Today, Chancellor Rishi Sunak has announced a wave of measures to help get the UK economy back on track as we emerge from months of lockdown.
The government would be defined by its response to the crisis and I would never accept unemployment as an unavoidable outcome of the Covid-19 pandemic.Rishi Sunak
- Chancellor announces ‘jobs retention bonus’ of £1,000 per employee to encourage bosses to keep on staff to try and prevent redundancies.
- Hospitality and tourism sectors receive VAT cut from 20% to 5% from 15 July to 12 January
- ‘Eating out to help out’ scheme introduced – People can get 50% off vouchers in August.
- £2bn Kickstart Scheme
- Stamp duty threshold increased to £500,000
Job Retention Bonus
The Chancellor said warned that the furlough scheme cannot go on forever, and with it’s gradual wind down expected to protect jobs until October, it is hoped that the job retention bonus will help businesses to keep staff with a £1,000 bonus pledged for each furloughed employee retained.
The employee must be brought back and retained until January 2021, with the bonus payment being made in February 2021.
We expect further information on this by the end of July, and will bring you the latest updates.
VAT Cuts For Hospitality and Tourism
Without doubt, hospitality and tourism has been hugely impacted by the pandemic, and the Chancellor appears to be pinning his hopes on boosting the sector by offering a VAT cut from 20% to just 5% VAT. This cut is expected to last from 15th July until 12th January 2021 with an estimated cost of £4bn.
Included int he VAT reduction are;
- Supply of food
- Admission to attractions
It is important to note that this cut does not include alcohol served in pubs or restaurants.
In addition, there is the introduction of the ‘eat out to help out’ scheme with a 50% voucher discount scheme commencing in August expected to be worth up to £10 per head when dining Monday – Wednesday. Use of the discount will be unlimited while the scheme is live. Businesses taking part will be reimbursed in full for the discount.
A new £2 billion Kickstart Scheme will also be launched to create hundreds of thousands of new, fully subsidised jobs for young people across the country. Those aged 16-24, claiming Universal Credit and at risk of long-term unemployment, will be eligible. Funding available for each six-month job placement will cover 100% of the National Minimum Wage for 25 hours a week – and employers will be able to top this wage up.
The Treasury details the plans;
A total of £1.6 billion will be invested in scaling up employment support schemes, training and apprenticeships to help people looking for a job. Young people, who are amongst the worst hit by the crisis, will benefit from this. This includes:
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.
A £111 million investment to triple the scale of traineeships in 2020-21 ensuring more young people have access to high quality training.
£17 million of funding to triple the number of sector-based work academy placements in 2020-21
Nearly £900 million to double the number of work coaches to 27,000;
Over a quarter of a million more young people to benefit from an extra £32 million investment in the National Careers ServiceHM Treasury
Businesses could start making applications for the jobs subsidies within a month and the first young people would be employed in the autumn.
In addition it is anticipated that infrastructure projects will be boosted including £1bn plans to make public buildings greener.
The construction industry will see spending of £5.8 billion on shovel-ready construction projects to get Britain building. This includes:
£1.5 billion for hospital maintenance and upgrades
£100 million for our local roads network
over £1 billion to start to rebuild schools in the worst condition in England, plus £760 million this year for key maintenance work on schools and FE colleges
£1 billion for local projects to boost local economic recovery in the places that need it most
£142 million for court maintenance to repair around 100 courts across England.HM Treasury
Stamp Duty Increased to £500,000
The Nil Rate Band Residential SDLT will be increased in England and Northern Ireland from £125,000 to £500,000. This will apply from 8 July 2020 to 31 March 2021. This will mean nearly nine out of ten people buying a home will pay no SDLT during this time.
Commenting that he believes in values and endurance, Sunak said;
We will not be defined by this crisis, but by our response to it.Rishi Sunak
MJB Avanti will bring you any updates to this information including further details as and when the Chancellor announces them.
Call MJB Avanti now 01473 558866 for help with all elements of payroll and VAT – helping you and your business navigate the pandemic.