Summer Economic Update – what are the headlines

Chancellor, Rishi Sunak, has announced a range of measures to try and kick-start the economy by getting the country spending again. The devil will, undoubtedly, be in the detail, but we don’t have that yet.  However, we do know at a high level what to expect:

1. The big story is a cut in VAT for the hospitality sector from 20% to 5%.  This will go live on Wednesday 15 July and will apply to eat-in or hot takeaway food from restaurants, cafes and pubs, accommodation in hotels, B&Bs, campsites and caravan sites, attractions like cinemas, theme parks and zoos.  One exception would appear to be that alcohol will not be included in the rate cut, which could add complexity to the completion of VAT returns with three rates being in play rather than the usual two.

2. Sunak also announced a temporary stamp duty holiday until January 2021 to stimulate the property market. This would exempt the first £500,000 of all property sales from the tax. 

3. The government will pay businesses a £1,000 bonus for every staff member that is kept on for three months when the furlough scheme ends in October. To qualify, the employee must be paid at least £520 on average, in each month from November to the end of January - the equivalent of the lower earnings limit in National Insurance. 

4. New schemes were announced to boost employment and training opportunities for 16 – 24 year olds.  This includes a ‘Kick Start’ scheme to assist those at risk of long term unemployment by funding six-month work placements to those on universal credit. Further support will be provided provide training to young people in England:

• Funding of £1,000 for each new work experience place

• For apprenticeships - funding of £2,000 for each new apprentice aged under 25, and £1,500 for each new apprentice aged 25 and over, from 1st August 2020 to 31st January 2021.

The apprenticeship payments will be in addition to the existing £1,000 funding that is provided for young apprentices.

5. One of the most eye-catching announcements was a scheme that will be launched in August to give 50% off to people dining out. However, this won’t be automatic – businesses will have to register to participate through a website from next Monday.  The scheme will mean 50% off meals eaten at any registered business between Monday to Wednesday in August, up to a maximum discount of £10 per head (including children).  The discounted amount can then be claimed from the government who have pledged to pay the business within five working days.

The details of all these measures will be published in the coming days, with the inevitable exclusions and restrictions.  If you would like to discuss the impact of any of the measures, please get in contact by emailing Stuart Brodie or by calling us on 0333 305 3667.

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