Archive for 16th July 2020
The Chancellor’s Summer Economic Update 2020
The Chancellor’s Summer Economic Update 2020
SUMMER ECONOMIC UPDATE 2020
On 8 July Chancellor Rishi Sunak delivered a Summer Economic Update to support jobs as the UK economy begins to recover from COVID 19 lockdown. The Chancellor announced measures to introduce a new Job Retention Bonus, support, protect and create jobs which is designed to boost the UK economy following the lockdown.
Job Retention Bonus
The Coronavirus Job Retention Scheme (CJRS) that has so far supported businesses would be wound down gradually by October. The government has introduced a one-off payment of £1,000 to UK employers for every furloughed employee wo remains employed as of 31 January 2021.
To qualify for the payment, the employee must earn above £520 per month between the end of the CJRS and the end of January 2021. Payments will be made from February 2021 and further details about the scheme will be announced by the end of July.
Kickstart Scheme for young people
The government also introduced a £2 Billion Kickstart Scheme in Great Britain that would create high quality 6-month work placements for young people. The Scheme aimed at those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment. Funding available for each job will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance Contributions (NICs) and employer minimum automatic enrolment contributions.
Supporting jobs
The government is introducing several initiatives to support people in finding jobs, enabling them to gain the skills needed to get jobs and provide targeted help for young people to get into work. The initiatives include a boost to the National Careers Service, enhanced work search support and payments to employers who hire new apprentices.
The government introduced a new payment of £2,000 to employers in England for each new apprentice they hire aged under 25 and a £1,500 payment for each new apprentice they hire aged 25 and over from 1st August 2020 to 31st January 2021. These payments will be in addition to the existing £1,000 payment the government already provides for new 16 to 18 year- old apprentices, and those aged under 25 with an Education, Health and Care (EHC) Plan.
Eat Out to Help Out
The Chancellor announced that in order to support businesses and to help protect jobs, the government will introduce the Eat Out to Help Out scheme to encourage people to return to eating out. This will entitle every diner to a 50% discount of up to £10 per head on their meal, at any restaurant, café, pub or other eligible food service establishment.
The discount can be used unlimited times and will be valid from Monday to Wednesday on any eat-in meal (including non-alcoholic drinks) for the entire month of August 2020 across the UK. Participating establishments will be fully reimbursed for the 50% discount.
Temporary VAT Cut
To support businesses and jobs in the Hospitality and tourism sector, the Chancellor announced that from 15 July 2020 to 12 January 2021 VAT will be reduced from 20% to % 5% rate. This applies to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, as well as supplies of accommodation and admission to attractions across the UK.
Stamp duty temporarily reduced
The Chancellor also introduced measures to boost confidence in the housing market which has been severely affected by the pandemic. It was estimated that UK residential transactions in May 2020 were nearly 50% lower than in May 2019.
In the light of this, the government will temporarily increase the nil rate band of Residential Stamp Duty Land Tax (SDLT) in England and Northern Ireland from £125,000 to £500,000. This will apply from 8 July 2020 until 31 March 2021 and cut the tax due for everyone who would have paid SDLT.
Additionally, the Chancellor announced a £2 billion Green Homes Grant, providing at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, up to £5,000 per household. The scheme aims to upgrade over 600,000 homes across England, helping to reduce energy bills and support the green economy.