The UK government is currently using all possible tools to help those affected by the coronavirus crisis.
From LISAs to VAT zero rating, tax credits and statutory payments, we can actually notice that a lot of government’s actions and laws have been made since the beginning.
A lot of people actually wondered how is it possible to be clear minded with such a large amount of information.
That’s why we decided to make for you, a brief summary of the major tax measures that have been done from the start.
ISA for life (individual savings account)
ISA Life time (LISA) is a measure which was introduced in April 2017 to encourage residents of the United Kingdom to save to meet long-term goals such as buying a house or preparing a retirement for example.
Registration terms and conditions:
To subscribe, individuals have to be aged between 18 and 40.
The government pays in a 25% bonus of up to £1,000 per year on amounts contributed in the year until the saver reaches the age of 50.
However, there is a penalty of 25% of the amount withdrawn if the funds are taken out in circumstances other than :
– Buying the saver’s first home worth up to £450,000
– when the saver is aged 60 or more
– when the saver is terminally ill with less than 12 months to live.
From March 6, 2020 to April 5, 2021, as part of the fight against the coronavirus, this LISA withdrawal penalty is now reduced to 20%.
VAT on protective equipment
In addition to the permanent reduction of VAT to zero on digital publications, the government has also introduced a temporary zero rate of VAT on PPE (personal protective equipment) which notably includes gloves, surgical aprons and masks, respirators and also face protection equipment.
These VAT rates are intended to help nursing homes, businesses that cannot recover VAT, and individuals.
The new laws on the topic, obliges the employer to use the normal salary level to calculate statutory payments (taxes and levies set by the government, statutory entities, local authorities …) and not the salary received on leave which is 80% of the employee’s regular salary.
This applies when the family-related statutory pay period begins on or after April 25, 2020.
So, people who have had their wages reduced while on leave should not be disadvantaged in statutory payments.
To be eligible for tax credits “tax credit” related to work ; It is necessary to work a certain hourly volume per week (16, 24 or 30H depending on the circumstances).
However, if you are put on an unpaid leave (partial unemployment from Covid 19) HMRC (the branch of the British government dealing with taxes) will treat you as working normal hours, so you will still be eligible for tax credits.