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

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.

Chancellor Rishi Sunak has announced changes to the government's Coronavirus Job Retention Scheme (JRS), which will be slowly wound down between July and October.

The changes mean businesses will be able to bring furloughed employees back on a part-time basis from 1 July.

Furloughed staff will continue to get 80% of their salary until the scheme finishes at the end of October. However, employers will be expected to gradually contribute more towards furloughed employees' salaries.

The taxpayer contribution will remain at 80% during August but employers will have to pay national insurance and employer pension contributions.

In September, employers will be asked to start paying 10% towards people's wages, which will rise to 20% in October.

JRS closes to new entrants from 30 June, but more critically, 10 June is the last date by which an employee can be put on furlough for the first time.

Dame Carolyn Fairbairn, Director-General at the Confederation of British Industry, said:

'Introducing part-time furloughing as more stores and factories start to open will help employees to return to work gradually and safely. Many more businesses will feel supported during this vital restart phase.

'Firms understand the scheme must close to new entrants at some point and that those using it in future will need to make a contribution to help manage the costs.

'However, previously viable firms not able to open until later, particularly in leisure, hospitality and the creative industries, may need further assistance in the coming months.'

Internet link: GOV.UK publications

On 5 June 2020, HMRC announced a five-month delay to the introduction of the domestic VAT reverse charge for construction services, due to the impact of the COVID-19 pandemic on the sector.

The change will now apply from 1 March 2021 and will overhaul the way VAT is payable on building and construction invoices as part of moves to reduce fraud in the sector. Under the domestic reverse charge, the customer receiving the service must account for the VAT due on these supplies on their VAT return, instead of paying the VAT to the supplier.

The change was originally scheduled to come into effect from 1 October 2019, but was then deferred for 12 months, after industry bodies highlighted concerns about lack of preparation and the impact on businesses.

Now the start date has been put back from 1 October 2020 to 1 March 2021.

There will also be an amendment to the original legislation. Businesses are excluded from the reverse charge on relevant supplies where they are end users, or intermediary suppliers. If so they must inform their subcontractors, in writing, that they are end users or intermediary suppliers.

HMRC says the additional amendment is designed to make sure both parties are clear whether the supply is excluded from the reverse charge. It reflects recommended advice published in HMRC guidance and brings certainty for subcontractors as to the correct treatment for their supplies.

HMRC says it will continue to focus additional resources on identifying and tackling existing perpetrators of fraud in the construction supply chain. It will also work closely with the sector to raise awareness and provide additional guidance and support to make sure all businesses will be ready for the new implementation date.

Internet link: GOV.UK publications

Several changes to the CLBILS scheme have taken effect from 26 May. The government has extended the maximum loan size available through the Coronavirus Large Business Interruption Loan Scheme (CLBILS) from £50 million to £200 million.

However, companies borrowing more than £50 million through theCLBILS will be subject to restrictions on dividend payments, senior pay and share buy-backs during the period of the loan. This will include a ban on dividend payments and cash bonuses, except where they were previously agreed.

Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:

'It is good to see the government continue to listen to business concerns and make improvements to existing schemes.

'These important changes could make a real difference to larger firms in particular, and alongside the other lending support schemes will help ensure that more businesses of all sizes get access to the finance they need to help weather this unprecedented economic storm.'

Internet link: British Business Bank website