There have been a few developments and government communications over recent weeks that we thought worthy of an update.
The latest Deloitte CFO (Chief Financial Officers) Survey (found here) shows that the perceptions of uncertainty of UK Chief Financial Officers are higher than at any time before the COVID-19 pandemic, and that their overriding expectation is for growth to be clawed back slowly.
Ian Stewart, Deloitte’s Chief Economist in the UK, commented that “For corporates, the pandemic overshadows all other causes of concern. CFOs rate it as the greatest risk facing their businesses – and by a wide margin. As new fronts open in the ongoing US-China economic conflict, geopolitics is ranked second on their risk list while Brexit takes the third spot. “
“Against a backdrop of elevated uncertainty and very weak demand, CFOs are firmly focused on protecting their balance sheets by bearing down on costs and building cash. Official data confirm that corporates’ are building cash reserves, and at the fastest pace on record.”
“Growth in business investment, which has slowed markedly since the EU referendum, is facing a continued squeeze. Almost two-thirds of CFOs expect their capital expenditure to decrease over the next three years due to a combination of the COVID-19 pandemic and the UK leaving the EU.”
Overall, the survey confirms sentiments that are being borne out of our conversations with clients and others in Cornwall.
We can assure you of our continued commitment to provide as much advice, guidance and support as you need to help you to come through this as best as you possibly can. Communication is imperative and we will continue to ensure that we disseminate relevant and up to date information as it emerges from government.
VAT – Temporary VAT cuts
In the Summer Economic Update the Chancellor announced VAT rate cuts from 20% to 5% for the following to last for 6 months between 15 July 2020 – 12 January 2021:
- Supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafes and similar establishments;
- Supplies of accommodation; and
- Supplies of admission to attractions.
HMRC has released a number of VAT Notices that provide guidance in relation to the latter two i.e. accommodation and admission to attractions. These can be found here.
Job Retention Scheme – Further detail published
As part of the Summer Economic Update, the Chancellor stated that a bonus of £1,000 will be paid to employers for bringing previously furloughed employees back to work, and retaining those employees until January 2021. This £1,000 bonus will be for each such employee.
Further detail has now been issued in the form of a ‘policy statement’ – this can be found here.
The accompanying ‘News Story’ can be found here.
- “employers will receive a one-off payment of £1,000 for every employee who has previously been furloughed under Coronavirus Job Retention Scheme (CJRS) – if they remain continuously employed to the end of January 2021
- to ensure the jobs are meaningful well-paid [sic], employees must earn at least £520 (the National Insurance lower earnings limit) a month on average between the beginning of November and the end of January
- those who were furloughed and had a claim submitted for them after the 10 June (when the CJRS closed to new entrants), because they were returning from paternal leave or time serving as a military reservist will also be eligible for the bonus as long as they meet the other eligibility criteria
- employers will also be eligible for employee transfers protected under TUPE legislation, provided they have been continuously employed and meet the other eligibility criteria and the new employer has also submitted a CJRS claim for that employee”
The bonus payments will be made in February 2021. The ‘policy statement’ states that “From February 2021, employers will be able to claim the Job Retention Bonus through GOV.UK. More detail about this process will be published in guidance by the end of September 2020.”
We will provide an update when this detailed guidance is released.
Capital gains tax review
There is obviously much speculation surrounding potential tax changes that will be announced in the Autumn Budget to address the pressure on the public finances caused by COVID-19.
The capital taxes of capital gains tax (CGT) and inheritance tax are rightly a common theme for many.
For CGT, this was recently confirmed by the Chancellors’ recent request to the Office for Tax Simplification (OTS) to carry out a wide-ranging review of CGT (the request can be found here).
The OTS has published an online survey and call for evidence that can be found here.
This has triggered further speculation about the CGT changes that could follow this review, including: the removal of capital gains Entrepreneurs’ Relief (even after the significant reduction in the lifetime limit); restriction to ‘principal private residence’ relief; and increases to the CGT rates (which must be highly likely as the rates are considered low in the context of historic rates).
If such changes are a concern, proactive tax advice should be sought.
Job Retention Scheme and Self-employed Income Support Scheme – Errors and penalties
Guidance has been issued as to how to deal with errors and over claims in relation to both schemes, these can be found as follows:
Job Retention Scheme
Self-employed Income Support Scheme
Business rates review
The government has now announced the business rates review that was promised in the Spring Budget. The review appears to be very wide-ranging.
The call for evidence document can be found here.
In this document, the government has stated that decisions on reforming the business rates system will need to consider the impact of the COVID-19 pandemic on the high street, and has confirmed that the next revaluation of non-domestic property in England, will now take effect on 1 April 2023 (previously 1 April 2021).
The documents also states the impact of online retail on the high street needs to be considered.
Furloughed employees and redundancy payments (and other associated payments)
It was announced last week that furloughed employees who are subsequently made redundant will be entitled to receive Statutory Redundancy Pay and notice pay based on their normal wage, as opposed to any reduced wage received whilst on a period of furlough, under new laws introduced on 30 July 2020 (last Thursday) and that took effect from 31 July 2020.
The government’s press release can be found here.
This also states that “Other changes coming into force will ensure basic awards for unfair dismissal cases are based on full pay rather than wages under the CJRS.”
Stamp Duty Land Tax (SDLT) – Temporary rates
The SDLT temporary rates were announced in the Summer Economic Update.
The guidance can be found here.
We have been receiving a number of queries around the temporary rates and how they interact with points such as: Multiple Dwellings Relief; the Additional Property Surcharge; ‘mixed use’ land and property; and the ATED-related 15% SDLT charge.
There are some nuances here – please feel free to get in touch with any queries or requests for advice.
‘Eat Out to Help Out’ scheme launched
In the Summer Economic Update the Chancellor announced that every diner at any participating establishment (restaurant, café, pub or other food service establishment) will be entitled to a 50% discount on any meal (including non-alcoholic drinks) they eat in the establishment on a Monday, Tuesday or Wednesday in August 2020, up to a maximum of £10 per person.
Given we have now crept into August 2020 (where have the last 4 months gone!), the Scheme has launched.
Government guidance on how establishments can register can be found here.
Guidance on how establishments can make claims to recover the relevant funds under the Scheme can be found here.
Government guidance on the Scheme in general can be found here.
Diners can use the government’s tool to find participating establishments – this can be found here.
Coronavirus Business Interruption Loan Scheme (CBILS) expansion
Last Thursday (30 July 2020), the government announced that the scope of the CBILS was being expanded.
The government’s ‘news story’ (that can be found here) states:
“Changes to state aid rules as a result of UK Government and industry lobbying mean that more small businesses can now benefit from loans of up to £5 million under the Coronavirus Business Interruption Loan Scheme (CBILS), it was announced today (30th July 2020).
Previously businesses which were classed as ‘undertakings in difficulty’ were unable to access CBILS because of EU rules. From today, businesses in this category and which have fewer than 50 employees and a turnover of less than £9 million can apply to CBILS.”
The relevant letter from the Treasury to the Department of Business, Energy and Industrial Strategy can be found here.
If we can help and advise you in any way, please get in touch with your usual RRL contact, we continue to largely work remotely. We will respond to emails as usual. We are conducting meetings virtually (using Microsoft Teams) albeit face-to-face meetings can be arranged by pre-appointment conditional upon our meeting policies being agreed and adhered to.
We will provide further updates, as and when further announcements are made and detail/guidance released.