COVID-19 and Summer Update

Coronavirus Job Retention Scheme (CRJS)

In our last update we detailed the changes and extension of the CJRS – here’s a quick overview to recap:

• From 1^st July flexible furlough is in place; employees can work hours at full pay, and still be furloughed for hours they aren’t yet needed for
• From 1^st August the government will no longer pay for Employer National Insurance or Employer Pension Contributions
• From 1^st September the government will pay 70% of the CJRS amount, and the employer must pay the remaining 10%
• From 1^st October the government will pay 60% of the CJRS amount, and the employer must pay the remaining 20%
• The scheme ceases as of 31^st October 2020

The latest on the scheme now is, in order to incentivise and reward employers to bring their employees back to work a bonus grant will be available. 

This bonus grant is for UK employers that bring employees back to work and keep them employed until at least 31^st January 2021.

Of course there are some rules relating to this bonus:

• Employees must have been furloughed
• Employees must earn more than £520 a month, on average, between 31^st October 2020 (when the CJRS finishes) and 31^st January 2021
• Bonus will be £1,000 per employee
• Bonus payments will be made from February 2021

This scheme has the potential to cost the government £9bn, but it’s aim is to help businesses keep their employees and mitigate the impact on the unemployment rate.  Unemployment is already seeing a rise, and the availability of jobs a decrease, due to the effect of coronavirus, social distancing measures, and lockdown on businesses.

Kickstart Scheme

The Chancellor’s summer update also recognised that the younger generation are hit the hardest by the lack of available jobs and threat of unemployment.  Therefore, the Kickstart Scheme has been introduced.

This scheme is available where employers’ hirer employees aged 16 to 24, who are claiming Universal Credit.  The government will:

• Pay 6 months of the employee’s wages
• Cover 100% of the national minimum wage for 25 hours a week
• Employers can top this up if they pay employees more than that

In addition to this:

• Employers can received £2,000 for each new apprentice they hire under the age of 25 – this is additional to the £1,000 already in place for 16 to 18 year old apprentices / under 25s in Education, Health and Care Plan
• £111m investment to triple the scale of traineeships in 2020/21 (this is a course with work experience that gets people ready for work or an apprenticeship)
• £17m to triple the number of work academy placements in 2020/21
• £900m to double the number of work coaches to 27,000
• And, 250,000 more young people can benefit from an extra £32m invested into the National Careers Service

Home Owners & Landlords

Stamp Duty

To boost the housing market the Chancellor has also cut stamp duty.  The threshold for having to pay stamp duty was at £125,000, however it has now been increased to £500,000. 

This cut is in place until 31^st March 2021.

The Treasury expect that 9 out of 10 house buyers won’t have to pay stamp duty at all, and their bill will fall, on average, by £45,000.

Green Homes Grant

Homeowners and landlords will be able to apply for vouchers to pay for green improvements like loft, wall and floor insulation to improve the energy efficiency of homes.  These grants come from the £2bn Green Homes Grant scheme.

The grants will be in the form of vouchers and will cover at least two thirds of these improvement costs.  Vouchers could be worth up to £5,000, or £10,000 (the full cost of the improvements) for low income households.

Hospitality & Tourism Industries

VAT Cuts

Due to the heavy impact coronavirus has had on the hospitality and tourism industries, the Chancellor has also announced a cut in VAT from 20% to 5% from 15^th July 2020 to 12^th January 2021.

Here’s a list of items that will benefit from the temporary 5% reduced rate:

• food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafes and pubs
• hot takeaway food and hot takeaway non-alcoholic beverages
• sleeping accommodation in hotels or similar establishments, holiday accommodation, pitch fees for caravans and tents, and associated facilities
• admissions to the following attractions that are not already eligible for the cultural VAT exemption such as:
  • theatres
  • circuses
  • fairs
  • amusement parks
  • concerts
  • museums
  • zoos
  • cinemas
  • exhibitions
  • similar cultural events and facilities

The VAT cut doesn’t apply to alcoholic beverages though folks.

It has been argued that these VAT cuts should have been delayed until social distancing restrictions have lifted, as the industries have a concern that they may not be able to make maximum usage of the VAT cut due to the limits on the number of people they are allowed to service. 

This cut has been implemented now, however, due to fears that many businesses in these industries may not survive until these restrictions are lifted, without this support.

15^th July 2020 will see many businesses needing to change information on their electronic point of sale (EPOS) and accounting systems to change the VAT rates charged.  If you’re in this industry, please don’t forget to do this!  And speak to your accountant if you have any queries about it.

Eat Out Help Out Scheme (EOHO)

This scheme sees restaurants able to offer discounts to encourage people to eat at their restaurants.  Here are the details:

• Restaurants can offer a 50% discount, up to £10 per head
• For food or non-alcoholic drinks, to eat or drink in
• The money is claimed back from the government
• The scheme will operate Monday to Wednesday from 3^rd to 31^st August 2020
• No limit to the number of times customers can use the offer during this time
• Establishments must sell food for immediate consumption on the premises

Other Things Implemented

In addition to the above, the Chancellor announced:

• £1bn going into public buildings, including schools and hospitals, to help make them greener
• £5.8bn will be spent on construction projects to get the nation building again

And finally, IR35

For those affected by IR35 and its implementation into the private sector; these changes, due to take place in April 2020, were deferred to April 2021.

Despite a movement to delay this further, IR35 changes are now firmly set to be implemented in April 2021.