Summer Economic Update: key points

The Chancellor of the Exchequer Rishi Sunak presented his ‘Plan for Jobs’ on Wednesday 8 July 2020 to outline how the government will boost job creation in the UK.

For the UK, the economy at the start of 2020 had just started to regain confidence and a new sense of stability following breakthroughs in Brexit and the appointment of a majority Conservative Government. Today, it couldn’t be any more different with predictions of a severe recession ahead and many industries facing difficult challenges to regain pre-lockdown trading levels, or even to survive.

The next stage of the Government’s recovery plan has begun with Boris Johnsons “Build, build, build” speech and Chancellor Rishi Sunak has now delivered his ‘Plan For Jobs‘.

The Chancellor declared “we are entering the second phase of our economic response” before announcing £30bn worth of measures designed to protect, support and create jobs. The key points from today’s announcement include:

Job Retention Bonus (JRB)

The JRB will provide employers with a bonus of £1,000 per employee for each employee who returns to work from furlough and who is paid at least £520 per month on average between November and end January 2021. Payments will be made from February 2021, although the cost to the Government is unlikely to reach the £9bn mentioned in the Chancellor’s statement as not all employees will return to work from furlough. Further details about the JRB will be announced by the end of July.

Hospitality and tourism

Temporary VAT cut

From 15 July 2020 to 12 January 2021, a reduced 5% rate fo VAT will apply to supplies of food and non-alcoholic drinks for restaurants, pubs, bars and cafes. The temporary cut in VAT will also apply to accommodation and attractions. Further guidance is expected by HMRC in the coming days.

Eat Out to Help Out

During August, to encourage people to return to eating out, every diner can receive a 50% discount of up to £10 per head on their meal, at any participating and eligible food service establishment. The discount can be used unlimited times and will be valid Monday to Wednesday on any eat-in meal (including on non-alcoholic drinks) for the entire month of August across the UK. Participating establishments will be fully reimbursed for the 50% discount.

Temporary Stamp Duty Land Tax (SDLT) cut

Effective immediately, the government will temporarily increase the Nil Rate Band of Residential SDLT, in England and Northern Ireland, from £125,000 to £500,000. This will apply until 31 March 2021 and cut the tax due for everyone who would have paid SDLT.

Green Homes Grant

£2bn is being made available to help homes become more energy efficient and create local jobs. The government will provide at least £2 for every £1 homeowners and landlords spend to make properties more energy efficient, up to £5,000 per household. The scheme will fund those on the lowest incomes, up to £10,000 per household. The scheme aims to upgrade over 600,000 homes and could support over 100,000 green jobs.

Kickstart Scheme

The Kickstart Scheme is for 16-24 year olds who are on Universal Credit where employers create new, quality 6-month work placements, which must genuinely be in addition to existing jobs. The Government will fund 100% of the National Minimum Wage for 25 hours of work per week, plus the associated employer NIC and minimum auto enrolment contributions.

Training and Apprenticeships

  • Additional support to triple the number of places available under the traineeship scheme, with the Government funding employers who provide trainees with work experience at a rate of £1,000 per trainee.
  • New funding for sector-based work academies. The government will provide an additional £17 million this year to triple the number of sector-based work academy placements in England in order to provide vocational training and guaranteed interviews for more people, helping them gain the skills needed for the jobs available in their local area.
  • Payments of £2,000 to employers for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice aged 25 and over, to run from 1 August 2020 to 31 January 2021.

Infrastructure improvements

The government will invest £100 million to deliver local road maintenance upgrades across England in 2020-21. This is in addition to the government’s plans to spend £1.5 billion in 2020-21 on filling potholes, resurfacing roads and improving local highway infrastructure.

You can download an infographic of these key points below.

Read the key points

If you have any queries about how any of the above may impact you or your business please get in touch with a member of our Tax Team on 01903 234094.