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.

On 1 July, changes to the Coronavirus Job Retention Scheme (CJRS) saw flexible furloughing introduced, so employees will no longer have to be furloughed for a minimum period of three weeks.

Following the change the CJRS has more flexibility to allow claims on a pro rata basis. Employers will be able to permit employees to work some of the week and be furloughed for the rest.

An employee needs to have been furloughed for at least three consecutive weeks between 1 March and 30 June to be eligible for furlough from 1 July. Additionally, after 1 July, employers may be subject to a cap on the number of employees that can be claimed for in a CJRS claim they are able to make.

The CJRS changes have effect from 1 July until the closure of the scheme on 31 October.

Parents returning from statutory maternity leave, paternity leave, adoption leave, shared parental leave and bereavement leave are broadly exempt from the CJRS furlough changes. So parents who are returning to work over the coming months will be eligible for the CJRS despite the scheme closing to new entrants on 30 June.

Additionally, from 1 August, the level of the grant will be reduced each month. From August the employer will need to pay employer national insurance and pension contributions for the time the employee is furloughed. For August, the government will continue to pay 80% of wages up to a maximum of £2,500 proportional to the hours the employee is furloughed. For September, the government will pay 70% of wages up to £2,187.50, and for October, the government will pay 60% of wages up to a maximum of £1,875. During these months employers will have to top up employees’ wages to ensure they receive 80% of their wages up to the £2,500 cap.

Internet link: GOV.UK publications

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

On 18 June, the Bank of England increased the stock of purchases of UK government bonds by an additional £100 billion to help boost the UK economy following the coronavirus (COVID-19) pandemic.The £100 billion in additional quantitative easing funds takes the total to £745 billion.

The MPC also voted to cut the cost of borrowing to a record low of 0.1%. The Committee admitted it is ‘hard to draw conclusions about the UK’s recovery prospects’ and stated that extra stimulus is needed to help boost the UK economy and push inflation.

The MPC said: ‘The unprecedented situation means that the outlook for the UK and global economies is unusually uncertain.

‘It will depend critically on the evolution of the pandemic, measures taken to protect public health, and how governments, households and businesses respond to these factors.

‘Inflation is well below the 2% target and is expected to fall further below it in coming quarters, largely reflecting the weakness of demand.’

Internet links: Bank of England’s Market Notice.

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