Tax Update By Mark Coleman, Tax Director
Summary of Tax Measures Outlined In The Chancellor's Summer Economic UpdateRead story
Summary of Tax Measures Outlined In The Chancellor's Summer Economic Update
Chancellor, Rishi Sunak, has provided a summer economic update in light of the Covid-19 pandemic. The main tax changes announced that apply to Northern Ireland are as follows:
Job retention bonus
The Coronavirus Job Retention Scheme (CJRS) is to wind down gradually until ceasing on 31 October 2020. To encourage retention of furloughed employees, employers will be paid £1,000 for each furloughed employee who is continuously employed through to 31 January 2021.
The employees must earn above £520 per month on average between the end of the CJRS and 31 January 2021. These payments are to be made from February 2021.
Stamp Duty Land Tax reduction
To support the housing market the nil rate band of residential Stamp Duty Land Tax (SDLT) is to be increased from £125,000 to £500,000 from 8 July 2020 to 31 March 2021. The rate of Stamp Duty Land Tax applying above £500,000 is 5%, 10% above £925,000 and then 12% above £1.5m.
The additional 3% rate for additional properties continues to apply, therefore, for example a property investor acquiring a property for £200,000 will pay SDLT at 3% of £6,000.
Eat Out to Help Out discount scheme
To encourage people to return to eating out and, therefore, support employment in the hospitality sector, there is to be a 50% reduction, up to a maximum of £10 per head, for meals in cafes, restaurants, pubs and other eligible food service establishments across the UK.
The reduction applies from Monday to Wednesday every week throughout August 2020. The discount can also be used unlimited times and includes non-alcoholic drinks.
A government website where businesses can register for the scheme will be made available and claims are to be paid within five working days.
Temporary VAT cut
The rate of VAT applied to food and non-alcoholic drinks from restaurants, pubs, bars, cafes etc. is to be reduced from 20% to 5% from 15 July 2020 to 12 January 2021.
In addition, there is to be a similar reduction in the VAT rate applied to accommodation and admission to attractions across the UK.
Many of the other announcements do not apply to Northern Ireland, however, to support a green economy there is to be new funding throughout the UK for research and development of direct air capture and new clean technology for capturing CO2.
There is also to be funding for innovative R&D projects aimed to scale up the manufacturing of the latest technology in batteries, motors, electronics and fuel cells.
Further detail is yet to be provided concerning these changes, however, please contact us if you require specific advice and we will endeavour to assist you.
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