As expected, the Chancellor announced several measures to try and jump start the economy in his Summer Statement last Wednesday (8 July 2020). Here we summarise the key points. As always, the devil will be in the detail and this is expected to emerge over the next few days.
The initiatives put in place are designed to support the worst affected parts of UK industry. They include a six-month VAT cut for the tourism and hospitality sector, additional incentives for employers to keep on staff and an eight-month stamp duty holiday for house purchases under £500,000.
Key Points for Employers:
- Retention bonus for employers using furlough scheme – the cost of the Coronavirus Job Retention Scheme (CJRS) to employers will go up from 1 August every month until it closes on 31 October 2020. Due to concerns the rising cost to the employer will make furloughed staff redundant, the Government will make a one-off payment of £1,000 for every furloughed employee earning over £520 per month, who is retained until the end of January 2021;
- Kickstart Scheme – a new job creation scheme will be created for young people aged between 16-24 who are on Universal Credit and at risk of long term unemployment. The Government will pay these workers’ wages for six months whilst they complete a job placement. The contribution will be capped at the applicable National Minimum Wage rate and will be available for up to 25 hours’ work per week;
- Training and apprenticeships – £32 million will be invested in the National Careers Service, with employers entitled to a payment of £2,000 for each young apprentice they take on under the age of 25, and £1,500 for each apprentice aged 25 or over.
Key Point for House Buyers:
• Stamp Duty – there will be a temporary increase in the nil rate band for residential stamp duty land tax, with the result that no stamp duty will be payable on the first £500,000 of all standard property sales in England and Northern Ireland.
For those purchasing second homes, additional stamp duty land tax will remain due but the 3% band will now apply in respect of the first £500,000, rather than the first £125,000 of the purchase price. This stamp duty holiday will last until 31 March 2021
Key point for businesses in the hospitality industry:
- VAT Cut – from 15 July 2020 to 12 January 2021 from standard rate of 20% to 5% on food, accommodation and attractions. This temporary cut should see prices fall when we eat or go out. However, whether the public will see much of this reduction depends on whether businesses pass on the VAT cut or businesses just keep the money and not cut their prices.
