Biggest Takeaways From The Government’s‘Mini Budget’
The new measures in brief
On Wednesday 8th July, Chancellor Rishi Sunak held his summer ‘mini Budget’, unveiling a range of measures to aid the UK’s economic recovery following coronavirus. It was a huge public spending pledge, with support packages aimed at both individuals and businesses.
In this article we’ve looked primarily at businesses, and how your business clients are likely to be affected by these much-needed financial boosts.
Job retention bonus
For every employee that returns from furlough, and who is still employed on 31st January 2021, the government will offer the employer a £1,000 job retention bonus per staff member. Employees must have worked at the company continuously in November, December and January, earning an average of over £520 per month.
As part of his Plan for Jobs, the Chancellor also revealed his new £2 billion Kickstart Scheme. The money will be used to generate jobs for unemployed young people between 16 and 24 years old. These jobs will be government-subsidised.
In turn, employers must be able to provide a six-month placement for their new staff member, with the Treasury covering their pay at National Minimum Wage, up to 25 hours a week. Organisations using the scheme are allowed to top up the worker’s pay if they wish.
Training and apprenticeships
A colossal £111 million will also be invested in tripling the number of traineeships. Businesses will now be provided with a grant of £1,000 for every trainee they take on, up to a maximum of ten.
Regarding apprenticeships, the government will also now give businesses up to £2,000 for every new apprentice under 25 over the next 6 months. If the apprentice is aged over 25, the business will be offered £1,500 instead.
Are any of your clients in the hospitality sector?
This is a big one, hopefully giving a massive lease of the life to the struggling tourism and hospitality industries.
VAT on attractions, accommodation, non-alcoholic drinks and food has been cut from 20% to 5%. Additionally, on Mondays, Tuesdays and Wednesdays in August, meals eaten at participating establishments will attract a 50% discount up to £10 per head. This is all part of the “Eat out to help out” scheme.
£3 billion green investment package
This one is aimed at both businesses and individuals. A landmark £1 billion of the existing infrastructure package will now be set aside to improve the energy efficiency of public buildings including schools, libraries and hospitals.
The remainder of the fund will be for a “Green Homes Grant” (see further down).
What has the Chancellor put in place for individuals?
Although your role as a business accountant is to advise your clients on the new schemes available, it’s obviously also important to have a firm grasp of the general ‘mini Budget landscape’. With this in mind we’ve put together the roundup below of brand new financial help available to all.
Green Homes Grant
As mentioned, the Green Homes Grant is government money that will be channelled into upgrading public buildings and reducing emissions. It is set to create around 140,000 green jobs in total.
These measures mean that landlords and homeowners in England can receive vouchers to finance green improvements such as cavity wall insulation and energy-efficient roofing/flooring. Up to £5000-worth of vouchers can be claimed per household, going up to £10,000 for the poorest households.
The vouchers are designed to fund two thirds of the work done. For instance, if a household decides to undertake £6,000 worth of energy improvement work, then they can claim vouchers to the value of £4,000. The scheme opens in September.
Cut in stamp duty
Up until now, homeowners buying a new property would be subject to stamp duty if the purchase price was more than £125,000. However, this threshold has now risen to £500,000, meaning that based on 2018-19 figures around 90% of homebuyers won’t be subject to stamp duty at all.
The change will take place immediately and run until the 31st March 2021. The idea is that it will help to build confidence in people to buy and sell their properties as well as to complete renovations. Of course, in turn there is likely to be an uptick in house-related purchasing, such as moving essentials and furniture, again boosting the economy.
According to building society Nationwide, average UK house prices currently stand at £216,403, making the average saving from the new rates around £1,828.06.
Don’t forget! The very generous R&D Tax Credits scheme is still on offer too
Although the above measures have been drafted in temporarily in light of COVID-19 economic damage, the government is still seeking to support growth and innovation long term. The R&D Tax Credits scheme supports this, and having been launched back in the early 2000s it’s still very much alive and kicking today.
How does the R&D Tax Credits scheme work and who can claim?
The great thing about R&D Tax Credits is that any UK company, of any size and in any industry can claim. It’s a valuable tax relief that helps to cover the cost of scientific or technological research; for example, a company may have created a new product or service from scratch or appreciably upgraded an existing one.
The relief is offered either as a reduction in a company’s Corporation Tax or (for loss-making companies) a cash lump sum. The range of projects and costs that can be included is vast, and with up to 33 pence in every £1 of R&D expenditure claimable, the rewards can be substantial.
You might find our recent Tax Cloud article helpful here too: What Are The Four Main Benefits Of R&D Tax Credits?
Think R&D Tax Credits may apply to one of your clients?
We strongly recommend reading up about the scheme on our R&D Tax Credits page, or you can call us for information on 0207 118 6045. Of course, you can always drop us a message if you prefer and we will get straight back to you. Don't let your clients miss out on what could be many thousands of pounds of extra funding.