COVID-19 Changes in Stamp Duty and VAT


changes-in-stamp-duty-and-vat-covid-19

October 24, 2020

The UK government has had to face the consequences of the coronavirus pandemic at multiple levels. From furlough to bounce back loans to stamp duties "holiday" and VAT cuts to the hospitality sector, things have been changing for the best.

Another development is the 3-week grants for businesses that have been forced to close down due to the imposition of local lockdowns. The chancellor has made a promise that no-one will be left without hope – and that is certainly saying much. However, due to the precarious new changes, many firms find themselves looking for an outsourcing accountancy partner to take care of the new compliances and changes to the legislation.

Until possibly the next year, stamp duty will not make its presence felt as it has been effectively scrapped. For employees the furlough element from the Coronavirus Job Retention Scheme (CJRS) is there to stay till the end of October but what about businesses? £9 billion has been assessed to be the pledged amount towards all these welfare support systems including the kickstart scheme and other grants. Furthermore, especially keeping the hospitality sector in mind we had the "Eat Out to Help Out" scheme where a £10 discount was offered on food and soft drinks. On the same vein, there has been a slash made on the VAT considered for tourism as well as the hospitality sectors.

When we consider how this VAT lowering would affect the Treasury, estimates quote the figure of £4 billion if this is to be kept up till January. The cut for VAT, after all, has been a rather sharp one as we see a fall from 20% to directly 5%. This is considerable considering the multiple avenues that are involved right from accommodation to tourism as well as the hospitality sector. So, this lowering of VAT would include zoos, pubs, cinemas, cafes, restaurants and hotels. Plus, accommodation and food too will be included but not of course alcohol.

Furthermore, the stamp duty for land tax has now reached the nil band as far as residential property is concerned. Thus, the government it seems is indeed putting its best foot forward.

In most cases these new changes are set to continue till the end of this financial year, so early 2021 will still see their implications which is why small business firms are now looking at new avenues like outsourcing accounting, bookkeeping and legal admin work.

Outsourcing – A Means of Saving Money In These Difficult Time

Interestingly, a new definition of outsourcing is making way because people have begun to increasingly treat money saved as a form of money that is earned. Thus, instead of a small business owner investing their time and energy on the compliance-related tasks that run like clockwork, he or she can instead rely on an outsourcing partner.

This in the long run is more feasible and cheaper because time is a valuable investment. Also, compliance needs knowledge and the lack of it or not knowing about the new changes can prove costly. 

Thus, it does indeed pay to get good advice from an expert who is supposed to function within that field. The scope of getting things done and well done also significantly increases.

Whether it be something like outsourcing VAT return or processing a Flexi-furlough claim, when time is of essence a small business owner might not be able to devote sufficient attention to the same. Outsourcing provides expertise that doesn’t cost an arm and a leg. What more could one be offered? It is win-win.