Hi folks A picture paints a thousand words and all that, so the graphics above pretty much tell you what's news right now. Below, I've set out a little more about how the measures work in practice and how they will affect YOU. (There were some smaller announcements too, so if you are interested in knowing about something we haven't covered here...p-p-p-pick up the penguin phone) As ever, just a couple of days after the announcement, we're still waiting for the legal 'stuff' to work its way through the system so there will I am sure be some small print to bring to your attention as and when it's finalised. But firstly... First Arrest For Furlough Fraud! 👮♂️ It was always going to happen - people taking advantage of this scheme to line their own pockets. As of 9th July, NINE people have been arrested for fraudulent furlough claims, totalling nearly half a million pounds. I suspect this is the tip of the iceberg, with £0.5M being about 0.002% of claims so far. We don't know the nature of the fraud, i.e. claiming for fake employees, or for real employees who were not in fact laid off. But this hopefully sends a clear message to employers that they need to follow both the LETTER and the SPIRIT of the law, and it seems HMRC aren't waiting until 2021 (as we thought they would) to investigate dodgy claims. £1,000 retention grant The first big announcement in the "budget" is this: If you staff who were furloughed any time between March and October AND you continue to employ them until January 2021 on a salary of more than £520pm, the govt will pay you a £1,000 per employee 'bonus'. This is a payment to the employer - you don't have to pass this on to the employee. It sounds remarkably generous, but look at it another way - it's effectively a three-month extension to the furlough scheme, worth £333 per month. It wouldn't make sense to keep staff on just to get this grant, but there appear to be no provisions for repayment if you made staff redundant from Feb 2021. At present there is no guidance on whether directors are excluded from the bonus; I expect this will apply only to non-Director employees but we wait for the details. Eat Out to Help Out The first of two measures aimed squarely at supporting the hospitality industry. The sector is a MASSIVE employer, with around 1,8 million workers, hence why they are getting special attention. FOR CUSTOMERS: Get a 50% discount off your meal (and soft drinks), up to a total discount of £10 per person, at any eat-in establishment. This will apply Monday to Wednesday throughout the month of August. There is no limit to the number of times you can enjoy this discount, with the restaurant claiming the discount back from HMRC. There is no "voucher" to be obtained here, everything is administered by the cafe. 🙌 FOR CAFES/PUBS etc: You'll need to register through the gov.uk website (portal opens 13th July) for the scheme, and claims will be in your account in five working days. Thought for the day: Mon-Wed has been chosen specifically because these are quieter times for hospitality. But you will note this appears to include the August bank holiday Monday on 31st [the author's birthday by the way...all gifts accepted!]. VAT cut to 5% Don't get too excited, this is on catering, hospitality and leisure only... but as above, it's an attempt to keep this hardest-hit sector afloat. In short, from 15th July to 12th Jan 2021 VAT will reduce from 20% to 5%. Again, full guidance is awaited but this will include sales from restaurants, pubs, bars, cafés and similar premises, as well as accommodation and attractions, so hotels, theme parks and so on. Mobile catering is also included. IT IS UP TO THE RETAILER whether they pass on the reduction to the customer, or use the difference to try and rebuild their business and support their wages etc. In reality, I suspect the consumer won't see much difference in prices - but don't forget your 50% discount!. The cut does NOT apply to alcoholic drinks; you'll have seen the jokes about "Crisps £5, comes with free beer" or buy a shot of Gin (20% VAT), a glass of tonic (5%) and mix them together the moment you leave the bar. "Mixed supplies" rules continue to apply (similar to food hampers), give me a call if you want more details on this. If you've already booked in advance e.g. a hotel in the UK, generally the VAT rate at the time of payment is fixed. BUT, check with the supplier as, depending on timing, there are transitional rules where payment and supply aren't on the same day. TILL SYSTEMS: As a retailer, you need to make sure your till systems are updated to only pay over 5% to the gov't, and you'll need to review all your lines to only apply 5% to eligible items. This won't happen automatically! FLAT-RATE SCHEME: If you're on the Flat-rate scheme, at the moment there appears to be no reduction in the rate, so please speak to me about whether you should come off the scheme. It'll be different for each business, especially as you can't re-join the FRS for 12 months (and this tax cut only lasts 6m). 🧮 Cutting Stamp Duty 🏡 In short: The Nil Rate Band for stamp duty rises to £500K until 31 March. It's based on the date of completion, not exchange, so if you are looking to buy a house in the next 9m, don't let it pop over to 1st April; it could cost you up to £15K in stamp duty. This benefit will also apply to those purchasing a second home (although the 3% levy remains), which seems a little unexpected. I didn't expect anything on Stamp Duty and I don't understand why they've brought in this measure. Yes, the construction industry employs a LOT of people, most of whom don't have employment protection and are effectively self-employed. But, the cut is only temporary and therefore new construction sites - with completion after 31 March - will not be in any higher demand. Indeed, moving house is perhaps very low down the list of concerns for people whose jobs are still uncertain once the furlough scheme finishes. In reality, I expect a small increase in selling prices over the next nine months, as buyers are all competing for the same number of properties but with an extra 'stamp duty bonus' in the pot. I'm not sure it will help many people actually get on the property ladder. But if you are in the market for a new property soon, this could be the most valuable measure so far! |