Summer Economic Statement aka “The Mini Budget”-The Details

With our country (and indeed the world) potentially facing the biggest economic recession since records began, it was announced last week that on Wednesday 8th July, Chancellor Rishi Sunak would be announcing the next steps of the government’s plan to try and help get Britain back to work.

Here, we take a look at the main points from the Chancellor’s statement:

Job Retention Bonus

The Chancellor confirmed that as expected, the furlough/job retention scheme would be wound down in October. However, with this brings fear of redundancies on a huge scale as employers make the decision that without that scheme, they cannot afford to keep previously furloughed employees on.

However, it was announced that for every furloughed employee retained by an employer until at least the end of January 2021, there would be a one off £1000 bonus payable (per employee earning over£520/month) to the employer.

If all furloughed employees are kept on, this is estimated to cost up to £9.5billion.

VAT cut for entertainment sector

From 13th July, VAT in selected areas will be cut from 20% to 5% until 12th January 2021. Some of the businesses that will benefit from this will be pubs, restaurants and café (on food and non alcoholic drinks), hot takeaway food, hotels, theme parks and cinemas.

“Eat out to help out” scheme

This new scheme will be launched in August and will be available from Monday-Wednesday. It will offer a50% discount to people eating out at participating restaurants, pubs and cafes (up to £10/head) covering food and non-alcoholic drinks. Restaurant/pub/café owners will need to apply for the scheme and then will be able to reclaim the discount from the government online.

Stamp Duty

Effective immediately, and until 31st March 2021, the threshold for stamp duty (on residential properties)in England and Northern Ireland will rise from £125,000 to £500,000. As this is a devolved issue, it will be up to the Scottish and Welsh parliaments to decide whether or not to also implement this.

It is estimated this will save the average buyer around £4,500 and nearly 9 out of 10 transactions will now be tax free.

“Green Homes Grant”

From September, homeowners and landlords will be able to apply for vouchers to make their homes more energy efficient, matching owners spend (up to £5000 per household, and £10,000 for low income households to cover the full cost).

“Kickstart Scheme” and getting younger workers back into jobs

To try and support younger workers, there are a number of measures being put in place, including the Kickstart Scheme- a £2billion fund paying for 6 months work placements for 16-24 year old on Universal Credit. This will cover payment at national minimum wage for 25hours/week (plus employers NI and pension contributions).

There will be a £1000 grant for employers for each new trainee taken on aged 16-24 (in England), as well as a £1500/£2000 grant for employers taking on new apprentices over 25 and under 25 respectively for 6 months from August.

The number of work coaches at Jobcentres will be doubled with additional help for younger jobseekers, £150m extra for the Flexible Support Fund providing help for jobseekers, and £101m to fund studies for 18and 19 year olds in England unable to find work.

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