Under the skin of the Summer Statement
It would seem that each time Rishi Sunak has taken the podium in recent months, there has been an interesting revelation for the business community – and last week’s Summer Statement was no different.
Now the dust has settled, we delve a little deeper to see what benefits the Chancellor’s latest announcements may bring for accountants.
Furlough scheme evolves
Some of you will have availed of furlough in your practices, and almost certainly your clients will have. The dilemma, as furlough begins to wind down, has been what future awaits these staff in a challenging economic climate.
Can you, can your clients, afford to bring furloughed team members back into the fold? The Chancellor had a solution that will have been welcome news for many.
The furlough scheme is morphing into a ‘Job Retention Bonus’, which encourages businesses to retain employees with a £1,000 bonus for each furloughed employee still employed as of 31st January 2021.
Focus on jobs
For smaller firms, it could make a crucial difference – saving money and skills – especially in conjunction with incentives offered by the Kickstart Scheme, apprenticeships and traineeships.
The Government also announced a £5.8bn investment in ‘shovel-ready’ construction projects, including hospitals, roads, schools, local projects and sporting facilities.
This infrastructure investment covers a wide array of sectors and all of these projects will require specialist contractors and support from supply chains. There is the potential your clients could benefit – and where there is income and growth, there are opportunities for proactive accountants.
Another announcement was the Green Homes Grant scheme, which may also bring some useful benefits – in addition to positive environmental ones.
For those of your who work from home, or who ordinarily work in an office but anticipate more remote working going forward, making home improvements may be high on your agenda – especially those that make a home more energy efficient, cost effective and comfortable.
Although a fine line between home repairs versus capital improvements, it will be interesting to see whether any green home alterations – especially replacing like-for-like with more eco-friendly versions, for example – could be claimed as tax deductible expenses.
Benefits for businesses
If the repairs fall into criteria covered by the Green Homes Grant and also qualify as repairs necessary for your business, some serious savings could be made. The Green Homes Grant could benefit your clients too.
Tradespeople, eco product providers, and anyone supporting these sectors will see a boost in trade. Landlords and property investors will also profit; saving money through the initiative as well as gaining more desirable properties that are more durable and economical to run. And with £1bn allocated to make public buildings greener, this can only have positive ratifications for the trades that undertake or support such projects.
Along the same lines, the stamp duty cut also bring benefits to those have jobs in home improvement, construction and house sales – plus the plethora of supporting businesses from mortgage brokers and insurers, to surveyors and solicitors. While the stamp duty cut may only affect you should you plan a house move, more likely its indirect effect will be on boosting clients’ custom and coffers.
Those of you with hospitality clients have likely felt their pain over recent months – and probably have administered advice to keep them afloat. As the welcome news came that hospitality businesses could reopen – albeit at different rates across the UK and with new measures making this a slow and different return to trading – it was clear they would need to replenish lost revenue quickly. The Chancellor made this part of his Summer Spending pledges.
The ‘eat out to help out’ scheme is designed to help get the hospitality sector back on its feet, offering 50% off up to £10 per head when dining out Monday-Wednesday in August.
Businesses will need to register for the scheme and then claim back the money. As with so many other Covid relief measures from the Government, clients may need help to navigate it. They might also want to know if it makes economic sense or is just a gimmick, as some critics have suggested. Will it divert potential higher spend weekend sales into smaller mid-week custom… is it right for them?
A huge announcement for these businesses and the wider tourism industry was the VAT cut, which saw the rate slashed from 20% to 5% on food, accommodation and attractions. It is estimated that it will help 150,000 businesses, which may mean you have clients that will benefit. They will need to understand what that means in terms of invoicing, reconciling VAT and filing returns for the six month period it covers. Your guidance and hands-on help with record keeping will be in demand.
The Budget is still to come
All of the above comes before we have even got to this year’s Budget! It is hard to see what Rishi Sunak has left up his sleeve at this point.
Speculation is that it may include further business rate cuts and changes to VAT. Somehow and at some stage the unprecedented Government spending will see money being clawed back into the Treasury, and it feels inevitable that tax will be one such method – so the year may yet bring more surprises.