by David Watkison www.watkinsonblack.co.uk
Well….. What a strange time we have had over the last three months. It has been a horrendous time for anyone caught by this disease. We are all grateful for having got through it to date, and our condolences go to the families of those not so fortunate.
We are pleased to say that our offices are now fully re-opened, although staff are still working from home where possible and visits are still be appointment only.
The effect of Coronavirus on the economy has been equally horrendous. It is estimated that the economy will shrink this year by 14%. Unemployment could potentially increase from under 4% to 15%. It is to attempt to mitigate these crises that the government has thrown huge amounts of public funding into the economy. We are, indeed, currently “at war”.
Looking back, we have kept clients informed of the various steps put into place by the government to assist people and businesses. Many of these, such as the furlough scheme and the first tranche of the Self Employed Income Support Scheme (“SEISS”), will have either ceased or are closed to new applicants. The Bounce Back and other loans are still available, and applications for the second tranche of the SEISS opens on 17th August. Further information on these are available in our various blogs which are still available on our website at www.warringtonaccountants.co.uk.
As we write, there are also a number of new measures being announced by the Chancellor in his summer statement, all of which are designed to give the economy a kickstart.
Employment
As expected, the furlough scheme is being wound down by October this year. Many jobs have been protected by this scheme, and the big fear was that a large proportion of these would be made redundant when the scheme finished. Therefore, the Chancellor has announced that, to encourage the retention of staff after October, there will be a “job retention bonus” of £1,000 paid to employers for every employee who has been furloughed and which are retained in employment until January next year.
In addition, the Chancellor has recognised the risk of youth unemployment especially with school leavers entering the job market. He has, therefore, announced that the government will fund “kickstarter” jobs. These will consist of a six-month work placement offered to young people aged between 16 and 24. It will cover 100% of the National Minimum Wage (“NMW”) for 25 hours per week. Employees must be paid at least £520 per month on average during November, December and January. Employers will be able to top-up these wages. The NMW is £4,55 per hour for 16 and 17 year olds, increasing to £8.20 per hour for those aged 18 and above.
Hotels, Restaurants and Hospitality
One area of the economy which is recognised to have been severely hit by the virus lockdown is the hospitality sector. He has therefore announced that for the period from 15th July to 12th January 2021 the Value Added Tax charged on hospitality and tourism will be temporarily cut from the current rate of 20% to 5%. This reduction will not apply to alcoholic drinks, but will cover:
– Accommodation in hotels and guest houses
– food and non-alcoholic drinks in restaurants, cafes and pubs
– hot takeaway food, and
– entrance to attractions across the UK, including cinemas, theme parks and zoos.
In addition, meals eaten in any participating business will enjoy a 50% discount on Mondays, Tuesdays and Wednesdays during August. The discount will be up to a maximum of £10 per person, including children. In order to participate in this scheme the business will need to register. This can be done through a website that will be available from 13th July.
Stamp Duty on Property
A further measure is a temporary reduction in stamp duty payable on property transactions in England and Northern Ireland. It will take effect immediate effect on 8th July and apply to all property sales until next 31st March. It has the effect of exempting the first £500,000 of each property transaction from stamp duty.
Normally, only the first £125,000 is exempt from stamp duty except for first time buyers for whom the exempt amount is £300,000. Above these limits Stamp duty of between 2% and 12% is payable.
Landlords pay an additional 3% on the whole price paid on buy-to-let properties, and this additional charge remains unchanged.
Other Measures
The Chancellor had previously announced a number of measures over the past week. As well as a substantial package of loans and grants for organisations in the arts and heritage sector these include:
– Vouchers of up to £5,000 for energy-savings home improvements
– A grant of £1,000 per trainee in respect of 30,000 new traineeships for young people in England
WatkinsonBlack have considerable experience in all areas of taxation and businesss services, including providing a very cost-effective payroll bureau service. If you want to arrange a no-obligation initial meeting on any taxation or accounting matter then please contact us at [email protected]. Please note that these ideas are intended to inform rather than advise and you should always obtain professional advice before taking any action.
