Summer Statement 2020

The Chancellor, Rishi Sunak, has laid out a package of measures intended to help to stabilise the economy as the main COVID-10 government support packages come steadily to an end over the next few months, with particular targets being the retention of employees, the hospitality sector and the housing market.

The following information is based on the announcements and supporting guidance available at the time of writing, and it is expected that further information will be released in the coming weeks.

  

Coronavirus Job Retention Bonus

In Mr Sunak’s words ‘The most urgent challenge now is to halt job losses’.

Clearly, the government is concerned about the ending of the job retention scheme and the effect that it could have on the unemployment rate.

Therefore, a bonus of £1,000 per employee will be payable to any employer who brings back to work furloughed members of staff on a continuous basis through to the end of January 2021.

Any previously furloughed members of staff must earn at least £520 per month on average between the end of the Job Retention Scheme at the end of October 2020 and the end of January 2021 for the employer to be eligible for the bonus on that employee.

It is understood that any employee who has been furloughed at any time since the inception of the Coronavirus Job Retention Scheme in March will be an eligible employee subject to the minimum earnigs criteria stated above.

Payments of the bonuses will be made from February 2021, although it is currently unclear whether these will be automatic or require a claim to be made by the employer.

Further information is expected to be released by the end of July.

 

Kickstart Scheme

A new £2billion fund will be launched to cover the cost of 25 hours work per week at the National Minimum Wage (plus any Employers’ National Insurance and Employers’ Pension costs) for 16-24 year olds currently claiming Universal Credit. This will be on the basis of 6 month work placements.

Employers will be able to top up any payment of wages over and above the National Minimum Wage if they wish.

Applications for the scheme will open in August, with the first jobs expected to start in the Autumn running to December 2021, with an option to be extended further.More information is expected to be made available before August.

 

Apprenticeship & Traineeship Schemes

Employers who take on new apprentices will be able to claim a payment of £2,000 per each new apprentice that that hire aged under 25, with a £1,500 per new apprentice payment for any aged 25 or over, between 1 August 2020 and 31 January 2021.

These payments will be in addition to the existing £1,000 payment already available for new apprentices aged 16-18 years old or those aged under 25 on an Education, Health and Care Plan.

Employers providing work experience or traineeships for 16-24 year olds will also be eligible for government funding of £1,000 per trainee. Registered employers are not required to pay trainees for a work placement unlike apprenticeships.

Traineeships will include classroom-based lessons in maths, English and CV writing and will include up to 90 hours of unpaid work experience over a 6 week to 6 month period.

 

VAT cut by 15% for hospitality sector

From 15 July 2020 to 12 January 2021, a large range of supplies made by the hospitality sector will be subject to the reduced rate (5%) of VAT rather than the standard rate. This will apply to the supply of the following:

  • Food and non-alcoholic drinks from restaurants, bars, pubs, cafes and similar premises
  • Accommodation
  • Admission to attractions

Further guidance on these changes will be announced in the coming days.

 

‘Eat out to help out’ discount scheme

During the month of August 2020, all diners at any participating restaurant, café, pub or other food service premises will be eligible for a government funded 50% discount of up to £10 per head on their meal.

The discount will be valid Monday to Wednesday on dine-in meals and non-alcoholic drinks, and its use will be unlimited during these times.

It is anticipated that participating establishments will claim the discount provided to customers directly from HMRC. Further details on how to register are expected in the coming days.

 

Temporary cut in Stamp Duty Land Tax (SDLT)

The nil rate band of Residential SDLT will be temporarily increased from £125,000 to £500,000. This change will have immediate effect and be available on residential purchases up to 31 March 2021.

This will have the effect of saving housebuyers up to £15,000 of SDLT and initial information suggests that this will apply to all residential purchases in England and Northern Ireland, as devolved legislation is applicable in Scotland and Wales.

For those buying additional dwellings, it is understood that the additional 3% SDLT rate will still apply on the entirety of the purchase price.

It is currently uncertain as to whether the 31 March 2021 will be applicable to the exchange of contracts or just the completion date. As with all of the other announcements, detailed legislation is yet to be released and it is hoped that this will answer any queries remaining.

 

Green Homes Grant

A new voucher scheme will be launched covering two thirds of expenditure by homeowners and landlords to make their property more energy efficient, up to a maximum of £5,000 per household.

Those on the lowest incomes – although no information has been made available as to this definition yet – will be able to claim the full cost of energy efficiency measures up to £10,000 per household.

The scheme is expected to launch in September with claims to be made online by homeowners. Homeowners will be required to obtain a quote from recommended accredited suppliers only.

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