What Is The Kickstart Jobs Scheme?

The Government’s Kickstart Scheme has now opened to assist young people on Universal Credit aged between 16-24 to find six month work placements.

The Government will pay 100% of the age-relevant National Minimum Wage, National Insurance and pension contributions for 25 hours a week. Employers can top up this wage.

In addition, the government will also pay employers £1,500 per job placement to cover set up costs (such as uniforms) and ongoing support and training.

The scheme only applies to new jobs – they must not:

  • replace existing or planned vacancies
  • cause existing employees or contractors to lose or reduce their employment

Once a job placement is created, it can be taken up by a second person once the first successful applicant has completed their 6-month term.

The jobs created must:

  • be for a minimum of 25 hours per week, for 6 months
  • be paid at least the National Minimum Wage for the age group
  • not require extensive training before commencing the placement

Each application should include how participants will be helped to develop their skills and experience, including:

  • support to look for long-term work, including career advice and setting goals
  • support with CV and interview preparations
  • supporting the participant with basic skills, such as attendance, timekeeping and teamwork

The scheme is open to businesses of all sizes and there is no cap on the number of places. However, applications must be for a minimum of 30 placements – employers offering fewer than this will need to make a bid with partner firms or through an intermediary, such as a Local Authority or Chamber of Commerce. An additional £300 of funding towards administrative costs is available to the representative applying on behalf of a group of employers.

Young people will be referred into the new roles through their Jobcentre Plus work coach with the first Kickstarts expected to begin at the start of November.

The scheme will initially run until December 2021 although it may be extended.

Further details, including how to apply, can be found online.

How can we help?

Please get in touch or contact your engagement partners at Simmons Gainsford if you would like more information or need any assistance.

Can You Afford To Leave Protection To Chance?

In the sixth instalment of our Summer Financial Focus, here at SG Financial Services we look at how the state benefit system has come under more intense scrutiny during the pandemic and highlighted some serious gaps.

There is nothing quite like a crisis to show where societies are vulnerable, as has been well demonstrated globally over the past few months. In the UK, the immediate concern was the resilience of the NHS, which initially appeared at risk of being overwhelmed by demand for intensive care beds. Then, like many other countries, the UK was also forced to look at providing extra financial support for people who suddenly found themselves out of work, whether through illness, quarantine requirements or temporary business closure.

The most significant element of the Government’s response was the Coronavirus Job Retention Scheme (CJRS), which by late May was covering nearly 8.4 million employees on furlough – handing them up to £2,500 a month in replacement ‘pay’. Without the CJRS, many of those employees would have looked to means-tested Universal Credit, under which the standard allowance for a couple aged 25 or over is just £594 a month, before any additions (e.g. for children). Even that lowly figure includes a temporary increase for 2020/21 of about £87 a month.

For employees who were suffering from Covid-19 symptoms, the four-day waiting period before statutory sick pay (SSP) began payment was scrapped, which sounds generous until you realise that SSP is worth only £95.85 a week.

The government also introduced a range of other measures to support anyone with reduced earnings, such as changing the law to prevent evictions for three months and, through the Financial Conduct Authority, pushing banks and other lenders to grant three-month payment holidays for mortgages that, provided they are pre-approved, do not affect the individual’s credit file for that period.

Getting back to normal

The damage that could have been done to millions of families by the fallout from Covid-19 has been mitigated by the Government’s multifaceted response. However, the Chancellor is already acting to limit the cost of the Covid-19 measures on the government’s finances. In a year or so from now, the social security safety net will probably have reverted to its lowly pre Covid-19 levels.

The crisis has highlighted the importance of having your own financial protection arrangements to cover possible income loss from illness or disability. The lesson of this experience is that the ‘normal’ social security safety net is inadequate, but full protection would probably be too costly for the Government to provide: protection needs to be personal.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it (coronavirus concessions aside). Think carefully before securing other debts against your home.

How can we help?

