Summer Economic Update

This afternoon the Chancellor, Rishi Sunak announced a raft of new measures in his summer economic update. In a bid to restart the economy and save jobs Mr. Sunak announced the following measures;

VAT Cuts

The rate of VAT for the hospitality and tourism industries is set to drop from the standard 20% rate to 5%.

The change will take effect from 15th July and will last until 12th January 2021.

The reduced rate of VAT will apply to all food and non-alcoholic beverages supplied from restaurants, pubs, cafes, bars and similar premises across the whole of the UK. This cut will apply to both eat-in and hot takeaway food.

The reduced rate of VAT will also apply to supplies of accommodation, such as hotels, B&B’s, campsites and caravan sites. Along with attractions like cinemas, theme parks and zoos.

Eat out to Help out

The ‘Eat out to help out’ scheme offers a 50% discount, up to a maximum of £10 per person (including children) on any meals at participating restaurants, cafes, pubs or any other eligible food service establishments. The scheme will run Monday-Wednesday across the whole of August.

Businesses will need to register through a website in what the Chancellor assured us will be a simple process. Money being paid back to businesses within 5 working days and is currently scheduled to on Monday 13th July.

Stamp Duty Land Tax

A temporary SDLT ‘holiday’ was announced in order to try and kick start the housing market. This measure will take effect immediately and will exempt the first £500,000 on all property sales from SDLT.

The ‘holiday’ will apply to properties purchased in England and Northern Ireland until 31 March 2021.

The 3% higher rate for purchases of additional dwellings will still apply on top of revised standard rates for the period 8 July 2020 to 31 March 2021. As will the 3% additional surcharge on companies purchasing property.

Kickstart Scheme

The scheme is aimed at creating more jobs for young people. The government will subsidise six-month work placements for people on Universal credit that are aged 16-24.

The grant will pay the wages for the first 6 months of employment up to a maximum of £6,000. To qualify workers must be paid at least the national minimum wage and are work a minimum of 25 hours per week.

There will be no cap on the number of places available.

Apprenticeships & Trainee Support

Businesses will receive cash bonus’ for taking on trainees and apprentices;

  • £1,000 for each new trainee
  • £2,000 for each new apprenticeship
  • £1,500 for each new apprenticeship for apprentices aged over 25

Job Retention Bonus

Businesses will be given a £1,000 bonus for each employee they return from furlough. The employees must be retained in work until at least the end of January 2021 and must be paid at least £520 per month.

This bonus will be for any employees that were placed on furlough, whether they have already been returned from furlough or are still currently furloughed.

Green Home Energy Grants

The government will provide grants for energy saving improvements. The government have pledged to pay two thirds of the costs for energy efficient home improvements, up to a maximum of £5,000.

The grant will be available for private homeowners looking to make environmentally friendly additions such as insulation, low energy lighting, double glazing and energy efficient doors.

If you require any support in relation to any of today’s announcements, or any other tax matters, do not hesitate to contact us.