Summer Economic Update
Yesterday the Chancellor gave his Summer Economic Update (phase two of a three phase plan to tackle COVID-19), which as anticipated was focused on helping the economy bounce back and help save/drive new jobs, especially in light of the phasing out of financial support (CJRS & SEIS).
There was unfortunately nothing in yesterday’s announcement that was specifically targeted towards sole traders (locum Optometrists or Dispensing Opticians). No announcement of any extension to the support scheme for self-employed or even any consideration for the already excluded individuals.
Our economy is built on low unemployment rates and it is therefore paramount that the Chancellor does everything in his remit to ensure he can limit mass unemployment.
At the moment these schemes should help the economy, however at what cost. We will all have to at some stage repay the huge debts that are being taken to help us through these unprecedented times. We anticipate we might hear more about this and potential tax rises later in the year (most likely in autumn).
In this article we aim to summarise each announcement which includes a new Job Retention Bonus Scheme, support for the housing market, VAT cuts and an incentive for us all to return to bars and restaurants.
Job Retention Bonus
- If you have/had staff on furlough and keep them on until at least the end of January 2021, then you as the Employer will be eligible for a one-off bonus of £1000 per employee.
- To qualify the employee must be paid on average at least £520 per month between the 31 October 2020 (end of CJRS) and 31 January 2021.
- The one-off bonuses will be paid out from February 2021. We await further details on whether this bonus will need to be applied for or if it will be automatic.
Note: This is a grant payable to the Employer and for their use. Unlike the furlough payments, which were also paid to the employers but to be passed down to employees.
Now a lot of locum Optometrists and locum Dispensing Opticians trade as owner managed businesses and the question arises, as they have furloughed themselves, if they can also claim for this bonus. The honest answer is we do not know. We do not know whether directors of an owner managed business that have furloughed themselves qualify for the £1k employment bonus if they don't subsequently make themselves redundant. Further details on this scheme are expected by the end of July.
Update 31 July 2020: We can now confirm that this bonus is also applicable for company directors as per todays additional press release.
"Employers can claim the Job Retention Bonus for all employees who meet the above criteria, including office holders, company directors and agency workers, including those employed by umbrella companies".
Stamp Duty Land Tax (SDLT) thresholds increased
- SDLT will no longer be due on any property costing below £500k.
- There is no penalty on second home buyers, leading to a maximum saving of £15k on properties of up to £500k (as previously the threshold was £150k) and £10k for first time buyers, whose previous thresholds were £300k.
- This scheme comes into effect immediately and lasts until 31 March 2021.
- The bands remain unchanged for any property over £500k (5% on price £500k to £925k then 10% on £925k to £1.5m then 12% on price above that)
- The savings on SDLT finalises on completion. It will not be applicable for all sales performed or completed before 8th July 2020.
- These increases in the thresholds only apply for England and Northern Ireland.
Note: The 3% surcharge still applies on second homes and residential properties purchases through a company
This is something we were all anticipating as it was one of the measures used post the previous 2008 recession also.
- VAT shall be reduced from 20% to 5% on hospitality & tourism sectors. This should translate into a saving of 12.5% in prices. This shall be on all food and non-alcoholic drink from restaurants, bars, cafés, etc.
- This reduction comes into effect as of 15th July and shall last up until the 12th of January 2021.
- What is uncertain is whether this saving will be passed down to you and me (the consumers) or taken by the business.
Eat out to help out
- This scheme is targeted to incentivise consumers back to eateries.
- Under this scheme each individual will be entitled to a 50% discount on their meal, up to a maximum of £10 per person.
- Discounts will only be available if you use it between Monday and Wednesday during the month of August. It can be used an unlimited amount of times.
- The discount will only be applicable at participating establishments, a list we do not have as of yet.
- The government has announced a £2billion fund to help recruitment of new workers who are deemed at risk of long term unemployment.
- Through this scheme the government will pay for all staff up to the age of 24 years old that were on universal credit for at least 6 months.
- The government will cover 100% of the National Minimum Wage for up to 25 hours a week plus associated employer's National Insurance contributions and employer’s minimum automatic pension contributions in addition to an amount to cover overheads
- This scheme is expected to go live by this Autumn
- Additional funding is announced for recruitment and training of 16 to 24 year olds.
- Each employer will receive £1k per training scheme they offer.
- Employers are being encouraged to hire apprentices by being offered £2k for each new recruit under the age of 25 or £1.5k if over 25.
- To be eligible for this money, the recruitment must have taken place between 1 August 2020 and 31 January 2020
- This shall be in addition to the existing £1k that is already given for each new 16-18 year old apprentice.
Green homes grants
- The government has announced £2bn worth of grants for green homes in order to increase demand for plumbers, builders and tradespeople.
- The public can claim from this pot by forms of voucher up to a maximum value of £5k (£10k for low income households) from September 2020 to use for making their homes energy efficient.
- We think all Opticians should take advantage of this deal. More information is expected around September time when this will be open to applications.
We at Locumkit Accounting will continue to update this page, as we get further information from the Government on how these schemes will work and how they will be delivered.
To read up on the latest CJRS updates for Optometrists and Dispensing Opticians who are furloughed, please click here
To read up on the latest SEIS updates for Optometrists and Dispensing Opticians who are claiming self assessment relief, please click here
If you have any questions in regards to the any of the governments reliefs or any other accounting related queries then feel free to drop me an email and I or someone from the Locumkit team shall get back to you - [email protected]
What is Locumkit?
Locumkit - Bespoke locum management platform for locum Optometrists and Dispensing Opticians (Locum Agency & Accountants); we help you get locum days, maintain your income/expenses, send invoices (all on the cloud), file your accounts - all from one place. Why not register and see what we are all about, especially as locum work starts to pick up we shall aim to regain contact with employers to get you work.
Specialist Accountants for locums - to find out more click here