The Chancellor's Economic Statement (July 2020)

To mitigate the effects of the Covid-19 pandemic, Rishi Sunak announced a combination of measures, a 3-phase ‘plan for jobs’ with the aim of finding, creating and protecting employment in the UK. As part of a multi-billion pound investment he outlined the new measures in his economic briefing on 8 July – highlights below.

Bringing furlough to an end

The furlough scheme will be closing at the end of October but with an added incentive to bring people back to work. Employers will receive £1000 for every employee who is brought back from furlough providing they work from November 2020 to January 2021. This is based on minimum earnings of an average of £520 per month.

‘Kickstart’ scheme for young people

A new scheme aimed at the 700,000 school leavers has been launched to provide ‘good quality’ employment for young people aged between 16 and 24. With a minimum of 25 hours per week, training and support, their wages will be paid in full for six months. Companies may apply for the scheme from August 2020. There is no cap on the number of people companies can employ.

Trainee/apprenticeship grants

Employers will be paid £1000 for every new trainee they take on. This goes hand in hand with additional investment in the careers sector including Job Centres and the skills sector where employers will receive £2000 per apprentice. This reduces to £1500 if the apprentice is aged 25 and above.

Green measures

The Chancellor announced a variety of incentives to boost employment in the green sector with vouchers up to £5,000 per household (£10,000 for lower income households) to help fund up to two thirds of any energy efficient measures undertaken such as solar panels, insulation and similar. This goes hand in hand with a portfolio of investment planned in the construction sector for new housing, roads, public buildings and other building projects.

Stamp Duty threshold increase

Excellent news for anyone buying their main home – effective immediately, the new Stamp Duty threshold has been raised from £125,000 to £500,000 until March 2021 so there is no Stamp Duty payable on properties worth £500,000 or less and then the duty applies only to the residual amount above £500,000.

5% VAT for hospitality and tourism sector

In a bid to increase social consumption and boost two of the hardest hit sectors, the Chancellor has temporarily reduced VAT from 20% to 5% for hospitality and tourism. This applies to food (eat in and take out), non-alcoholic drinks, accommodation, tourist attractions and venues such as cinemas and theme parks. It is not specified whether the business or consumer should benefit from the savings. This starts on Wednesday 15th July and will last until 12th January 2021.

“Eat out to help out” scheme

During August 2020, anyone eating out at a participating restaurant on a Monday, Tuesday or Wednesday is eligible for 50% off their bill, up to £10 per person, including children. It applies to dine-in food and non-alcoholic drinks. The host venues can reclaim this discount and will be reimbursed within five working days of each claim.

More on ‘Eat Out to help out” if you are a restauranteur

If your business sells food for immediate consumption, has a dining area for eat in meals and was registered as a food business with your Local Authority on or before 7 July, you can register to participate in the scheme from 13 July.

After registering, you will receive a reference number. Using this number, you may offer discounts from 3 August. You must only offer discounts throughout your opening hours on eligible days (Monday, Tuesday, Wednesday) and on all qualifying sales of food and drink.

Each individual establishment must be registered separately, unless you have more than 25, in which case you may provide a link to a website if it provides details of each address. It’s important that you keep records of the total number of customers who have used the scheme, the total value of transactions under the scheme and the total amount of discounts you have given.

Making a claim:

Full details are not yet available, but the service you will use to claim reimbursement from HMRC will be available on 7 August. Here's what we know so far, with more information to follow as soon as we have it:

  • You must wait 7 days from registration to make your first claim.

  • Your claim will be paid by HMRC within 5 working days

  • You will submit claims on a weekly basis

  • You will still pay VAT based on the full amount of the customers’ bills

  • Any money received through the scheme is treated as taxable income

Register your business here

Here to help

We are very keen to help you work through the coming months. “These measures mark a welcome contribution to businesses in helping them recover from the effects of the pandemic” commented Jill Evenden, MD of EBS Accountants. “We look forward to supporting our clients as they move forward, making the most of the new incentives and grants. Clearly some will be more beneficial than others but it’s all positive”.

These measures can be understood in more detail at the government website here

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