Summer Economic Update from the Chancellor

Today, 8th July 2020, the Chancellor, Rishi Sunak, set out a “Plan For Jobs” that he proposes will spur the UK’s recovery from the Coronavirus outbreak.

• The Chancellor announced a package of measures which he believes will support jobs in every part of the country, give businesses the confidence to retain and hire, and provide people with the tools they need to get better jobs
• Key announcements from today’s update were;
  • 80% of hospitality firms stopped trading in April which saw around 1.4 million workers furloughed – the highest proportion of all sectors. To ensure the demand is high as businesses reopen the rate of VAT applied on most hospitality and tourism related activities will be cut from 20% to 5%
    • From 15 July 2020 to 12 January 2021, the reduced (5%) rate of VAT will apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafes and similar premises across the UK
    • From 15 July 2020 to 12 January 2021, the reduced (5%) rate of VAT will apply to supplies of accommodation and admission to attractions across the UK
    • Further scope of the relief is to be published by HMRC in the coming days
  • Eat Out to Help Out discount scheme for diners providing a 50% reduction for sit-down meals at participating establishments across the UK from Monday to Wednesday every week throughout August 2020 (capped at £10 per head)
  • Job Retention Bonus will be introduced to help firms keep furloughed workers. Firms will receive a one-off bonus of £1,000 for each furloughed employee who remains continuously employed as of 31 January 2021. Further details will be announced by the end of July
  • £2 billion Kickstart Scheme will also be launched to create hundreds of thousands of new, fully subsidised jobs for young people across the country. Those aged 16 to 24, claiming Universal Credit and at risk of long-term unemployment, will be eligible and funding will be available for each six-month placement covering 100% of the National Minimum Wage for 25 hours a week (employers able to top up this wage)
  • £1.6 billion will be invested in scaling up employment support schemes, training, and apprenticeships to help people looking for a job
  • From 1st August 2020 to 31st January 2021 businesses will be given £2,000 for each new apprentice they hire under the age of 25 (in addition to the existing grant of £1,000 for 16 to 18-year-old apprentices)
  • Over a quarter of a million more young people to benefit from an extra £32 million investment in the National Careers Service
  • Homeowners and landlords in England will be able to apply for vouchers from a £2 billion Green Homes Grant scheme this year to pay for green improvements such as loft, wall and floor insulation that could save some households hundreds of pounds a year on energy bills, whilst creating jobs for tradespeople
  • The Nil Rate Band of Residential Stamp Duty Land Tax (SDLT) will also be temporarily increased from £125,000 to £500,000 until 31 March 2021
  • £5.8 billion to be spent on shovel-ready construction projects to get Britain building including £100 million for our local roads network

Read the full “Plan For Jobs” published by the HM Treasury, here.

Aspire Comment

This is the second stage in a three-phase plan to secure the UK’s recovery from the pandemic which includes supporting jobs by focussing on skills and young people. The third phase will focus on rebuilding with a Budget and Spending Review in the Autumn.

In terms of the announcements today, we will need to see what further guidance brings, especially in terms of the VAT cut in the hospitality sector.

If you require any further discussion surrounding the announcements made today and how they affect your business or employment tax guidance, please get in touch with one of our advisors on 0121 445 6178 or email enquire@aspirepartnership.co.uk.