Chancellor Announcements – COVID update July 2020

The Chancellor announced further measures to help the country come out of the COVID downturn.

Most of the announcements will be detailed in the media, for small companies and contractors the following are the more interesting points:

Supporting jobs

A Job Retention Bonus will be introduced to help firms keep furloughed workers. UK Employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021.  This will require wages of at least £520 per month from the end of the furlough scheme for three months through to 31 January.  Once the payroll returns have been filed with HMRC then the claim can be made in February.

The sweet spot for director wages in the current 2020-21 year is £9500.  This requires a small national insurance contribution but is the most effective overall rate of pay when considering self-assessment and corporation tax (with no other personal income other than dividends)  An monthly salary of £792 would more than satisfy the requirement for the £1000 job retention bonus.

VAT

This is to be cut from 20% to 5% for the hospitality sector from 15 July to 12 January.  This covers food and non-alcoholic drinks from all pubs, bars, cafes and restaurants.

There is a similar cut for accommodation and attractions.  The scope of this has not been outlined so we do not know if this will include tickets for cinemas, theatres or football (assuming audiences can get in before the 12 January 2021)?  The details are due to be published in the next few days.

Eat out vouchers and Stamp duty – These are covered in the media.

IR35

The proposals for IR35 have been included in the Finance Bill 2020 and it looks as if there is no stopping the legislation.  It is possible the Government will choose to delay again if the economy still looks shaky in the spring.

If you would like more information on how these changes might affect you and your business, then please contact me on 01737 244298.