Response to Summer Economic Update

On Wednesday 8 July the Chancellor of the Exchequer, Rishi Sunak presented a Summer Economic Update to the House of Commons. The main theme of his announcement was a ‘Plan for Jobs’.

Stamp Duty

The Chancellor announced that, with immediate effect, there would be no stamp duty to pay when buying a property up the value of £500,000. This relief will be until 31 March 2021. The previous threshold before stamp duty was due was £125,000, or £300,000 for first time buyers.

This measure is a step towards trying to bolster confidence in the housing market and build upon the recovery that it is starting to make, which will in turn support the construction industry.

VAT

To further support the hospitality industry, VAT will be reduced from 20% to 5% on the supply of food and non-alcoholic drinks, accommodation and attractions. This will be from 15 July 2020 until 12 January 2021.

Further guidance on the scope of this relief will be published shortly.

The hospitality industry has been one of the hardest hit by the coronavirus outbreak. There have been other schemes and grants given specifically to this industry to help it maintain and recover. The reduction in VAT and the ‘Eat Out To Help Out’ discount scheme, which will run during August, are further to steps to support those in the hospitality industry and will be welcome news to many businesses in the local area.

Jobs Retention Bonus

As an extension to the Coronavirus Job Retention (Furlough) Scheme the Chancellor announced news of a Jobs Retention Bonus. This will be a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021.

Employees must earn above the Lower Earnings Limit (£520 per month), on average, between the end of the Coronavirus Job Retention Scheme on 31^st October 2020 and the end of January 2021.

Payments will be made from February 2021. Further detail about the scheme will be announced in due course.

This measure is in response to calls for the Jobs Retention Scheme to be extended beyond 31 October 2020 and is designed to encourage employers to retain staff to prevent redundancies and higher unemployment when the scheme ends.

Kickstart Scheme

The Chancellor announced a raft of measures designed to support, create and protect jobs. The most significant one being the Kickstart Scheme that encourages UK employers to create high quality 6-month work placements for those aged 16-24, with government funding available for each job to cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions.

 

These further announcements of business support by the government are designed to try and prevent the UK economy from shrinking further, and to weather the global recession caused by coronavirus.

The Chancellor plans to deliver a Budget and spending review this Autumn that should give a clearer picture of the health of the British economy.

You can find out more about all of the financial support available to businesses in our Coronavirus Business Interruption Guide.

Full details about the Government’s ‘A Plan for Jobs’ can be found on their website.