The chancellor is set to make an announcement next month to introduce measures that will mitigate the economic downturn caused by the coronavirus. Not unlike 2008 when VAT was dropped to 15% (from 17.5%) to provide stimulus after the financial crash, there is speculation that the headline VAT rate again may be slashed to 17% (currently 20%) to bolster the economy. Germany have already implemented a similar measure for a temporary period until 31 December this year. Possible other measures may include:
- Zero rating additional products for a set period, temporary products have already been zero rated, such as PPE.
- Lowering business rates, beyond the already announced 12 month holiday for those in retail, hospitality and leisure.
- Reduction in employers’ national insurance contributions, or an increase in the threshold before they apply.
- Employers’ national insurance holidays on new employees for first 12 months to promote hiring.
- 2 year extension on £1 million Annual Investment Allowance which is set to expire in January, to promote capital expenditure.
These announcements would no doubt be welcomed by many in business who have felt the financial effects of lockdown due to coronavirus. The chancellor is expected to deliver an announcement in early July. This is all just speculative at the moment, and once the announcements are made we will let you know the new measures and how they will benefit your businesses.
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