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Chancellor’s summer economic update – Covid -19 support update

Date posted: 8th Jul 2020

Coronavirus Job Retention Scheme

1. Timescale for furlough support programme
The chancellor confirmed that the previously announced changes to the scheme will not be varied. The scheme will close on 31 October 2020, with government contributions being reduced month on month from August 2020.

2. Job Retention Bonus
To encourage businesses to bring furloughed employees back to work, all businesses will be paid a Job Retention Bonus of £1,000 for each previously furloughed role that is reinstated. To be eligible, the previously furloughed individual must be continuously employed between November 2020 and January 2021 and earn on average at least £520 per month over the three month period. More details will be released by government in the coming months.

Hospitality, leisure and tourism support

3. Temporary reduction in VAT
Businesses in the hospitality and tourism sectors will benefit from a reduction in VAT from 20% to 5% on food, accommodation and attractions. The change is effective from Wednesday 15 July 2020 to 12 January 2021.

4. Eat Out to Help Out
For the month of August 2020, to encourage the public to eat out, a discount will be given to everyone in the country. The discount will be 50% off the cost of a meal, limited to a maximum of £10 per head and will apply Monday to Wednesday. Businesses will be able to register for the programme from week commencing 13 July 2020. Claims for reimbursement for discounts given by participating businesses will be paid within 5 days.

5. Kickstart Tourism Programme
Businesses in the tourism sector can benefit from grant support of up to £5k from the kickstart tourism fund towards consultancy or minor equipment purchases- https://www.gov.uk/government/news/government-announces-10-million-for-small-businesses-to-kickstart-tourism

Other measures

6. Stamp duty
A cut to Stamp Duty Land Tax has been announced. The threshold for paying stamp duty land tax on residential property transactions will increase to £500,000 (up from £125,000). This applies to transactions completing between 8 July 2020 and 31 March 2021.

7. Youth employment
The chancellor has announced a series of incentives to encourage businesses to recruit young people and apprentices including:

a. Kickstart scheme to reward employers for taking on people aged between 16-24 who are at a risk of long-term unemployment. Employers must offer at least 25 hours of work per week with the government paying the wages in full for six months, plus a contribution to overheads. The programme will go live in August 2020.

b. Apprenticeship grants for employers creating new apprentice roles. Businesses will receive £2,000 to hire apprentices under 25 or £1,500 to hire apprentices over 25. In addition, a grant of £1,000 is available to take on trainees.

8. Home energy efficiency
The government will launch a £2bn green homes grant programme. From September 2020 onwards homeowners and landlords will receive vouchers to contribute towards the costs of improvements which increase household energy efficiency. The vouchers will fund at least two thirds of the cost up to £5,000, with low income households receiving up to £10k towards the full cost of works.

If any of the updates in this article raise any issues for you or your business, please contact our Tax team here or call us on 01325 349700.

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