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July 8th 2020

Tax changes and other measures announced today

Rishi Sunak has today announced a raft of tax changes and other measures intended to stimulate the economy in the wake of lockdown.

In summary:

  • Temporary cut in the VAT rate from 20% to 5% for "hospitality, accommodation and attractions" - effective from 15 July 2020 until 12 January 2021.

    The 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; and to supplies of accommodation and admission to attractions across the UK. Further guidance on the scope of this relief will be published by HMRC in the coming days.

  • Cash awards for businesses for retaining furloughed employees - £1,000 payable for each furloughed employee who returns to work and continues to be employed until January 2021. Employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021. Payments will be made from February 2021. Further detail about the scheme will be announced by the end of July.

  • A new "Kickstart Scheme" to encourage employers to provide high-quality 6 month work placements for 16-24 year old who are on Universal Credit and are deemed to be at risk of long-term unemployment. Funding available for each job will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions.
  • Employers in England will be able to claim £1,000 of funding for providing work experience to trainees, at a rate of £1,000 per trainee; and additional funding for hiring new apprentices.
  • A new "Green Homes Grant". The scheme will offer at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, up to £5,000 per household. For those on the lowest incomes, the scheme will fully fund energy efficiency measures of up to £10,000 per household.
  • A Stamp Duty Land Tax holiday on all residential property purchases in England and NI. The government will temporarily increase the Nil Rate Band of Residential SDLT, in England and Northern Ireland, from £125,000 to £500,000. This means there will be no SDLT on purchases under £500,000 completed between now and 31 March 2021. It will be interesting to see if the Scottish and Welsh governments follow suit (stamp duty on property transactions is a devolved tax).
  • "Eat out to help out" scheme providing 50% off meals at participating restaurants on Mondays to Wednesdays in the month of August, up to £10 per head.

Further details are included in the policy paper "A Plan for Jobs 2020" available here.

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