8 Jul 2020

The Summer Economic Statement - what it means for you

The Chancellor today made his much-anticipated announcement on the latest financial stimulus measures to support the UK's economic recovery following the Coronavirus (COVID-19) pandemic.  In his opening remarks, he noted that the interventions he had made since March were to be viewed as ‘Phase 1’  - with the aim of protecting the economy and the financial health of individuals and businesses - and that today we had started ‘Phase 2’, with the attention now focused towards protecting jobs.

All of today’s announcements were measured against this one goal – and, indeed, the supporting documentation released by the Treasury was simply titled the government’s ‘Plan for jobs’.  Whether referencing increased infrastructure spending, the Job Retention Bonus (payable to employers who bring furloughed staff back to work and keep them employed until at least 31 January), the creation of new employment-based training and apprenticeship opportunities, or the increase in the nil band SDLT threshold to £500,000 (to keep the housing market moving and support ancillary service providers in that sector), the aim is to protect and create new employment opportunities.

The hospitality and leisure sector received direct support – hardly surprising given that these businesses are amongst the hardest hit by the pandemic.  Reduced VAT rates of 5% will take effect next Wednesday (15 July) in respect of certain supplies made by restaurants, hotels and tourist attractions, amongst others, and will last for six months.  And in a novel move, the (perhaps unfortunately titled) ‘Eat Out to Help Out’ scheme will provide a 50% discount (up to £10 per head) for diners on Mondays to Wednesdays throughout August, with the government picking up that half of the bill and making a cash payment to the restaurant within five days.  It is perhaps notable, however, that these benefits to the hospitality sector do not extend to alcoholic drinks.

As always with significant announcements, we await the finer detail, which will arrive in the coming months.  In particular, the announcement (and supporting documents) are vague on which furloughed employees will qualify for the Job Retention Bonus – is it all employees who have ever been furloughed or individuals that were (or will be) on furlough on a specified date?  The government anticipates that this measure alone will cost £10 billion, implying that a significant number of jobs will benefit from the relief.

Job Retention Bonus
* £1,000 one-off bonus to UK employers
* For every furloughed employee
* Must be employed continuously through to the end of January 2021
* Must earn a minumum of £520 per month 
Kickstart Scheme
* Unlimited 6-month work placements
* For 16-24 year olds
* Funding for 25 hours per week at National Minimum Wage
* Applications from August 2020 to start in the autumn
New traineeships
* For 16-24 year olds
* Training and work experience
* £1,000 bonus for employer
New apprenticeships
* £2,000 per apprentice under 25
* £1,500 for 25yr+ apprentices
* 1 August to 31 January 2021
Eat Out to Help Out
* Every UK diner received a 50% discount, up to £10 per head
* Covers meals and non-alcoholic drinks
* Monday – Wednesday during August; unlimited times
Food and non-alcoholic drinks
* Temporary VAT cut from 20% to 5%
* 15 July 2020 – 12 January 2021
* Covers pubs, restaurants, bars and cafes
Accommodation and attractions
* Temporary VAT cut from 20% to 5%
* 15 July 2020 – 12 January 2021
Stamp Duty Land Tax
* Immediate temporary increase to nil rate band
* Threshold raised to £500,000 from £125,000
* Until 31 March 2021
Green Homes Grant
* Up to £5,000 per household
* £10,000 for lowest incomes
   

 

Full details of the initiatives announced by the Chancellor are available here.

For further information, please contact Chris Riley (criley@pkf-littlejohn.com; +44 (0)20 7516 2427) or Catherine Heyes (cheyes@pkf-littlejohn.com; +44 (0)20 7516 2237).