Summer Economic Update 2020: Key Points
As Government support schemes are gradually withdrawn and businesses can start to fully assess the harm sustained by lockdown and what the ‘new normal’ will look like, now is a crucial time to get key guidance to help your business adjust to this new future and take advantage of any tax and financial opportunities.
This afternoon (8th July) Chancellor Rishi Sunak has unveiled a package to kickstart the UK economy’s recovery.
The Chancellor announced a VAT cut, stamp duty holiday, restaurant discounts and a suite of measures to boost hiring as part of his mini-Budget.
We have listed the full details below, but here is a brief overview of the key announcements:
- A Jobs Retention Bonus, giving £1,000 to businesses who bring back employees from furlough
- A “kickstart scheme” to get unemployed 16 to 24-year-olds into work
- New payments for businesses hiring apprentices
- A temporary VAT cut for hospitality and tourism – down from 20% to 5%
- A rise in the threshold of stamp duty from £125,000 to £500,000 (England only)
- An “Eat Out to Help Out” scheme for August, giving a discount to people eating at cafes, restaurants and pubs
- The furlough scheme will wind down flexibly and gradually until the end of October, Sunak confirms.
- “Leaving the furlough scheme open forever gives people false hope that it will always be possible to return to the jobs they had before,” says the chancellor.
- A jobs retention bonus will help to wind down the scheme: businesses will be paid £1,000 for every furloughed member of staff retained through to January 2021. This would cost the Treasury more than £9bn if every job furloughed is protected, Sunak says.
- Mr Sunak unveiled a new £2bn Kickstart Scheme as a key plank of his “Plan for Jobs”. The fund will create government-subsidised jobs for unemployed young people and employers will be able to offer a six-month placement for people aged between 16-24.
- The Treasury will cover 100% of the National Minimum Wage for each young employee for up to 25 hours a week with firms able to top up the worker’s pay.
Training & Jobs
- Jobcentre work coach numbers will be doubled, the chancellor says.
- Apprenticeships will be supported by bonuses for companies. Firms will get a payment of £2,000 for each apprentice they take on. Companies taking on apprentices aged over 25 will be given £1,500.
VAT Cut for Tourism & Hospitality
- Sunak says 2 million people work in the hospitality sector and that it has been one of the hardest hit by Covid-19, warranting further support from the government.
- VAT will be cut from the current rate of 20% to 5% for the next six months on food, accommodation and attractions. The cut lasts from Wednesday 15 July until 12 January 2021.
- Sunak says the move is a £4bn catalyst, benefiting more than 150,000 businesses and consumers.
- Sunak says the government wants a “green recovery with concern for our environment at its heart”.
- As previously announced, the government will provide £3bn for decarbonising housing and public buildings.
- Vouchers worth £5,000 per household, and up to £10,000 for those with a low income will be made available out of a £2bn pot to retrofit homes with insulation, helping to cut carbon emissions.
- £1bn will be allocated to make public buildings greener.
- The chancellor announces he will cut stamp duty to reinvigorate the housing market.
- The threshold for stamp duty will increase from £125,000 to £500,000. The cut will be temporary, running until 31 March 2021, and will take effect immediately.
We will keep you updated on any Scottish announcements once they are made.
Discounts on Eating Out
- The chancellor announces an “eat out to help out discount” to encourage consumers to spend at restaurants and cafes.
- Meals eaten at any participating businesses, from Mondays to Wednesdays in August, will be 50% off up to a maximum discount of £10 per head for everyone, including children.
- Businesses will be able to register through a website launching on Monday. Firms can claim money back to have money in their bank accounts within five working days.
- Sunak says 1.8 million people work in the industry, whose jobs can be supported. “We can all eat out to help out,” he adds.