Summer 2020 Economic Statement: Tax Updates
Temporary VAT Cut
The Government announced a temporary reduction in the standard rate of VAT in certain sectors for a 6-month period. From 15 July 2020 to 12 January 2021, a 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. The reduction will also apply to supplies of accommodation and admission to attractions.
Further details and guidance will be announced by HMRC imminently around the practicalities.
Stamp Duty Holiday
The Chancellor also announced he will immediately (from 8th July) raise the threshold on stamp duty land tax (SDLT) to £500,000 until March 31 next year. This means that 90% of house buyers will save thousands when purchasing a new property – everyone buying a ‘main’ home under £500,000 will pay no stamp duty at all.
The current rate bands will apply to the excess over £500,000. This means that the next £425,000 (£500,001 to £925,000) will carry SDLT at 5%, the next £575,000 (£925,001 to £1,500,000) at 10%, and any excess over £1,500,000 at 12%. If the purchaser is acquiring an additional property (or the purchaser is a company qualifying for relief from the 15% corporate SDLT charge on residential property over £500,000) the existing additional 3% charge will apply on top of the above figures. In respect of residential leases granted during this period, the SDLT ‘nil rate band’ applicable to the ‘net present value’ of the rent payable under the lease will increase to £500,000, with a 1% charge on the excess over £500,000.
HMRC has stated that it will be publishing guidance on the impact of the SDLT holiday on linked transactions (presumably including multiple dwellings relief), first-time buyers, and shared ownership properties, and will be expanding its brief guidance on leases and the additional 3% charge.
Everyone will have their bills discounted if they eat out at a restaurant, cafe or pub during August midweeks, as part of a scheme to help save jobs in the food and catering sector. Chancellor Rishi Sunak announced the ‘Eat Out to Help Out’ scheme to help get people back into venues across the UK. He told the Commons that the “creative” measures which have never been rolled out before, are to protect the 1.8 million people who work in the hospitality sector and the discount would be valid throughout August between Monday to Wednesday and can be used an unlimited number of times.
The scheme offers 50% off a bill for everyone, including children, up to a maximum discount of £10 per head. Participating establishments will be fully reimbursed for the 50% discount but will need to register through a website, which will be open from 13 July. Each week in August, businesses can then claim the money back, with the funds in their bank account within 5 working days.
Green Homes Incentive
The Chancellor has announced a £2bn home insulation scheme in England, as part of a £3bn plus plan to improve energy efficiencies and cut CO2 emissions. Homeowners and landlords will receive vouchers worth up to £5,000 towards covering at least two-thirds of the cost of energy-saving home improvements such as cavity wall and floor insulation and double glazing. For those on the lowest incomes, the scheme will fully fund energy efficiency measures of up to £10,000 per household.
The scheme will open for applications for recommended energy-saving measures in September when details of accredited local suppliers will be made available. Part of the plan will be to fund improvements to insulation in public buildings and fit low-carbon heating technology in social housing as well as several other energy-saving projects. The scheme has been labeled the “green jobs plan” which looks to boost jobs whilst cutting CO2 emissions.
For more information on any of the above updates, please get in touch.