A plan for jobs
Chancellor Rishi Sunak used his recent Summer Economic Update to announce a £30 billion plan to create and protect jobs as government support for the economic recovery from the coronavirus (COVID-19) pandemic moves into a new phase. As part of his ‘plan for jobs’, the Chancellor introduced a Job Retention Bonus to support the phasing out of the furlough scheme, a VAT reduction for businesses in the hospitality and tourism sector and a temporary reduction in Stamp Duty Land Tax (SDLT). Here, we look at what these measures mean for businesses and individuals.
The Job Retention Bonus
The Coronavirus Job Retention Scheme (CJRS) is being gradually wound down and will end in October, to be replaced by a Job Retention Bonus. This will see UK employers receive a one-off payment of £1,000 for each furloughed employee who is still employed as of 31 January 2021. To qualify for the payment, the employee must be paid at least £520 on average in each month from November to January. Payments will be made from February 2021.
Kickstarting the job search
To address the ongoing challenges that the economy faces, the government has a large-scale plan to support people in finding jobs, enable them to gain the skills they need to get jobs and provide targeted help for young people to get into work.
The flagship £2 billion Kickstart Scheme aims to create high-quality, subsidised six-month placements for young people at risk of long-term unemployment. Other measures include a boost to the National Careers Service, enhanced work search support and payments for employers who hire new apprentices.
Eat Out to Help Out
Pubs and restaurants have been amongst the worst affected by the COVID-19 lockdown and Mr Sunak’s innovative ‘Eat Out to Help Out’ scheme aims to give them a boost.
It entitles every diner to a 50% discount of up to £10 per head on their meal at any participating restaurant, café, pub or other eligible food service establishment and is valid Monday to Wednesday throughout August. Participating establishments will be fully reimbursed for the 50% discount. Further details are available here: bit.ly/3edB9D0.
In order to further support the hospitality and tourism sector, the Chancellor cut the rate of VAT from 20% to 5%. This applies to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, as well as to accommodation and admission to attractions, including theme parks and zoos, across the UK. See here for further guidance: bit.ly/2DrjsTR.
Stamp duty boost for property market
In response to a stalling property market, the government temporarily increased the nil-rate band of residential SDLT in England and Northern Ireland from £125,000 to £500,000. This applies from 8 July 2020 until 31 March 2021.
Both Scotland and Wales have their own versions of SDLT, namely the Land and Buildings Transaction Tax (LBTT) and the Land Transaction Tax (LTT). The Scottish government has raised the threshold at which LBTT is paid from £145,000 to £250,000. This applies from 15 July 2020 until 31 March 2021. The Welsh government has also raised the threshold at which LTT is paid from £180,000 to £250,000, effective from 27 July 2020 until 31 March 2021. However the tax reduction in Wales will not apply to purchases on additional properties, including buy-to-let and second homes.
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. For those on the lowest incomes, energy efficiency measures will be fully funded up to £10,000. The scheme aims to upgrade over 600,000 homes across England.
Changes to tax rules and rates can be complex. We would be only too pleased to provide any further assistance you may need.