8 Jul 2020
This afternoon the Chancellor, Rishi Sunak, presented a Summer Economic Update to announce measures to mitigate the impact of Covid-19 on the economy to get the country back on its feet.
The range of measures were largely focused on two areas; to control the level of unemployment by supporting, protecting and creating jobs and to encourage consumer spending to aid recovery for the hardest hit sectors.
Here are the main highlights with details to be released later.
Unemployment is the biggest challenge facing the government, so it is no surprise that a number of measures and schemes were announced.
Job Retention Bonus
The current furlough scheme has already supported 11 million individuals however it is not sustainable to extend the scheme further. Sunak confirmed that the scheme will wind down flexibly and end at the end of October.
To encourage employers to bring back furloughed workers, a new Job Retention Bonus of £1,000 per employee will become available provided that employee remains continually employed to 31 January 2021. Payments will be made from February 2021.
The government will introduce a new Kickstart Scheme to create high quality placements aimed at 16-24 year olds who are at risk of long term unemployment. Funding will cover 100% of the national minimum wage for 25 hours per week for 6 months and include a portion of overhead costs.
High quality traineeships
Funding will be made available for high quality work placements for 16-24 years olds at a rate of £1,000 per trainee.
Payments of £2,000 will be available to employers who hire apprentices aged below 25 and £1,500 for those aged 25 and over. This will be available from 1 August 2020 to 1 January 2021.
Stamp Duty Land Tax (SDLT)
May 2020 saw a 50% decrease in housing transactions compared to the prior year so there is a major concern relating to the growth of the housing market.
As expected, a temporary SDLT cut has been introduced with immediate effect through to 31 March 2021, increasing the nil rate band threshold from £125,000 to £500,000. It is thought this will apply to all house buyers but we will need to wait and see to confirm if it also applies to purchasers of second homes.
Furthermore, to encourage homeowners and landlords to spend more on their homes and support green jobs, a Green Homes Grant of up to £5,000 per household will be available to make homes energy efficient covering up to two thirds of the cost. Lower income households will receive a grant of up to £10,000 covering up to 100% of the costs.
The hospitality and tourism sectors have been the hardest hit with many businesses facing severe financially difficulties. These sectors employ over 2 million people and 80% had no choice but to stop trading in April.
To encourage demand for these businesses, a temporary VAT cut from 20% to 5% will be introduced from 15 July 2020 to 12 January 2021 for the following:
Further guidance on the scope of this relief will be published over the coming days.
Eat Out to Help Out
To further support the hospitality and tourism sector, each diner will be entitled to a 50% discount, up to £10 per head when eating in at a participating restaurant, café, pub or food establishment, during Monday to Wednesday throughout August 2020.
Further information on all of the above will be available soon.