If you would like some more information on what help we can offer regarding your savings and investments portfolio, please contact us on advice@sgfinancialservices.co.uk or call 020 8371 3143

This newsletter is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this publication. The newsletter represents our understanding of law and HM Revenue & Customs practice.

Child Trust Funds: A Useful Nest Egg

In the fifth instalment of our Summer Financial Focus, here at SG Financial Services we look at how the first Child Trust Funds (CTFs) are due to mature this September, giving those who turn 18 in that month access to a useful nest egg.

The Chancellor has more than doubled, to £9,000, the amount that can now be saved into a CTF, and its replacement the Junior ISA (JISA). Parents and other family contributors now have the opportunity to contribute more towards younger family members’ savings. Both CTFs and JISA plans can be cashed in by children who have them from their 18th birthday.

The value of CTF plans will vary considerably. Some families will have made substantial contributions over the years, and there may be further investment growth on top. Others will find that this ‘trust fund’ contains just the initial payment made by the government when they were launched in January 2005. All children born between 1 September 2002 and 2 January 2011 were eligible.

Parents initially received a £250 payment from the government to invest in either a cash or stocks and shares CTF plan (lower income families received a £500 payment). However, this was later cut to just £50 before the scheme was withdrawn in 2011. CTFs were then replaced by JISAs, although contributions could continue for existing CTFs. JISAs didn’t come with any ‘free’ money from the government, but the annual savings limits have increased regularly over the years.

A child can’t have both a CTF and a JISA. However, it is possible to transfer a CTF into a Junior ISA. Although the tax benefits are the same, interest rates paid on cash JISAs are higher than on the older CTFs. There is also more product choice.

Saving tax-free

With each of these accounts, savings can roll up in a tax-free environment, as there is no income tax to pay on any interest earned (in cash holdings), or capital gains tax (CGT) to pay on investment returns. For those able to save more substantial sums this may be a benefit. It’s also worth noting that parents and grandparents can make contributions into these accounts on top of their own ISA limits.

Neither child nor parent can access these funds before the child’s 18th birthday, at which point a JISA rolls into a standard ISA in the child’s name. Those with CTFs can roll their money over into an ISA at this point too, if they don’t want to cash in these savings. This may be the preferred route that parents wish to encourage.

For most young adults, coming into these savings may be their first experience of
managing substantial sums, so it’s worth discussing with them in detail. There are likely to be short term calls on the funds for higher education or other costs, but there are additional saving options such as personal pensions. These may seem a very long term investment indeed for an 18 year old, but the earlier savings start to build, the better.

The value of your investments can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

The tax efficiency of ISAs is based on current rules. The current tax situation may not be maintained. The benefit of the tax treatment depends on individual circumstances. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

The value of tax reliefs depends on your individual circumstances. The Financial Conduct Authority does not regulate tax advice, and tax laws can change.

How can we help?

If you would like some more information on what help we can offer regarding your savings and investments portfolio, please contact us on advice@sgfinancialservices.co.uk or call 020 8371 3143

This newsletter is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this publication. The newsletter represents our understanding of law and HM Revenue & Customs practice.

Time To Review Your Drawdown Plans

In the fourth instalment of our Summer Financial Focus, here at SG Financial Services we look at why many people may need to reduce the income they are taking from their drawdown pension funds in light of recent falls in the value of their investments resulting from the economic impact of Covid-19.

The dramatic initial falls in equity markets were followed by some recovery and were by no means fully reflected in portfolios that were diversified into bonds and other assets. But there may, of course, be further fluctuations ahead.

The falls have reduced the value of people’s pensions, equity ISAs and investment portfolios. For those accumulating savings and contributing regularly to a pension, the general guidance has been to continue contributions and wait for asset prices to recover in the longer term.

The situation can be different, however, if you are taking regular withdrawals from your pension fund or other investments and you may need to review your pension planning.

Taking withdrawals

Withdrawals from pension funds are typically derived from dividends, interest and sales of units in the funds you hold in your pension. That is how you are able to benefit from the total returns of capital and income generated by your pension portfolio. If fund values continue to rise reasonably steadily, the combination of income and capital withdrawals should provide a steady source of income.

