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The Chancellor of the Exchequer, Rishi Sunak, has delivered his Summer Economic Update which contained a number of policy decisions intended to support the recovery from COVID-19. There were a number of flagship announcements.
Under the Job Retention Bonus, the government will introduce a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed and paid through to the end of January 2021.
The payments will be made from February 2021 and further details on the scheme will be announced by the end of July.
However, Mr Sunak reiterated that the Job Retention Scheme would finish at the end of October. Whilst understanding the complexity in targeting particular sectors, there is a strong likelihood many businesses will still be unable to trade at that point leaving closure as the only option.
To offset the impending loss of jobs, the government will introduce a new Kickstart Scheme in Great Britain. This £2 billion fund is designed to create hundreds of thousands of high-quality six-month work placements and is aimed at those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment.
The employer will be funded to cover the relevant National Minimum Wage for a twenty-five hour week plus the associated employer National Insurance contributions and employer minimum automatic enrolment pension contributions.
To encourage businesses to hire apprentices, the government will introduce a new payment of £2,000 to employers in England for each new apprentice they hire aged under twenty-five and a £1,500 payment for those hired twenty-five and over between 1st August 2020 and 31st January 2021.
The tourism and hospitality sectors have been particularly severely impacted by COVID-19 with around 1.4 million staff furloughed. A number of measures were announced to stimulate demand.
The Eat Out to Help Out scheme will run in August to encourage people to return to eating out. This will entitle every diner to a 50% discount of up to £10 per head on their meal at any participating restaurant, café, pub or other eligible food service establishment. The discount can be used unlimited times and will be valid from Monday to Wednesday on any eat-in meal including on non-alcoholic drinks.
The participating establishments will be fully reimbursed for the 50% discount and registration opens on 13th July. Further details can be found here.
Some key points for an establishment to consider are that:
There will be a temporary cut in the rate of VAT from 20% to 5% for food, non-alcoholic drinks, accommodation and attractions between 15th July 2020 and 12th January 2021.
This reduced rate of VAT applies to:
There is some ambiguity as whether this benefit is intended for the provider or to be passed through to the consumer. Further guidance on the scope of the relief is due to published by HMRC in the next few days.
On property and housing, the government has temporarily increased the Nil Rate Band of residential Stamp Duty Land Tax in England and Northern Ireland from £125,000 to £500,000. This is in force from now until 31st March 2021.
Those purchasing second homes, buy-to-let properties and property investors who purchase through limited companies will also benefit. However, the 3% surcharge will still apply.
Finally, the government will introduce a £2 billion Green Homes Grant that will provide at least £2 for every £1 that homeowners and landlords spend to make their homes more energy efficient up to £5,000 per household.
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