Summary of summer statement tax updates
Today the Chancellor has made a number of tax updates in the Summer Statement as part of his plan to help kick start the economy in the fight to tackle the issues individuals and businesses face against coronavirus. Here is a summarised version of tax changes:
SDLT Holiday – The chancellor has confirmed an immediate stamp duty holiday in a bid to reinvigorate the housing market after the coronavirus lockdown. The threshold for paying stamp duty (SDLT) will be raised from £125,000 to £500,000 until 31 March 2021.
Eat out to help out or date night discount – The Chancellor said participating restaurants/pubs/cafes would be able to offer half price meals (up to £10 per head) and be reimbursed by the Government within five working days. The scheme is available only for the month of August 2020 for meals eaten out from Monday to Wednesday. For those who feel ready to eat out, this could be good news but administration of the scheme could be tricky for businesses who will need to apply VAT on the discounted price and keep a record of the discount in order to claim a refund from the government.
In order to revive the hospitality / tourism sector after months of lockdown, a 5% temporary VAT cut (reduced from 20%) has been introduced from 15th July until 12th January 2021. The temporary cut will be applied to all restaurants, pubs, bars, holiday accommodation and attractions like cinemas. Further details on the reduction will be introduced in the coming days. Many other EU countries have for a long time applied the reduced VAT rate to their hospitality sectors, and now the UK has followed suit there will likely be increasing pressure for it to become permanent. The question remains about how these savings will be passed to the end customers and businesses will need to make sure that VAT is applied and accounted for correctly.