Summer Economic Statement

10th July 2020

Chancellor Rishi Sunak delivered his Summer Economic Statement on Wednesday 8 July which was focused on jobs and the recovery of the economy, particularly the hard hit hospitality industry. Despite fears of tax raises to address the hefty bill from the coronavirus crisis, this statement was all about spending money; the question of how it will be paid for deferred until the Autumn Budget.

Described as a “Plan for Jobs”, the statement included the measures detailed below.

Jobs Retention Bonus

The Chancellor has confirmed that the Coronavirus Job Retention Scheme will end on 31 October as previously announced. The new flexible furlough scheme came into effect on 1 July and over the next few months employer contributions will gradually increase until the end of the scheme.

To encourage employers to retain employees that have been furloughed, they will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as at 31 January 2021.

For an employer to be eligible for the bonus, the employee must earn above £520 per month on average over the three month period ended 31 January 2021. Further details will be announced by the end of July but payments are expected to be made from February 2021.

Kickstart Scheme

The Kickstart Scheme is a new £2bn fund to create hundreds of thousands of job placements for young people, which will subsidise six-month work placements for people on Universal Credit aged between 16 and 24, who are at risk of long-term unemployment.

Support for apprentices

Businesses will be given £2,000 for each new apprentice they hire under the age of 25. This is 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.

VAT reduction for tourism and hospitality

VAT will be reduced from 20% to 5% for goods and services supplied by the tourism and hospitality sector from 15 July 2020 until 12 January 2021. This reduction will apply to food, accommodation and attractions and is designed to encourage people to start spending more.

In addition, a new “Eat out to help out” scheme offers 50% off sit down meals and non-alcoholic drinks from Monday to Wednesday throughout August, up to a discount of £10 per head.

Temporary reduction in stamp duty land tax

To help boost the housing market, the stamp duty land tax threshold for home purchases is now increased from £125,000 to £500,000 until 31 March 2021.

People buying second homes and buy-to-let properties will also benefit, but will still have to pay the 3% extra duty due on the entire price.

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