission to attractions across the UK. More details soon. 

An ‘Eat Out to Help Out’ Scheme will offer 50% meal discounts during August, again excluding alcohol, and up to a £10 limit per head.  Mondays to Wednesdays only.  Businesses will need to sign up to a new government website and put in a weekly claim.

Help for the housing industry

There will be a temporary cut to Stamp Duty Land Tax on residential property, increasing the zero-rate band to £500,000 from 8 July until 31 March 2021.  This will save purchasers up to £15,000 because rates have been 2% from £125,000 to £250,000 and 5% from 250,000 to £500,000.  The first good new for the buy-to-let market for a while…  However, the extra 3% for additional properties still applies. 

Job Retention Bonus £1,000

The Job Retention Scheme has not been extended beyond October and is being phased out with employers bearing more of the cost of employment.  However, if employees who have been furloughed are still employed by the end of January and are being paid an average of at least £520 per month until then, there will be a £1,000 Job Retention Bonus.  Will that really be enough to keep them on until then?  I suspect that this will depend more on other aspects of the business than this bonus.

Kickstart Scheme for young trainees

This scheme will cover employers’ costs at the minimum wage for new six-month work placements for trainees aged 16-24.  This is for people who are on Universal Credit and who are considered to be at risk of long-term unemployment. The funding for each job will cover 100% of the relevant National Minimum Wage (NMW) for 25 hours a week plus the associated employer NICs and minimum pension contributions (a maximum of about £6,500).  The NMW ranges from £4.55 per hour for 16 year-olds to £8.20 for 24 year-olds.

In parallel with this, lump sums of up to £2,000 will be available for new placements and apprenticeships.

TAX INVESTIGATIONS – PROTECTION AGAINST FEES

The taxman is waking up.  For some reason or another, there has been a pause in tax enquiries and investigations for the last few months, but we’re now seeing some enquires coming to life again. 

Frankly, some people deserve to be investigated – although at Chamberlains we tend to steer well away from them.  But others are randomly selected for an enquiry or because their affairs have changed or look odd to the taxman’s computer – and we have to deal with the questions raised.  Sometimes they can be summarily dismissed, but at other times they can take quite a bit of time to sort out – and you’ll understand that we’ll normally need to charge for this time. Fortunately, we have an arrangement whereby we are able to cover these costs for a modest annual fee.  You can see more background here: http://chamberlainsaccountancy.clientweb.site/ .    The new year for this is from 1 August, so I’ll send out invoices to those who’ve had the cover previously.   The cost varies a bit, depending on the nature of the taxpayer’s affairs – please ask me for details.