Amid the transition from the Coronavirus lockdown into a new form of normality, the chancellor Rishi Sunak has presented his economic plan towards financial recovery. The new measures, which were mostly welcomed by industry leaders were described by some as unprecedented.
Here is a summary of the main changes introduced.
What happens from August until October?
The Furlough Scheme will cease at the end of October. Until then, the government’ funding will gradually be reduced. From August, employers will slowly reacquire their responsibilities for paying employees NIC, pensions and salaries.
Coronavirus Job Retention Scheme guide
For the latest Job Retention Scheme update and a complete breakdown of future monthly payments for employers, click here.
New £1,000 bonus for retaining staff – £9.4bn
From October, companies will be given a £1,000 bonus for every employee they bring back from furlough and who is paid at least £520 on average between November and January. Meaning, these employees would have to be retained within the company’s employee list, at least until January 2021.
Our plan has a clear goal: to protect, support and create jobs. It will give businesses the confidence to retain and hire. To create jobs in every part of our country. To give young people a better start. To give people everywhere the opportunity of a fresh start… It’s vital people aren’t just returning for the sake of it – they need to be doing decent work. ”
— Chancellor Rishi Sunak
VAT rate reduction – £4bn
Businesses providing hospitality and leisure services will benefit from a significant VAT cut, as value-added tax would be reduced from 20% to 5%. This benefit will come into force from 15 July 2020 until 12 January 2021. Bear in mind that the reduction will not apply to alcohol served in pubs or restaurants.
The ‘Eat Out to Help Out’ scheme – £0.5bn
To boost dining out and to support the culinary and hospitality industries, the Government will introduce a 50% discount rate on eating in at restaurants and cafes. This will run from Mondays to Wednesdays for each week in August, and up to a maximum discount of £10 per head. Businesses will be able to reclaim these amounts and have them refunded by the Government within five working days. Online registration for the ‘Eat Out to Help out’ scheme will be open for businesses from Monday, 13 July.
Kickstarter jobs – £2.1bn
Minimum wage cover for young workers
The Government will fund 6-month job placements for 18 – 24 year olds. Employers that take on an individual that is in receipt of universal credit into a job with a minimum of 25 hours per week, at national minimum wages will have their wages covered by the Government.
Also, a six month, £2,000 grant will become available from August, for businesses who hire an apprentice under 25 and £1,500 for those who offer an apprenticeship for over 25 year olds.
Arts, cultural and heritage protection scheme (freelancers jobs) – £1.57bn
This rescue plan aims to allow cultural and heritage organisations to stay afloat, while the current crises hinder their operation. It should also provide some employment support for the large freelance community in the arts sector.
Stamp Duty holiday – £3.8bn
To spur the property market, Mr Sunak has announced a tax-exempt package for homes sold up to £500,000 in England and Northern Ireland, from 8 July 2020 until 31 March 2021. For purchases of a second home, the 3% surcharge will still apply on homes up to £500,000.
Green Investment – £3bn
In addition, the chancellor has introduced a Green Investment package to help remove carbon from public buildings and cut emissions from homes that are poorly insulated. Homeowners will be able to apply for vouchers for the scheme to pay for green improvement (e.g. Loft or Wall Insulations). The Green Investment scheme intends to create more jobs and also help cut bills for homeowners.
Coronavirus tests – tax exempt
Lastly, Employers will be exempt from tax due to coronavirus swab tests, which they have provided for their staff.
Some Comments from UK business leaders
Jeff Matsu, CIPFA Chief Economist: "Today's #SummerStatement shifted the tone from stabilisation to economic recovery. Measures may add £30bn to the current #COVID19 fiscal response, all while the government has promised to not raise taxes." #publicfinancehttps://t.co/DCV096jB7d— @CIPFA (@CIPFA) July 8, 2020