The Chancellor’s Summer economic update

The Chancellor announced his Summer economic update outlining further measures in addition to previous tax initiatives aimed at combating the negative impact of COVID19 on the UK's economy

Summer economic update

We've focused on those measures announced in the Chancellor's Summer economic update most likely to impact you and your business.

Coronavirus Job Retention Scheme

This is gradually being wound down and will now cease in October 2020. The government have gone on record as stating that keeping furloughing ongoing for an indefinite period would have been unrealistic.

Furloughing is effectively being replaced by a new Job Retention Bonus in order to encourage employers to retain their furloughed employees.

This takes the form of a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021. 

Employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021.

Payments will be made from February 2021. Further details about the scheme will be announced in the next few weeks.

Kickstart Scheme

The government is introducing a new Kickstart Scheme in Great Britain. The funding available for each job will essentially cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions and employer minimum automatic pension enrolment contributions.

Training places

The government will pay employers who provide trainees with work experience, a £1,000 per trainee. They will also provide funding for employers who hire new apprentices at a rate of £2,000 to employers in England for each new apprentice hired who is aged under 25.

Additionally they will make a £1,500 payment to employers 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 16-18 year-old apprentices, and those aged under 25 with an Education, Health and Care Plan – where that applies. 

Stamp Duty Land Tax

The chancellor announced that the current residential threshold of £125,000 will rise to £500,000 and the higher rate of Stamp Duty Land Tax is reduced for buyers of properties costing up to £500,000.

This applies to all residential property sales for the period 8 July 2020 until 31 March 2021 though only to dwellings purchased in England and Northern Ireland. 

The 3% higher rate for purchases of additional dwellings applies on top of revised standard rates above for the period 8 July 2020 to 31 March 2021.

Temporary VAT cut

In order to support businesses and jobs in the hospitality sector from 15 July 2020 to 12 January 2021 the Chancellor has introduced a cut in VAT from 20% to 5% for the following VATable supplies:

  • Food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK
  • Accommodation and admission to attractions across the UK.

HM Revenue will be publishing further details on this VAT cut in the near future.

'Eat out to Help Out' scheme

This initiative is designed to encourage people to return to eating out. The discounts below must be reclaimed by the business who must apply to participate in the scheme.

Every diner will be eligible for a 50% discount of up to £10 per head on their meal at any participating restaurant, cafe, pub or other eligible food service establishments.

The discount can be used unlimited times and will be available from Monday to Wednesday on any eat-in meal (including non-alcoholic drinks) during August 2020 across the UK.

For more useful information, check out our Ebooks here.

And if you'd like to know how we can help you with all of this, or with anything else, feel free to give us a call on 01202 048696 or email us at richard@tfaaccountants.co.uk.

Alternatively, please feel free to complete our Business Questionnaire here.

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