On 8th July the Chancellor delivered a "Plan for Jobs" aimed at stimulating the British economy, in particular the flagging hospitality sector and lacklustre housing market.
Mini-Budget: Plan for Jobs
Key tax and business announcements
- Temporary SDLT nil rate band increase
- Temporary 5% VAT rate for services in the hospitality sector
- A new job retention bonus for employers of returning furloughed employees and measures to create jobs for persons aged 16-24
- A series of green recovery measures including a green homes grant for homeowners and landlords and a £1bn investment in public sector decarbonisation
The UK government has announced that the nil-rate SDLT band (SDLT is calculated on successive bands of the purchase price which are taxed at increasing rates) for residential properties will temporarily be increased to £500,000 so that only the portion of the purchase price above that amount will be taxed. This measure has been introduced against the backdrop of residential property transactions falling by 50% in May and will have effect from 8 July 2020 until 31 March 2021. The UK government estimates that the average SDLT saving for buyers in this period will be £4,500 and that the measure will cost the UK Treasury £3.8 billion.
The change alters the first three consideration bands for both normal residential purchases and for purchases within the 3% SDLT surcharge (levied, broadly speaking, on second home buyers (including buy-to-let landlords) and certain other acquisitions). This means that:
- for normal residential purchases:
- the nil-rate band is increased so that it applies to purchases up to £500,000;
- the 2% band for the slab of the consideration above £125,000 and up to £250,000 is temporarily abolished; and
- the 5% band for the next slab of the consideration does not apply until the consideration exceeds £500,000 (instead of £250,000); and
- for residential purchases within the 3% surcharge:
- the starting 3% band is increased so that it applies to purchases up to £500,000
- the 5% band for the slab of the consideration above £125,000 and up to £250,000 is temporarily abolished; and
- the 8% band for the next slab of the consideration does not apply until the consideration exceeds £500,000 (instead of £250,000).
The change should not affect SDLT reliefs, which will continue to apply.
The Scottish government has announced that the nil-rate band for the Land and Buildings Transaction Tax in Scotland will rise from £145,000 to £250,000 with effect from 15 July 2020 until 31 March 2021. The Welsh government has also announced that the nil-rate band for the Land Transaction Tax in Wales will rise from £180,000 to £250,000 with effect from 27 July 2020 until 31 March 2020.
It was announced today that VAT on:
- food and non-alcoholic drinks sold from restaurants, pubs, bars, cafés and similar premises; and
- supplies of accommodation and admission to attractions;
in each case across the UK will be reduced from 20% to 5% for a temporary period from 15 July 2020 to 12 January 2021. 5% reflects the reduced rate of VAT in the UK which can be applied to the above services under the relevant EU legislation. No further detail has been announced as to how the reduced rate will operate but guidance is expected from HMRC in the coming days.
The Chancellor has announced a job retention bonus scheme aimed at incentivising employers to keep on their furloughed employees as the Coronavirus Job Retention Scheme winds down between August and October. A £1,000 bonus will be paid to UK employers for each returning furloughed employee who remains continuously employed until 31 January 2021. In order to qualify, returning employees must be paid an average of £520 per month. The bonus payments will be made to employers from February 2021. This is potentially a very expensive measure – if taken up for every employee who is currently furloughed, it would cost the Treasury £9.4 billion.
Other job protection measures announced include:
- New funding for employers in England who provide 16-24 year olds with traineeships (£1,000 per trainee).
- Additional funding for English employers of new apprentices from 1 August 2020 - 31 January 2021 (£2,000 per apprentice aged under 25, £1,500 per apprentice aged 25 and over)
- A "kickstart scheme": funding for 6 month long work placements for persons aged 16-24 who are on universal credit and at high risk of long-term unemployment (100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer NICs and employer minimum automatic enrolment contributions).
The Chancellor announced a series of "green recovery" measures aimed at boosting the construction industry whilst helping the UK to meet its greenhouse gas emissions reduction commitments. The measures include:
- A green homes grant to subsidise the cost of making homes more energy efficient (£2 per £1 of expenditure, capped at £5,000 per household with enhanced grants for those on the lowest incomes).
- £1bn investment in a public sector decarbonisation scheme to improve the energy efficiency of public buildings such as schools and hospitals. The government is also investing £50m in the decarbonisation of social housing.
- A £40m investment in a Green Jobs Challenge Fund which would fund the planting of trees and restoration of natural habitats.
A full Budget spending review will be delivered this Autumn.
Read HM Treasury's Plan for Jobs in full.