But a sudden downturn means you would need to sell more units in your funds to support the same level of income. The losses would be crystallised and those units would no longer be in your pension portfolio to bounce back if the market improves again.

The impact on long term values is much greater if the downturn, and the consequent sales of units at lower values, occurs early on in retirement. The technical term for this is ‘sequencing risk’.

Investors with well diversified portfolios have seen some of their holdings decline much less than other components in the portfolio. So the overall impact may well be much less than some of the headline figures, and withdrawals may not have a serious effect on future performance. The necessary rebalancing of portfolios may also allow withdrawals to come more from funds that have held up relatively well.

Many investors have some cash reserves that have been set up for such circumstances. If you are in this position, you might feel that it would be preferable to draw now on these cash reserves and wait for a time to make further drawings from your investments.

Under lockdown, our levels of spending have declined with sharp cut-backs on eating out, holidays, clothing and many other purchases. A temporary reduction in expenditure and plans for future spending may be a prudent strategy in the circumstances. There is also the possibility that some taxes are likely to rise soon to cover the costs of the pandemic.

Regardless of how you use your drawdown plan, it is essential to review the income you take from your investments on a regular basis. If fund values have fallen — or simply not grown as much as anticipated — you can act accordingly so that long-term plans are not jeopardised.

The value of your investment can go down as well as up and you may not get back the full amount you invested.

Past performance is not a reliable indicator of future performance.

Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

How can we help?

If you would like some more information on what help we can offer regarding your savings and investments portfolio, please contact us on advice@sgfinancialservices.co.uk or call 020 8371 3143

This newsletter is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this publication. The newsletter represents our understanding of law and HM Revenue & Customs practice.

Planning Towards Your Century

In the third instalment of our Summer Financial Focus, here at SG Financial Services we look at how much the quality of a long life depends on how well we’ve planned for it.

The number of people who celebrate their 100th birthday has quadrupled in the last 30 years, according to the Office for National Statistics (ONS). Pre Covid-19 this trend looked likely to continue, with the ONS forecasting that around 19% of all new-born girls (and 14% of all new-born boys) will become centenarians.

The downside of living a long time in retirement is that your finances might not last the course. Most people start the last third of their lives in reasonably good health and with apparently adequate resources. But a long life does not always imply a healthy life. You might well need help with care costs if you were to fall ill or require help with your basic living activities. It is also likely that individuals
will have to make a significant contribution towards their care costs in the future.

The other calls on retirees’ financial resources may come from their families. The costs of going to university, buying a house, as well as school fees for the youngest relatives could all impact on the solvency of that great institution
– the bank of mum and dad, or grandma and granddad. In addition, there could be the need, or at least the desire, to make a dent in a potential inheritance tax bill by making some lifetime gifts.

The traditional three life stages of education, work and retirement have become increasingly blurred as people retrain, set up their own businesses and switch careers for a longer working life. This gradual transition from work to retirement needs to be planned for.

Creating the right mix between investments, pensions and earned income will be key: planning that far ahead is never easy, so professional financial advice should be your first port of call.

If you are drawing up a financial plan to see you through to your late 90s, here are some practical steps to consider:

Be flexible Financial plans and your attitude to them should be flexible to cope
with unexpected changes. As we’ve seen recently, stock market falls can impact
on your portfolio and pensions and you may be forced to adjust your plans, such
as reviewing the age you intend to start drawing your pension.

Start saving early The longer your money is invested, the more it should be worth, thanks to the benefits of compound returns. Retirement may seem a long way off if you are in your 20s and 30s, but money put aside now can make a difference to your financial wellbeing in your 70s or 80s.

Know what you have Pensions are probably the cornerstone of your retirement plan, and they offer valuable tax relief. Keep track of your various pensions and get an up to date valuation of your State pension entitlement.

