Rishi Sunak, Chancellor of the Exchequer, delivered his summer statement today, announcing a package of measures all focused around ‘a plan for jobs’.
“The Chancellor confirmed that, in addition to the £160 billion support package already pledged during the COVID-19 pandemic, further support of up to £30 billion would be made available to help the UK economy bounce back,” said Nick Haines at Gloucestershire accountants Hazlewoods, who added more detail to the headlines news.
Sunak confirmed that the furlough scheme would continue to wind down as planned, ending in October. However, with the aim of ensuring that after this time those furloughed employees are retained by their employers, he announced a new ‘coronavirus job retention bonus’ scheme. This new scheme will be introduced at a cost of up to £9 billion and just shy of one-third of the total package announced during his speech, added Nick.
“Under the scheme, employers will receive a one-off £1,000 bonus for each furloughed employee that is continuously employed by the business until at least 31 January 2021,” explained Nick. “To qualify, the employee must earn at least £520 per month on average from when the furlough scheme ends up until the end of January 2021. The employees must also have been included on a furlough claim submitted by 5 July 2020.”
Other support for jobs included the introduction of a Kickstart Scheme where employers will be funded by the Government to create jobs for younger people (aged 16-24) who are at the highest risk of long-term unemployment. He also announced a £2,000 payment for each new apprentice that an employer hires, aged under 25, and £1,500 for those over 25, running from 1 August 2020 to 31 January 2021.
The Chancellor also confirmed the rumours of a temporary cut to stamp duty land tax (SDLT) by announcing an increase to the threshold above which SDLT is paid from £125,000 to £500,000. This cut will apply with immediate effect, until 31 March 2021, in an attempt to boost the property market. It is estimated that almost nine out of ten people buying a house will pay no SDLT at all under this temporary measure.
The final measures announced by Rishi Sunak were focused around the hospitality sector which has been notably one of the hardest hit sectors during the coronavirus pandemic. This included the much-anticipated announcement that there would be a temporary cut in the rate of VAT for services in these sectors.
With effect from 15 July 2020 and running until 12 January 2021, the VAT rate will be reduced from 20% to 5% for supplies of food and non-alcoholic drinks from restaurants, pubs, cafes and bars, as well as on accommodation and admission to attractions within the UK.
An ‘eat out to help out’ scheme was also announced during August 2020, where diners will be entitled to a 50% discount on their meals up to £10 per head from Monday to Wednesday. Food establishments will need to register to be part of the scheme and will be reimbursed by the Government for the discount given.
The Chancellor confirmed that a full budget and spending review will be planned for the autumn and time will only tell whether this will lead to further announcements of tax cuts to help continue to boost the UK economy, or the start of austerity measures to begin to recoup the billions of pounds of support provided in recent months.