Overview of announcements in the Summer Economic Statement

Chancellor, Rishi Sunak, delivered his Summer Economic Statement earlier today which was focused on economic recovery following the impact of coronavirus.

He began by explaining that this second phase will be a £30bn “plan for jobs”, covering three key areas – Support to find jobs, Create jobs and Protect jobs. Please note that whilst most of the announcements are UK wide, there are some, particularly in “Creating Jobs” that are for England only. Whilst we await to see if the Scottish government mirror that support, we have covered the main announcements of each area below.

Supporting Jobs

With the Coronavirus Job Retention Scheme winding down and being phased out by the end of October, the Chancellor announced a new Job Retention Bonus to reward and incentivise employers to bring back furloughed employees. All UK employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed with the business as of 31 January 2021. Minimum wage restrictions apply.

A new £2 billion Kickstart Scheme was also announced for those aged 16-24, that claim Universal Credit and are at risk of long-term unemployment. The government will cover 100% of the National Minimum Wage for 25 hours a week for a six-month job placement – employers will be able to top this wage up.

Finally, the Chancellor announced that the government will pay employers £2,000 for each new apprentice they hire under the age of 25 and £1,500 for apprentices over 25.

Creating Jobs

The second area focused on a “green recovery”, including a £3bn green investment package to create jobs to upgrade buildings and reduce emissions.

As part of this package homeowners and landlords in England will be able to apply for vouchers from a £2bn Green Homes Grant Scheme to pay for improvements to make their home more energy efficient and create local jobs. The grants will cover 2/3 of the costs, up to £5,000 per household and 100% up to £10,000 for low income households.

Lastly, the Chancellor announced a temporary cut of Stamp Duty, increasing the threshold to £500,000 until 31 March 2021. Currently, this levy is paid on land or property sold for £125,000 or more, or £300,000 for first time buyers. The change will take effect immediately – we will wait to see if the Scottish Government follow suit and do the same with Land & Buildings Transactions Tax (LBTT). *

Protecting Jobs

The Chancellor focused on the hospitality and tourism sectors that have been badly hit by the pandemic. Employing over 2m people, 80% of firms had to stop trading with 1.4m employees furloughed – the highest in any sector.

To protect these jobs and get things moving again, he announced a VAT cut from 20% to 5% for hospitality-related activities such as food, attractions and accommodation. This will take effect from 15 July and is scheduled to end on 12 January 2021. HMRC have produced guidance on which businesses will be able to apply the temporary reduced VAT rate, you can find this here.

The final measure announced has never been tried before in the UK, the “eat out to help out” scheme aims to encourage people to safely return to restaurants. The government will give a 50% discount for people dining out on Monday – Wednesday at participating restaurants in August – up to £10 per person for adults and children.

To apply, businesses must register to be part of the scheme and then claim back their costs.

The Chancellor then closed his statement, summarising that this £30bn package is his “plan for jobs” to get people back to work and the next stage will focus on how we can rebuild, with a Budget and Spending Review in the Autumn. You can read the full statement here.

To discuss how these announcements will affect your business, get in touch with one of our team by calling one of our offices.

*The Scottish Government announced on the 9 July that the starting threshold for LBTT for residential property transactions will be raised from £145,000 to £250,000. This will not come into affect immediately but will be implemented as soon as possible. Once introduced, the change will remain in force until 31 March 2021.