Maximise savings If you get a pay rise, increase your pension contributions so your savings keep pace with your income. It may be prudent to invest at least some of any windfall, for example from an inheritance, rather than spend it all at once.

Review your essential bills and additional spending If you are able to enjoy a healthier and more active later life, you may need more funds for leisure activities or holidays. Judicious cash flow planning can help you gauge how much you may need to save for any given stage.

The value of your investments, and the income from them, can go down as well as up and you may not get back the full amount you invested.

Past performance is not a reliable indicator of future performance.

Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

How can we help?

If you would like some more information on what help we can offer regarding your savings and investments portfolio, please contact us on advice@sgfinancialservices.co.uk or call 020 8371 3143

This newsletter is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this publication. The newsletter represents our understanding of law and HM Revenue & Customs practice.

Estate Planning Health Check

In the second instalment of our Summer Financial Focus, here at SG Financial Services we look at how the Covid-19 pandemic has provided many people with an awkward reminder of things they prefer to ignore, particularly estate and will planning.

Key workers have become much more prominent during the coronavirus crisis. The list of ‘key’ occupations surprisingly included solicitors “acting in connection with the execution of wills”. Like many of the other unexpected members of the list, their presence becomes clear once you stop to think about it.

Some solicitors’ firms saw double the normal number of enquiries about will writing just as the lockdown started in March, according to the Law Society. Many people discovered that having a will suddenly moved up their list of priorities from ‘do-it-later’ to ‘do-it-now’. Writing a will forces people to recognise their own mortality, which is why deferral and delay so often sets in. The Covid-19 pandemic has provided enough additional incentive to prompt many people into action.

However, difficulties with last minute solutions are a reminder of why it is much better to prepare in advance. For example, in England and Wales, the Wills Act 1837 requires the signature of the person making the will to be witnessed by two people who are physically present at the signing – video links do not count, according to the Ministry of Justice.

To complicate matters further in a time of social distancing, neither witness should be a beneficiary under the will, because it would invalidate their entitlement. Northern Ireland takes the same approach, although in Scotland the law only requires a single witness and the rules have been amended to allow for video witnessing.

Over half of the British adult population currently do not have a will. If you are part of that majority, then the rules of intestacy (which vary between the four constituents of the UK) will determine how your estate will be distributed on your death. Whether those rules are appropriate will depend upon your personal circumstances. But you should bear in mind that the intestacy rules do not automatically pass everything to a surviving spouse or civil partner if there are children, nor do they make any provision for unmarried partners.

Keeping in control

Having a will lets you decide who receives what from your estate and can also control when and how benefits are distributed if you use a trust. For example, you may not want your children to inherit outright at 18.

Ideally your will should form the cornerstone of your estate planning. We can work with you and your legal advisers to develop a structure that meets your long-term goals as tax-efficiently as possible. The inheritance tax rules are particularly relevant at present because various changes look likely to be announced in this autumn’s Budget. However, you shouldn’t regard these expected tax changes as a reason to procrastinate. In fact, it is more important to act now and review lifetime planning options, which could become less attractive if the proposed reforms currently being considered take effect.

Even if you do have a will, don’t file it away and forget it. A will, like any other piece of financial planning, needs to be reviewed regularly to reflect both changes in your circumstances and to tax rules.

The Financial Conduct Authority does not regulate will writing, trusts and some forms of estate planning.

The Financial Conduct Authority does not regulate tax advice, and tax laws can change.

How can we help?

If you would like some more information on what help we can offer regarding your savings and investments portfolio, please contact us on advice@sgfinancialservices.co.uk or call 020 8371 3143

This newsletter is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this publication. The newsletter represents our understanding of law and HM Revenue & Customs practice.

Holding Your Nerve With Your Investments

Through our Summer Financial Focus, here at SG Financial Services we look to bring you an overview on how these globally altered circumstances may impact on your own financial positions.

