On Wednesday 8 July 2020, the Government held an emergency mini budget to minimise the pain as the economy faces the challenges of the past few of months.
The main priority on the agenda was unemployment rates, with the Chancellor announcing that he wants to ‘protect, support and create jobs.’
With the support provided through the furlough scheme gradually decreasing, the Government foresee unemployment rates growing.
Although they believe that keeping the scheme open for a longer period will provide those on furlough with false hope that their job will always be there, they want to do as much as they can to soften the blow.
The Government are introducing a £1,000 job retention bonus for businesses who retain furloughed staff until at least January 2021. The employee must be paid over £520 per month to qualify.
Payments won’t be made until February 2021, so employers should review their financial position before making any decisions.
The Chancellor also announced a ‘kickstart’ job creation scheme for young people, paying their wages for six months.
The scheme will open for applications in August, with the first jobs expected to start in the autumn and run until December 2021 – with the option of being extended.
For each ‘kickstarter’ job, funding will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance and employer minimum auto-enrolment contributions.
Employers will have the option of topping up the payment if they wish.
Training and jobs
The Government have introduced a new payment of £2,000 to employers in England for each new apprentice they hire aged under 25, and a £1,500 for those 25 and over, from 1st August 2020 to 31st January 2021.
These payments will be in addition to the existing £1,000 the Government already provide for new 16-18 year old apprentices, and those aged under 25 with an Education, Health and Care Plan – where that applies.
We are waiting to hear from the Welsh Government to see if this support will be provided to welsh businesses.
Whilst there is a great concern for the economy, the environment still plays a significant part, and the Government are keen to see a green recovery.
Homeowners and landlords who make their homes more energy efficient, will be able to access a grant of up to £5,000 per household.
For those on the lowest incomes, the scheme will fully fund energy efficiency measures of up to £10,000 per household.
The Government is temporarily increasing the Nil Rate Band of residential Stamp Duty Land Tax (SDLT), in England and Northern Ireland, from £125,000 to £500,000.
This will apply from 8 July 2020 until 31 March 2021 and cut the tax due for everyone who would have paid SDLT.
This doesn’t apply to the Land Transaction Tax (LTT) which is in place in Wales. The Welsh Government are only increasing the threshold to £250,000 from 27 July 2020 to 31 March 2021.
VAT cuts for hospitality and tourism
From 15 July 2020 to 12 January 2021, to support businesses and jobs in the hospitality sector, the reduced 5% rate of VAT will apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK.
This reduction in VAT will also apply to supplies of accommodation and admission to attractions across the UK.
Discounts on eating out
In order to support businesses and protect the jobs of their employees, the Government will introduce the ‘Eat Out to Help Out’ scheme to encourage people to return to eating out.
This will entitle every diner to a 50% discount of up to £10 per head on their meal, at any participating restaurant, café, pub or other eligible food service establishment.
Businesses will be required to register through a website which launched on Monday 13 July 2020.
The discount can be used unlimited times and will be valid Monday to Wednesday on any eat-in meal (including on non-alcoholic drinks) for the entire month of August 2020 across the UK.
Participating establishments will be fully reimbursed for the 50% discount.
With lots of new changes being announced by the Government, we are urging business owners to review their financial position and cashflow, and reach out to their advisers.
We are always here to support business owners who require a better understanding of their financial information. To speak to one of our team, please don’t hesitate to contact us.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.