Following the unprecedented financial impacts of the Coronavirus, Chancellor Rishi Sunak delivered an Economic update on 8 July 2020. This took place less than four months after his maiden Budget speech back in March. The latest announcement was more of a fiscal plan than an emergency summer budget, as some were predicting, but the headline measures announced continue the theme of recent months and are focused on a “plan for jobs”.
It is worth recognising that there were no economic forecasts from the Office for Budget Responsibility or major long-term tax decisions. Those are on hold until what looks like a huge Autumn Budget and subsequent spending review later in the year.
Key measures announced for individuals:
- The lower threshold of Stamp Duty, at which the tax is paid, has been temporarily raised from £125,000 to £500,000 until next spring.
- The 2% Stamp Duty threshold, which kicked in from over £125,000 to £250,000, no longer applies until 1 April 2021.
- Someone who wishes to buy a second home would not pay stamp duty land tax up to £500,000, but would still be liable to pay the 3% surcharge on the whole purchase price.
Key measures announced for businesses:
- The Chancellor also revealed a temporary cut to the standard rate of VAT for food, accommodation and attractions, from 20% down to 5%.
- Small businesses using the VAT flat-rate scheme may now need professional advice to work out whether the scheme is still worthwhile.
- A new job retention bonus comprises a one-off payment of £1,000 to any UK employer who brings a furloughed employee back to work and keeps them in continuous employment until the end of January 2021.
- The Chancellor also announced a £2bn ‘kickstart scheme’ to create more jobs for young people. The fund will subsidise six-month work placements.
- Running from 1 August 2020 to 31 January 20221, the government will facilitate the payment of £2,000 for each new apprentice under the age of 25 in England, and £1,500 for each new apprentice older than that.
The way in which tax charges (or tax relief, as appropriate) are applied depends upon individual circumstances and may be subject to change in the future. The information in this report is based upon our understanding of the Chancellor’s Economic update 2020, in respect of which specific implementation details may change when the final legislation and supporting documentation are published. This document is solely for information purposes and nothing in this document is intended to constitute advice or a recommendation. You should not make any investment decisions based upon its content. ISA and pensions eligibility depend on personal circumstances. The value of investments can fall as well as rise and you may not get back the full amount you originally invested. Whilst considerable care has been taken to ensure that the information contained within this document is accurate and up-to-date, no warranty is given as to the accuracy or completeness of any information. All tax tables include numbers, rates and allowances only. None of the usual qualifying notes are included in this report.