Nobody could have predicted how the last few months have turned out. The disruption to everyday life seems set to continue, with coronavirus lockdown measures easing but still bringing us nowhere near to our to “pre-covid” lives. The same can be said for the stock markets, which have seen sharp falls. The investment landscape has certainly shifted, if not permanently then certainly for the foreseeable future. This naturally has implications on personal financial planning, such as savings and investments.

Hard as it feels, now is the time to try and stay calm. There is no disputing the impact of the COVID-19 pandemic. Despite previous coronavirus outbreaks in Asia, such as SARS in 2002, on this occasion it is different. Time now seems to be divided into before and after: the old normal and the new socially-distanced reality we are coming to terms with.

These two eras are clearly visible in the global stock markets, most of which fell sharply in March as the virus spread globally, closely followed by lockdowns and economic contraction.

A steady stream of commentary has discussed whether life as we knew it has changed forever, from air travel to working patterns. That perspective of major changes has also extended to suggestions that there has been a fundamental change in the investment world.

The scene has certainly altered – at least for now. There has been increased volatility in the values of investments, while businesses have reacted to the new environment in a variety of ways, the most obvious being to reduce dividend payments, which you will probably notice in coming months.

Taking a long view

However, it is worth trying to take a longer-term view.

Think back – if you can – to previous crises, such as the financial crisis of 2007/08, the turn-of-millennium dotcom bubble and even the great storm and accompanying stock market crash of 1987. At the time, each of those events felt momentous and a break in history. Now, with the benefit of hindsight, these may even appear as little more than dips on a long-term investment chart.

Investors who stayed the course did suffer in the short term, but they benefited in the long term. Those who panicked and sold up may have chosen the worst point to do so, and then faced the difficult decision of when to reinvest.

All we can say with certainty is that 2020 will be remembered as a difficult year for investors, but perhaps just one of many over the life of a portfolio.

The value of your investments, and the income from them, can go down as well as up and you may not get back the full amount you invested.

Past performance is not a reliable indicator of future performance.

Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

How can we help?

If you would like some more information on what help we can offer regarding your savings and investments portfolio, please contact us on advice@sgfinancialservices.co.uk or call 020 8371 3143

This newsletter is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this publication. The newsletter represents our understanding of law and HM Revenue & Customs practice.

Who Benefits From The CBILS Change?

Having seen rapidly growing, early-stage SMEs fall foul of the “undertaking in difficulty” test when applying for the Coronavirus Business Interruption Loan Scheme (“CBILS”), the rule change on 30 July 2020 was welcomed.

Previously, issues arose with CBILS applications from successful, early stage SMEs that had burned through share capital as part of their rapid development plans. Despite now being profitable, many had early losses following investment in the right people, ideas and marketing. If these losses had eaten into over half their subscribed share capital, as at 31 December 2019, and the business was over 3 years old, it was classified as being” in difficulty”. This unfairly placed it in the same category as a business subject to insolvency proceedings.

Many such businesses were innovative companies that had been funded by loans from committed investors and directors, as opposed to share capital. Whilst profits were now accelerating, early losses and the investment structure meant they did not qualify for CBILS support.

From 30 July 2020, following changes in State Aid Law, the accumulated loss criteria has been relaxed for businesses with fewer than 50 employees and less than £9M in annual turnover and/or on annual Balance Sheet. Such businesses will now only be “undertakings in difficulty” if they are subject to insolvency proceedings, in receipt of unpaid rescue aid or subject to restructuring plans post restructuring aid.

If your business was initially rejected for CBILS finance as an “undertaking in difficulty” and meets the revised criteria, it may certainly be worth reapplying. Remember other British Business Bank and individual lender criteria will still need to be met, most importantly your ability to service any debt.

Need help with your application?

Our Banking Advisory team is led by Delphine Paterson who is an experienced banker with an extensive network and first-hand experience of bank credit processes, attitude to risk and pricing strategies for borrowing and operational needs. delphine.paterson@sgllp.co.uk / 020 7291 5792

VAT Cut For UK Hospitality: What You Need To Know

A temporary cut to VAT from 20% to 5% on food, accommodation and attractions in the hospitality sector has been put in place for the period 15 July to 12 January 2021.

