What does the Summer Statement mean for your business?
9th July 2020
Chancellor Rishi Sunak used his Summer Statement to unveil an economic plan designed to support the UK economy as it begins its recovery from the impact of coronavirus. New measures include further support for the leisure and hospitality industry, new opportunities for young workers and a temporary suspension of stamp duty. Read on to learn about the changes and find out what they mean for your business.
What does the Summer Statement include?
- Temporary VAT reduction from 20% to 5% for restaurants, hotels and attractions
- Half-price dining scheme for August
- New schemes to encourage employers to take on young workers
- Six month stamp duty holiday for properties up to £500,000
- Cash bonuses for employers who retain furloughed staff until January
Support for leisure and hospitality
A key measure outlined in the Summer Statement is a 15% reduction in VAT for selected areas of the leisure and hospitality industry. From 15 July 2020 to 12 January 2021, VAT will be charged at 5% for food and non-alcoholic drinks served in restaurants, pubs and cafes. Hot takeaway food will also be included, as well as B&B and hotel accommodation, theme park admission and cinemas.
The idea is to encourage consumers to visit by lowering prices, however it will remain up to the business whether or not they choose to pass this discount onto consumers.
Another measure introduced is the Eat Out to Help Out scheme, which offers diners 50% off restaurant meals Monday – Wednesday during August, up to a maximum discount of £10pp. The discount applies to all eat-in food and non-alcoholic drinks, and participating restaurants will be able to claim the cash back via a government website. Registrations for the scheme open online on 13 July.
Young workers
Sunak announced a £2bn package of measures designed to create new jobs for young people. Labelled the “kickstart scheme”, it will fund six-month work placements for Universal Credit claimants aged 16-24.
Payments will cover National Minimum Wage for up to 25 hours per week, including pension contributions and National Insurance.
The scheme is scheduled to run from August 2020 to December 2021 but could be extended further.
Employers will also be able to claim grants for taking on young trainees under a new £111 million work experience scheme.
Firms will be given a grant of £1,000 per new trainee, and a £2,000 grant per apprentice under 25 hired (£1,500 for over 25s).
It will begin in England from September 2020 and the Treasury have indicated that employers must offer “a high-quality work placement of 60 to 90 hours” in order to qualify.
The traineeships will include classroom-based lessons in maths, English and CV writing in addition to up to 90 hours of unpaid work experience. Traineeships can last from six weeks to six months and, unlike apprenticeships, employers are not required to pay trainees for the work placement.
The housing market
House buyers in England and Northern Ireland will benefit from a temporary stamp duty suspension for properties up to £500,000, with immediate effect. Before the announcement stamp duty was paid on all properties over £125,000 – with the exception of those purchased by first time buyers where the limit was £300,000.
The cut also applies to property investors, however they will still be charged the additional 3% second home stamp duty payment. Landlords and homeowners can also benefit from Sunak’s Green Homes Grant, which will provide vouchers worth up to £5,000 for energy-saving home improvements including insulation, double glazing and upgrading boilers. Under the scheme, homeowners can apply for the Government to cover the cost of at least two thirds of eligible improvements.
Furlough bonus
Employers that bring staff back from furlough and employ them continuously them until 31 January 2021 could be eligible to claim a £1,000 bonus per employee.
The employees must be paid at least £520 per month on average for November, December and January.
Employers should be able to apply for the bonus from February and we expect further details to be announced by the end of July.
The Flexible Furlough Scheme is set to gradually reduce Government contributions from 80% to 70% in September and 60% in October before ending fully.
Talk to our experts about the Summer Statement
Get in touch with our team if you have questions about the implications of the new measures for your business.
