COVID-19 Business Updates 8 July 2020

Mini Summer Budget

This week saw the Chancellor announce some initiatives to get the economy moving again.

As usual the announcements are short on the exact details but we will bring you those when we hear more, but for now this is what we know….

Help for Jobs – what’s to know?

To spur the UK’s recovery from the coronavirus pandemic, the Chancellor presented his “Plan for Jobs”. What are the key employment points?

Job retention bonus. There will be a new one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed until at least 31 January 2021. Employees must earn above £520 per month on average between the end of the Coronavirus Job Retention Scheme and 31 January 2021. Payments will be made from February 2021 and further details about the bonus will be announced by the end of July 2020.

Kickstart. A new kickstart scheme in Great Britain will fund the direct creation of six-month work placements aimed at those aged 16-24 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 employers’ NI and the minimum auto-enrolment employer pension contribution.

Traineeships. Employers in England who provide work experience placements for those aged 16-24 on traineeships will receive a payment of £1,000 per trainee.

New apprenticeships. From 1 August 2020 to 31 January 2021, employers in England will receive a payment of £2,000 for each new apprentice they hire aged under 25, and £1,500 for each new apprentice they hire aged 25 and over. These payments will be in addition to the existing £1,000 payment that the government already provides for new 16-18-year-old apprentices.

Questions

This has already raised a couple of questions amongst our Facebook group.

Q. What is the difference between a traineeship and an apprenticeship?

A. The difference between a traineeship and an apprenticeship is that a traineeship can be either a full-time or part-time employment based training arrangement, usually for around 12 months (apprenticeships usually last for three to four years) and is generally in a non-trade related area.

Apprenticeships have a number of strict criteria that need to be met in order to qualify.
https://www.gov.uk/take-on-an-apprentice

Q. Will we qualify for the job retention bonus if we’ve already brought an employee back to work?

A. So far we understand that as long as an employee has been furloughed for the minimum 3 week period some time between March and end of June, then you will qualify,

Q. Will we qualify for the job retention bonus if a furloughed employee comes back to work from furlough and then goes off on maternity leave?

A. Again we have no definitive details on such a scenario but we cannot see why this employee shouldn’t qualify, as long as their Statutory Maternity Pay works out to be above the £520 per month threshold.
However, we will bring further details when we know them.

Q. Will the bonus apply to seasonal staff that are currently furloughed and will be kept on the books but won’t be earning in Jan as we close down for the winter?

A. This is a tricky question, as we were told that every employee that qualifies will need to earn above £520 per month between 1 November 2020 and 31 January 2021, so the answer would be no.
However, we now understand that they must have earned an average of £520 per month for that period. Now whether that means they will accept someone earning nothing in January but still having a 3 month average of £520 or above is currently unclear.

We have been promised detailed guidance by 31 July so will bring further details then.
Tax changes

While the Chancellor didn’t announce any changes to direct tax there was some welcome news of short-term measures to reduce indirect tax to stimulate business and house buying.
Here’s the story so far…

VAT and hospitality. Two of the main benefactors of the measures announced by the Chancellor were the hospitality and tourism sectors. Apart from the government picking up as much as half the tab if you eat out during August, restaurants, cafes, hotels and visitor attractions will also be able to charge a reduced rate of VAT, 5% instead of 20%.

The idea is to lower prices to encourage more customers. Of course, it will be up to businesses whether they pass on the VAT reduction to customers or keep their prices the same and so more directly benefit from the VAT cut.We’re waiting for HMRC to publish the details of the VAT rate change, e.g. exactly what types of goods and services it will apply to. In the meantime, if you’re in the sectors affected, we can tell you that the reduced rate will apply from Wednesday 15 July until 12 January 2021 inclusive.

We’ll bring you the full details as soon as they are available so that you can make the necessary changes to your tills and other billing processes ready in time for 15 July.

Stamp duty land tax. The Chancellor confirmed the recently announced temporary changes to stamp duty land tax (SDLT). The measure only applies to purchases of residential properties in England and Northern Ireland. So far, the Welsh and Scottish governments haven’t announced changes to their equivalent taxes.The standard nil rate threshold for SDLT on residential property transactions will be increased from £125,000 to £500,000. This took effect for sales completing on 8 July and will apply to sales completing on or before 31 March 2021.