This will apply, across the UK, to:

  • food and non-alcoholic drinks supplied by restaurants, pubs, bars, cafés and similar premises, including hot takeaways;
  • accommodation;
  • admission to attractions such as cinemas, zoos and theme parks

There may be situations where the customer has already agreed a fee / been invoiced / has paid for the service at the higher VAT rate.  At a basic level, the consequences are:

  • Where a price has been agreed but not yet invoiced or paid, the amount payable must be altered unless there is an express term in the contract which stipulates that the gross price is fixed.
  • When an invoice has been issued or payment received, the business can (but is not required to) lower the rate charged to the extent that goods are removed or services performed after the change of rate. The supplier has to issue an appropriate credit note within 45 days of the change of rate. If the lower rate is not used, the business should pay to HMRC the full amount of the VAT charged at the old, higher rate.
  • Where continuous supplies of goods or services are made which cover a change of rate and the invoice/payment date results in a higher rate than that in force when the goods or services were actually removed or performed, the business can (but is not required to) account for VAT at the new rate to the extent that the provision occurs after the change of rate. The supplier must issue a credit note within 45 days of the change of the change of rate. If the lower rate is not used, the business should pay to HMRC the full amount of the VAT charged at the old, higher rate.
  • Where goods are removed or services performed before the change of rate, provided:

payment was not received before the removal of the goods or the performance of services; and

the invoice is issued after the change of rate but not later more than 14 days after the removal of the goods or performance of the services,

then the supply may benefit from the reduction in rate.

However, businesses that have advised HMRC in writing that they do not wish to apply the 14 day rule are unable to benefit in these circumstances.  There are also a number of businesses that have agreed an extension to the 14 day rule with HMRC.  Such an extension would allow businesses more time to take advantage of the reduction in the VAT rate.

  • Any invoices issued in advance at the old rate are invalid to the extent that the date shown on the invoice is after the change of rate.

Businesses should take care not to be pressured into incorrect adjustments of VAT due as this would result in them being exposed to assessments and penalties.

The commercial considerations are different when the VAT rate falls from when it increases, and the notes above are not in themselves a basis for definitive action.

How can we help?

Clients who may be affected by the rate reduction should take appropriate advice. If you would like to discuss how these changes may affect you, please speak to:

Paddy Behan – Partner, Indirect Tax Services

Paddy advises on the full range of VAT for businesses and their advisors. As well as providing consultancy, he also acts for clients in relation to penalties and disputes, and appeals to the First-tier Tribunal. 020 7291 5652

Anthony Martin-Luce – Manager, Indirect Tax Services

A non-practising barrister with a Masters in Laws, Anthony has more than 15 years’ experience in VAT and indirect taxes and specialises in land and property, finance and insurance, partial exemption, and certain customs matters. 020 7291 5611 

Eat Out To Help Out: How It Works

Restaurants and other similar establishments can now sign up to the Eat Out to Help Out Scheme, an initiative devised by the government with the aim of protecting hospitality sector jobs by encouraging people to safely return to dining out.

The scheme will:

  • operate all day, every Monday, Tuesday and Wednesday from 3 to 31 August 2020
  • provide a 50% discount, up to a maximum of £10 per person, to diners for food or non-alcoholic drinks to eat or drink in
  • allow the business to claim the full amount of the discount back from the government

There is no limit to the number of times customers can use the offer during the period of the scheme. Customers cannot get a discount for someone who is not eating or drinking.

It is expected that the discount will be offered during the whole of the opening hours on all the eligible days and on all qualifying sales of food or drink. The terms of the scheme cannot be changed – the discount offered must be 50%.

On registering, a business will be able to download free promotional material, including the campaign logo, and will be sent a display sticker. Establishments who have registered will be published on the GOV.UK website so the public can see who is taking part.

