Summer Economic Update 2020 – Highlights

The Chancellor Rishi Sunak has set out what he called a ‘Plan for Jobs’ to help the UK recover from the Coronavirus outbreak.

Delivering his Summer Economic Update in Parliament, the Chancellor announced the second part of a three-phase plan to secure the UK’s economic recovery from the pandemic.

The first stage was a £160 billion support package supporting over a million businesses through grants, loans and rates cuts, as documented in our Covid-19 SME Support Hub.

As the UK enters the second phase in its recovery, the Chancellor’s plan is designed to support jobs by focusing on skills and young people and protecting jobs through a VAT cut for the hospitality sector and an ‘Eat out to help out’ discount scheme for diners.

The Chancellor said that following this second phase focusing on jobs, there will be a third phase focusing on rebuilding, with a Budget and Spending Review in the Autumn.

A summary of the key tax measures:

VAT reduced rate:

New ‘Eat out to help out’ vouchers for all adults and children during August.

From 15 July 2020 to 12 January 2021 there will be a reduction in VAT for the hospitality sector to 5 per cent for the supply of:

– Food and nonalcoholic drinks from restaurants, pubs, bars, cafés, and similar premises across the UK; and

– Accommodation and admission to attractions across the UK.

Find out how to register your restaurant or establishment for the Eat Out to Help Out Scheme.

Stamp duty land tax (SDLT)

From 8 July 2020, the government has introduced a temporary increase to the Nil Rate Band of Residential SDLT from £125,000 to £500,000 until 31 March 2021. Those buying second homes and buy-to-let properties will see their SDLT bills reduced by the same amount, but they will still need to pay the 3 per cent surcharge.  More details can be found on the gov.uk website.

A summary of the key measures impacting employers:

Job retention bonus

As part of the plan to support jobs, a Job Retention Bonus will be introduced to help firms keep furloughed workers. UK Employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021.

Kick-start scheme

Employers will receive a payment to create new jobs for young people aged 16 to 24 who are at long-term risk of unemployment. Jobs must be a minimum of 25 hours per week, pay at least the minimum wage, and be of good quality with training and support. The government will pay the employees’ wages for six months, including an amount to cover overheads. Employers can apply for the grant from next month and there will be no cap on the places available.

Traineeships 

The government will pay employers to take on new trainees and invest £111 million in tripling the number of trainee places. Trainees will be supported to find work in high-demand areas, such as social care.

Apprenticeships

For the next six months, the government will pay businesses £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.

You can read the Budget in full on the gov.uk website.

If you have any concerns or queries relating to the Summer Economic Update 2020 announcements, our tax experts are available to guide you and to assist with bespoke solutions to ensure that you and your business are as tax efficient as possible. Contact Barrie Dunning or your usual Beavis Morgan Partner.

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