July 2020 Budget announcement update – what could it mean for you?
The Budget announcement by the Chancellor Rishi Sunak has been significant with “bold” changes relating to boosting the economy, creating and supporting jobs and encouraging support for leisure and tourism businesses.
The Budget, which was billed as a ‘fiscal event’, has been much anticipated by businesses struggling after the Coronavirus pandemic. Our team of experts have been following the Summer Statement closely and have highlighted below what each of the three main areas outlined by the Chancellor might mean for you.
Job Retention Bonus – To help firms retain furloughed workers, the government will introduce a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021. Employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021. Payments will be made from February 2021. Further details about the scheme will be announced by the end of July.
Kickstart Scheme – A new £2 billion scheme will 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 job will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions – and employers will be able to top this wage up.
Employment Support Scheme – £1.6 billion will be invested in scaling up employment support schemes, training and apprenticeships to help people looking for a job. 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 will be made available to triple the scale of traineeships in 2020/21 ensuring more young people have access to high quality training. £17 million of funding was also announced to triple the number of sector-based work academy placements in 2020/21 and £900 million to double the number of work coaches to 27,000.
These measures will provide welcome support for employers as they try to restart their businesses following the Coronavirus lockdown and should help to support jobs and training in the short term.
Eat Out to Help Out – This is an unprecedented scheme to encourage people to return to eating out by offering a 50% discount. The scheme will run for the month of August and eating establishments wishing to participate will be able to register their business online from Monday 13 July. For consumers, this means that you will receive a 50% discount on the cost of your meal and non-alcoholic beverages if consumed at the premises on Mondays to Wednesdays inclusive, throughout the month of August, with a cap of £10 per person.
For businesses this means that you will have to register from Monday 13 July on a ‘simple website’ to be able to participate. You will apply the discount to your sales and will make a claim weekly throughout August for reimbursement from the government. The money will be refunded to your bank account within five working days of making the claim.
VAT Reduction – There will be a temporary VAT cut for food and non-alcoholic drinks to support businesses and jobs in the hospitality sector. The reduced rate of VAT, down from 20% to 5%, will apply to suppliers of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK. A similar reduction will also apply to accommodation and attractions, with both schemes running from 15 July 2020 to January 2021. There will also be a temporary waiving of VAT on Personal Protective Equipment (PPE) from 1 May to 31 October 2020.
Further guidance on the scope of each of the above reliefs will be published by HMRC in the coming days.
The housing market has been severely affected by the pandemic, with house prices falling for the first time in eight years. In order to ensure confidence in the property market two new measures have been announced.
Stamp Duty Holiday – In a bold move to kickstart the housing market, Rishi Sunak has increased the nil rate band for when stamp duty is paid from £125,000 to £500,000 for all main homes in England and Northern Ireland. This cut will start immediately and be in place until 31 March 2021. He has estimated that it will benefit 9 in 10 homebuyers, saving in the region of £4,500 on the average house purchase. Currently, stamp duty is not charged on the first £125,000 of a property’s selling price, with a 2% rate up to £250,000 and 5% on the next £675,000.
Green Homes Grant – A new £2 billion Green Homes Grant fund will be introduced to encourage homeowners and landlords to spend money this year to make their homes more energy efficient. This voucher scheme will provide at least £2 for every £1 that is spent on energy efficient work, such as loft, wall and floor insulation, up to £5,000 per household. For those on the lowest incomes the scheme will fully fund energy efficient measures up to £10,000 per household. Further details will be announced in due course, but this scheme aims to upgrade over 600,000 homes in England, saving households hundreds of pounds per year on their energy bills, which is fantastic news.
The team at David Allen will be working closely with clients to support them through the changes and to help them make the most of the announcements made by the Chancellor to get the UK economy moving again. The next annual budget is due in Autumn 2020.
If you have any queries about how we can help you, please contact us for advice and support.