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UK Announces COVID-19 Tax Breaks To Stimulate Economy

by Jason Gorringe, Tax-News.com, London

10 July 2020


In a bid to reinvigorate the UK economy and buoy property prices, Chancellor Rishi Sunak has announced plans to slash the VAT rate for the hospitality sector and offer temporary stamp duty relief.

The VAT rate will be lowered from 20 percent to five percent temporarily, during the period July 15, 2020, until January 12, 2021. It will apply to both eat-in and takeaway food and non-alcoholic drinks, to overnight accommodation, and admission to theme parks, zoos, and cinemas.

Further, the Government has announced that it will increase the threshold for the application of the nil rate of Stamp Duty Land Tax (SDLT) to properties worth up to GBP500,000 (USD629,325). This is an increase from GBP125,000 presently. It affects transactions taking place between July 8, 2020, and March 31, 2021.

A five percent rate will apply on the portion from GBP500,001 to GBP925,000; a 10 percent rate applies on the portion from GBP925,001 to GBP1.5m, and a 12 percent rate applies on the value above GBP1.5m.

The three percent higher rate for purchases of additional dwellings applies on top of the revised standard rates.

For new leasehold sales and transfers, the nil rate band, which applies to the "net present value" of any rents payable for residential property, is also increased to GBP500,000 from July 8, 2020, until March 31, 2021.

The Government said companies as well as individuals buying residential property worth less than GBP500,000 will also benefit from these changes, as will companies that buy residential property of any value where they meet the relief conditions from the corporate 15 percent SDLT charge.

TAGS: individuals | tax | value added tax (VAT) | United Kingdom | food | stamp duty | Tax

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