Chancellor’s Summer Statement
In light of the UK economy having retracted by 25% since the global COVID-19 pandemic, and with the OBR predicting ‘significant’ job losses, today, Wednesday 8 July, the Chancellor Rishi Sunak announced his new “Plan for Jobs.”
We’ve detailed the key actions the Chancellor announced today below:
Job Retention Bonus:
To encourage employers to bring back and retain employees after furlough, UK employers will each receive a one-off bonus of £1,000 for each furloughed employee who remains employed as of 31 January 2021.
The Chancellor announced the new, fully subsidised ‘Kickstart Scheme’ to incentivise employers by directly paying the wages of any qualifying young person for a period of 6 months. To qualify, any new employee must be currently claiming Universal Credit, be between the ages of 16-24, and at risk of long term unemployment. The Chancellor caveated the scheme by confirming the jobs must be ‘newly created’ jobs. Employees must be paid at least National Minimum Wage for a minimum of 25 hours per week, and employers can top up this wage if required. The move would see businesses employing a qualifying 24 year old receiving a grant in the region of £6,500. A government contribution towards overheads will also be paid – further detail is awaited here.
Employers can apply to register for the Kick Start scheme from August, with the newly created jobs anticipated to start in the Autumn, with no cap on the number of places available.
Training & Apprenticeships:
The chancellor also confirmed his desire to boost employment support schemes by making £1.6 billion available with the following measures:
Employers will receive £2,000 for each new apprentice hired under the age of 25, in addition to the existing £1,000 payment received for the hire of 16-18 year old apprentices, and a £1,500 bonus for hiring apprentices over the age of 24 years.
‘Green Homes’ Grant:
The Chancellor confirmed the announcement from earlier in the week about the ‘Green Homes’ grant in an effort to stimulate the construction and trade sector, by making available grants to homeowners and landlords to cover two-thirds of the cost of energy efficient home improvements, up to a maximum cost of £5,000. Low income homeowners will receive 100% financial support of energy efficient improvements up to a maximum of £10,000.
Stamp Duty Reduction:
Stamp Duty Reduction:
The Chancellor confirmed that the Nil Rate Band of Residential Stamp Duty Land Tax will raise with immediate effect to £500,000 from the existing £125,000 with a predicted 90% of home buyers are expected to benefit from a nil Stamp Duty bill when purchasing residential properties.
Landlords and companies will benefit from the increased threshold, with 3% being due on purchases on the value up to £500,000, rather than a possible 8% rate.
Individuals who may end up owning two properties whilst their old residence is being sold will also benefit in the reduction. As above, rather than paying 8% they will only 3% on property purchases up to £500,000. If the old residence is sold within three years, they can reclaim the additional SDLT in the usual manner.
The measure means that individual property landlords may wish to consider incorporating their existing property portfolios into a limited company, whilst the SDLT rates are substantial lower.
The threshold will remain at the increased rate until 31st March 2021.
VAT Rate Cut:
With hospitality and tourism having been hit the hardest by the pandemic, the Chancellor wishes to protect jobs through a VAT cut for the hospitality sector and confirmed that he is slashing the VAT rate from 20% to just 5% for eat in/hot take away food retailers, restaurants, cafes, pubs, hotel accommodation, campsites, caravan parks, theme parks, cinemas and zoos, from next Wednesday (15th July). The reduced VAT rate will remain in place until January 12th, 2021.
We have produced initial guidance as to the steps businesses in the sector should take to prepare for the reduced rate, including prices, invoices and credit notes which you can read here.
We are currently analysing the finer points of this change and how it could impact your business, and will be circulating a special VAT webinar early next week with step by step, detailed guidance as to how to accommodate the temporary change.
“Eat Out to Help Out”
Consumers will benefit from a 50% discount on eating out (up to a maximum of £10 per head) when dining out Monday – Wednesday, with the government making up the difference to restaurants and other applicable food retailers s in the sector. Pre-registration for the scheme will be available from Monday 13th July. Businesses will be able to reclaim the discount on a weekly basis with the refunds being processed by the Government within 5 working days.
If you have any questions in relation to the above you should not hesitate to contact your usual engagement partner.