On Wednesday 8 July 2020, Chancellor Rishi Sunak delivered his Summer Economic Update to parliament. These measures are being described as the second part of a three-phase plan to secure the UK’s economic recovery from coronavirus.
Summarised below, key announcements include a Job Retention Bonus of £1,000, paid to businesses that keep a furloughed member of staff employed until at least 31 January 2021; VAT cuts of 15% to much of the hospitality industry and an increase in the Stamp Duty threshold until 31 March 2021.
VAT cuts for parts of the hospitality sector
VAT is being cut from 20% to 5% from 15 July to 12 January 2021 for food and non-alcoholic drinks in restaurants, cafes and pubs alongside hot takeaway food and hot takeaway non-alcoholic beverages. It will also be cut for hotel accommodation and B&Bs as well as admission to cinemas and attractions, including theme parks.
Further information is available here.
Further hospitality help with restaurant discounts in August
The Chancellor also announced a new Eat Out to Help Out scheme to help out those in the hospitality industry. This offers 50% discount for every diner, up to £10 a head, from Monday to Wednesday throughout the month of August.
It applies to food and non-alcoholic drinks only, at establishments that sign up to the scheme to participate. It does not apply to takeaway or home delivery.
Businesses can sign up online and claim the discount from the Government in full, with payment made via BACS.
Job Retention Bonus
Whilst the Coronavirus Job Retention Scheme (CJRS) was not extended, a Job Retention Bonus was announced.
The aim of this is to encourage firms to retain furloughed staff. For every furloughed employee that is retained continuously until the end of January 2021, a one-off £1,000 payment will be made to employers. This will apply to workers who are earning over £520 per month and is UK-wide.
Stamp Duty cut
The Stamp Duty threshold for residential properties in England and Northern Ireland has been raised to £500,000 from 8 July 2020 until 31 March 2021.
The Chancellor believes this will result in almost nine out of ten transactions being tax free, at an expected cost to the treasury of £3.8bn.
For those considering purchasing a residential property, this would amount to a saving of up to £15,000, if purchased by the 31 March 2021 deadline. Further information is available here.
Green Homes Grant
The Chancellor also announced a Green Homes Grant, comprising a £2 billion Grant scheme, with up to £5,000 available per household for projects which make homes more energy efficient in England. The Government will cover two-thirds of the spend of owners or landlords for most homes.
For example, a homeowner or landlord installing insulation costing £3,000 would only pay £1,000, with the Government contributing the remaining £2,000 through the voucher scheme.
In addition to this, up to £10,000 is available, per household for low-income households, which will be fully funded by the Government.
Support for young workers
A £2 billion Kickstart Scheme is being launched, which aims to create new, fully subsidised jobs for young people across the country.
Eligibility is for those aged 16-24, claiming Universal Credit who are at risk of long-term unemployment. The scheme will cover 100% of the National Minimum Wage for 25 hours a week for each six-month job placement. These wages will be able to be topped up by employers
To help people looking for a job, £1.6 billion will be invested in scaling up employment support schemes, training and apprenticeships. Measures to be introduced include:
- £2,000 will be given to businesses for each new apprentice they hire under the age of 25. This is in addition to the existing £1,000 payment the Government already provides for new 16-18-year-old apprentices and those aged under 25 with an Education, Health and Care Plan
- A £32 million investment in the National Careers Service
- Doubling the number of work coaches to 27,000
- £111 million invested to triple the scale of traineeships in 2020/21
- Funding of £17 million to triple the number of sector-based work academy placements in 2020/21
Infrastructure and decarbonisation
Further details of a £5.6bn package of infrastructure measures that were previously announced by Boris Johnson on 30 June 2020 were announced. These include measures for school buildings, hospitals, transport, and housing.
Alongside this, £1bn of grants were announced for public sector bodies to improve energy efficiency and £50m was announced towards a social housing decarbonisation fund. This is aimed at improving the energy efficiency of socially rented homes.
We’re here for your business
For any advice or assistance on the grants or cuts mentioned in this article, whatever industry you’re in, contact our dedicated team of accountants. Our accountants are here to provide you with all aspects of tax and business growth advice to help your business thrive in the current climate.
Call us on 0161 832 4841, email firstname.lastname@example.org or simply fill out the form below and we’ll be in touch shortly.