It’s safe to say Chancellor Rishi Sunak did not expect to be delivering the first official fiscal statement less than four months after his maiden Budget speech back in March, but here we are.
The economic impact of COVID-19 has resulted in the UK’s debt-to-GDP ratio breaking the 100% mark for the first time since 1963, while the economy shrank by a monthly record of 20.4% in April.
While Sunak’s latest announcement was more of a fiscal plan than an emergency Summer Budget as some were predicting - and ran for only around 30 minutes - there was more to it in terms of tax than we have seen in many recent Spring and Autumn Statements.
The headline measures announced continue the theme of recent months and are focused on a “plan for jobs” – a phrase the Chancellor repeated no less than 11 times.
There were also measures designed to stimulate the housing market such as a green homes grant and a Stamp Duty Land Tax holiday.
There was a VAT cut targeted at the hospitality and tourism sectors and, finally, with much flourish, Sunak announced that the government will underwrite dining-out discounts in August.
There were no economic forecasts from the Office for Budget Responsibility or major long-term tax decisions. Those are on hold until what looks like a huge Autumn Budget and subsequent spending review later in the year.
Below is a summary of all the measures announced and, in our Economic Update, we offer informed analysis of Sunak’s speech to suggest how the next six months might pan out.
Main measures affecting businesses
- A one-off £1,000 bonus for employers if they bring a furloughed employee back to work and keep them in employment until the end of January 2021. Those employees must earn, on average, above the lower earnings limit of £520 per month.
- Subsidised six-month work placements for 16-24-year-olds who are on Universal Credit and at risk of long-term unemployment. The government will cover 100% of the National Minimum Wage for up to 25 hours per week.
- Grants for businesses taking on apprentices, of £2,000 for each new apprentice under the age of 25, and £1,500 for each new apprentice older than that. This scheme runs from 01 August 2020 to 31 January 2021.
- An ‘Eat Out to Help Out’ discount scheme, allowing participating food service businesses to claim back 50% on food they serve, up to £10 per person. This scheme runs from Monday to Wednesday, throughout the month of August.
VAT cut for hospitality and tourism sectors:
- A reduction to the standard rate of VAT on food, accommodation and attractions, from 20% to 5% between 15 July 2020 and 12 January 2021, in a bid to support the hard-hit hospitality sector.
- Stamp Duty Land Tax holiday: Chancellor Sunak has announced a temporary Stamp Duty Land Tax holiday to revive the flagging housing market.
- A green homes grant will provide a minimum of £2 for every £1 property owners, including landlords, spend on making residential properties more energy efficient, up to £5,000 per household. Lower income households will be able to claim up to £10,000 under the same scheme, fully funded.
Get in touch
If you would like to discuss how any of the measures announced may affect you or your business, give us a call today on 01483 205850