What does the Chancellor’s mini budget mean for you?
Posted on 9th July 2020 at 11:22
We spent a large part of yesterday afternoon listening and reflecting on the budget update from the chancellor. As ever, statements from the government regarding personal and business finances can be difficult to grasp, so we've broken it down for you...
If you furloughed a member of staff you probably received this excellent summary from the government of the changes being announced. (It’s probably the best overall summary of the changes and worth a read.)
Temporary reduction, until 31st March 2021, in stamp duty so that houses under £500k are exempt
The Eat Out To Help Out Scheme across August for participating restaurants
Temporary VAT reduction
Incentives to help young people into the workforce through apprenticeships and traineeships
The COVID-19 Job Retention Scheme or as most of us know it… furloughing
It was announced back in May that the scheme would stay open until the end of October. However, from August, employers will be asked to pay some of the costs of Furlough. Which is why we are now seeing daily announcements of large-scale redundancies from businesses.
The good news is that government is now incentivising companies to bring back their furloughed staff and keep them until at least Jan 2021. For every furloughed member of staff, you bring back to work, continuously employ and pay over an average of £520 a month for Nov/Dec/Jan, the government will give your business £1000. We are currently assuming this also applies for any directors who you have furloughed in this time.
The money will be granted once you have submitted your payroll RTI submission for January 2021. This could be a very welcome cash bonus for many businesses.
VAT changes for eat in/takeaway food, hospitality and leisure (just not alcohol)
Of course, we wholeheartedly applaud the reduction in VAT to 5% for these categories from July 15th to 12th Jan 2021. The accountant in us would have preferred the reduction to take place at the beginning or end of a month, but that’s just life!
If you sell or buy products which benefit from this VAT reduction, please get in touch to discuss how to administer/account for the VAT reduction.
Setting up a 5% VAT category in your accounting software
Negotiating with suppliers to check they are passing on the VAT reduction
Changing your prices for impacted goods or services if you previously quoted inclusive of VAT
Checking any auto publishing rules into your accounting software take account of the new VAT rate
Even though things are starting to return to normal for most of us, times are still tough and there are many who will be feeling confused or concerned. As ever, feel free to give us a call or drop us an email if you need any advice on anything mentioned above and we'll do our very best to help you.
Nicola J Sorrell -
Founder | Xero Champion | IR35 Expert
Tagged as: HMRC
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