Eligibility

The scheme is open to any business UK wide which:

  • sells food for immediate consumption on the premises
  • provides its own dining area or shares a dining area with another establishment for eat-in meals
  • was registered as a food business with the relevant local authority on or before 7 July. For new businesses, the application to the relevant local authority must have been made on or before 7 July 2020

“On the premises” means any area set aside for the consumption of food or non-alcoholic drink by that establishment’s customers and includes an outdoor seating area designated to the business.

It does NOT include informal outside seating such as a take-away or mobile van putting a table and chairs on the pavement.

Eligible businesses could include:

  • restaurants
  • cafés
  • public houses that serve food
  • hotel restaurants
  • restaurants and cafés within tourist attractions, holiday sites and leisure facilities
  • dining rooms within members’ clubs
  • workplace and school canteens

The scheme is open to businesses which have used other schemes.

Businesses which are ineligible for the scheme include:

  • an establishment that only offers takeaway food or drink
  • catering services for private functions
  • a hotel that provides room service only
  • dining services (such as packaged dinner cruises)
  • mobile food vans or trailers

In particular,

  • a stall at a stadium or attraction must have a designated area for use by its customers to be eligible
  • a restaurant in a hotel can use the scheme for food and drink sold for immediate consumption on the restaurant premises. This does not include food and drink that is purchased as part of a wider service.
  • Catering on trains is only included if there is a specific area or dining carriage for dining. All other food and drink is excluded.

Applying the discount

The discount can be applied to food and/or non-alcoholic drink purchased for immediate consumption on premises, up to a maximum discount of £10 per diner (inclusive of VAT). There is no minimum spend requirement.

The discount cannot be applied to:

  • alcoholic drinks
  • service charges
  • tobacco products
  • food or drink that is to be consumed off premises
  • food or drink that is sold as part of a private party, event or function taking place within an eligible establishment. This includes catering services for weddings and other events.
  • food or drink that is provided as part of a wider accommodation service (such as a hotel providing a bed and breakfast service).
  • food or drink provided by a workplace or school canteen that is paid for by the owner of the premises and supplied to employees or students for free.

If a customer is dining in and then takes away the remainder of their meal, the discount will still apply.

A diner is any person, adult or child, for whom food or drink is being purchased for consumption on premises. A diner does not need to be the paying customer.

In order to calculate the amount of the discount:

  • start with the amount of the bill
  • remove any ineligible items (such as alcohol and service charge)
  • divide by the number of diners
  • the discount per person is the lower of the amount calculated and the capped amount

VAT should still be charged on the full amount of the bill.

The scheme can be used with other offers and discounts. These should be applied first with the scheme discount calculated on the reduced amount of the bill.

Registration

Registration for the scheme is now open and will close on 31 August. An agent will not be able to apply on behalf of the business.

In order to register, a business will require:

  • its Government Gateway ID and password (if it does not have one, it can be created on registration)
  • the name and address of each establishment to be registered (unless more than 25 establishments are being registered – see below)
  • the UK bank account number and sort code for the business which can accept BACS payments
  • the address on the bank account for the business (this is the address on the bank statements)

The business may also require its:

  • VAT registration number (if applicable)
  • employer PAYE scheme reference number (if applicable)
  • Corporation Tax or Self Assessment unique taxpayer reference

If registering more than 25 establishments that are part of the same business then details for each one do not have to be provided.

Instead, a link to a website which contains details of each establishment participating in the scheme, including the trading name and address, should be provided.

On registration the business will be provided with a registration reference number which will be needed for claiming repayments.

Records

The business should maintain a record, for each day the scheme is in operation, of:

  • total number of people who have used the scheme
  • total value of transactions under the scheme
  • total amount of discounts given

If the scheme applies to more than one establishment then separate records should be kept for each.

Making a claim

Claims can be made on a weekly basis starting on 7 August 2020 although they can only be made 7 days after registrations. The service will close on 30 September. HMRC will pay eligible claims within 5 working days.

Any money received through the scheme will be treated as taxable income.

How can we help?

Please get in touch or contact your engagement partners at Simmons Gainsford if you would like more information or need any assistance.