Chancellor Rishi Sunak announced a temporary cut in the rate of Stamp Duty Land Tax (SDLT) in order to boost confidence in the flagging housing market in his Summer Economic Update.
Property transactions fell by 50% in May this year and house prices have fallen for the first time in eight years. In response, the government will temporarily increase the nil-rate band of residential SDLT in England and Northern Ireland from £125,000 to £500,000. This will apply to purchases from 8 July 2020 until 31 March 2021.
Additionally, the Chancellor announced a £2 billion Green Homes Grant, providing at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, up to £5,000 per household. The scheme aims to upgrade over 600,000 homes across England, helping to reduce energy bills and support the green economy.
Eric Leenders, Managing Director of Personal Finance at UK Finance, said:
‘The Chancellor’s announcement on stamp duty should give a welcome boost to the housing market and in turn have positive knock-on effects for the wider economy.
‘This measure designed to re-boot the housing market builds on the wide package of support put in place by mortgage lenders, working with the regulator and HM Treasury, to help customers through these tough times.
‘The industry has a clear plan to help homeowners whatever their financial situation and is committed to providing ongoing support to those customers who need it.’
Internet link: GOV.UK publications and UK Finance press release.
The introduction of off-payroll rules to the private sector will go ahead as planned next April after an attempt to delay them failed in the House of Commons.
The reforms of the off-payroll rules to the private sector, which are known as IR35 and have applied to the public sector since 2017, was reviewed earlier this year.
They will shift the responsibility for assessing employment status to the organisations employing individuals.
The rules would have applied to contractors working for medium and large organisations in the private sector and were due to come into effect on 6 April this year. Due to the disruption caused by the outbreak of the coronavirus, the decision was taken in March to delay the introduction until 6 April 2021.
An amendment to the Finance Bill, brought by a cross-party group of MPs, was designed to delay the IR35 changes until 2023, but was defeated by 317 votes to 254.
The move to introduce new IR35 rules to the private sector has proved highly controversial, amid claims that the regulations are too complex and that HMRC’s online tool Check Employment Status for Tax (CEST), used to determine whether they apply, is flawed.
Internet link: Parliament website.
The Federation of Small Businesses (FSB) has found that the UK’s late payment crisis has worsened during the coronavirus (COVID-19) lockdown.
62% of small businesses have been subject to late or frozen payments during the COVID-19 pandemic, according to research carried out by the FSB. Just 10% of small firms have agreed changes to payment terms with their clients. In addition, 65% of small businesses that supply goods or services to other businesses have experienced being paid late or having payments frozen.
The FSB has called on policymakers to give the Small Business Commissioner additional powers to investigate and fine repeat late payment offenders.
Mike Cherry, National Chairman of the FSB, said:
‘Before the COVID-19 outbreak struck, many small firms were already under immense financial pressure because of late payments.
‘Cash is still very much king for small firms, and withholding it has pushed many to the brink at a time when they’re at their most vulnerable. Our endemic culture of treating small businesses as free credit lines against their will must be brought to an end.’
Internet link: FSB press release.
The government has expanded its COVID-19 support for start-ups and innovative companies with the launch of a new fund.
On 27 June the government announced the Sustainable Innovation Fund (SIF), which is aimed at helping businesses to keep ‘cutting edge’ projects and ideas alive during the pandemic.
The SIF will make almost £200 million available to UK companies that are developing new technologies in certain areas. These include making homes and offices more energy efficient, creating ground-breaking medical technologies, and reducing the carbon footprint of public transport.
The government is asking research and development-intensive businesses to apply for the funding.
Internet link: Sustainable Innovations Fund
The Financial Conduct Authority (FCA) has confirmed further support for users of certain consumer credit products if they are experiencing temporary payment difficulties due to the coronavirus pandemic.
The measures outline the options firms will provide for credit card, revolving credit and personal loan customers who are coming to the end of a payment freeze. They also outline options for customers who have agreed an arranged interest-free overdraft of up to £500.
In addition, customers yet to request a payment freeze or an arranged interest-free overdraft of up to £500 will have until 31 October 2020 to apply for one.
According to UK Finance, its members have offered over 27 million interest-free overdrafts, provided 992,400 payment deferrals on credit cards and 686,500 payment deferrals on personal loans during the pandemic.
Christopher Woolard, Interim Chief Executive at the FCA, said:
‘Since the coronavirus crisis began, we have made support available for those borrowers financially affected by the pandemic.
‘For those who are now in a position to restart payments, it will be in their best interests to do so. But for those who still need it, the package we are confirming today ensures there is help and further support.’
Internet link: FCA press release