Chancellor Rishi Sunak has revealed the next phase of the government’s economic response to the coronavirus pandemic, with promises to support, protect and create jobs.
The chancellor’s 8 July statement A plan for jobs covered a wide range of measures designed to support the UK’s economic recovery, including announcements on VAT and SDLT.
VAT
Across the UK, from 15 July 2020 until 12 January 2021 the 5% reduced rate of VAT will apply to:
food (including hot takeaway food) and non-alcoholic drinks supplied in restaurants, pubs, cafes and similar premises;
accommodation in hotels, B&Bs, campsites and caravan parks; and
admission to attractions such as cinemas, theme parks and zoos.
It is unclear from the announcement whether the effect of the reduced rate will be limited, given that some ‘attractions’ already benefit from the VAT exemption for cultural services. Further details on the VAT changes are expected in the coming days.
Accompanying the VAT support for the hospitality sector is a novel ‘Eat Out to Help Out’ scheme, under which the government will pay up to half the bill for diners who eat out on Monday to Wednesday at participating establishments during August 2020. The scheme will operate via a refund system, where businesses claim back the discount.
Welcoming support for the tourism industry, Kate Forbes MSP, Cabinet Secretary for Finance in Scotland tweeted that the VAT rate cut ‘will make a significant difference’ but hoped that the Chancellor would ‘reconsider ending the VAT reduction in mid-winter’.
Stamp duty land tax
The SDLT nil-rate band for residential transactions in England and Northern Ireland will be increased from £125,000 to £500,000. The increase will apply from 8 July 2020 until 31 March 2021.
Business support measures
Although no plans were announced to extend the coronavirus job schemes, a number of new support measures for businesses are to be introduced:
Job retention bonus: a one-off payment of £1,000 will be available to UK employers for every furloughed employee remaining in continuous employment to the end of January 2021, subject to the employee earning above the lower earnings limit (£520 per month) on average between the end of the coronavirus job retention scheme and 31 January 2021.
Kickstart scheme: £2bn will be allocated to creating 100,000s of high-quality, six-month work placements for those aged 16–24 who are at risk of long-term unemployment. The funding will cover 100% of the relevant national minimum wage for 25 hours a week and will also cover secondary NICs and minimum auto-enrolment pension contributions.
Green economy
One other area of focus for the chancellor was support for ‘green’ schemes including a £2bn green homes grant, worth potentially up to £10,000 for some households for expenditure on making their homes more energy efficient. A social housing decarbonisation fund will help social landlords provide warmer homes with lower energy bills.
A £1bn public decarbonisation scheme will provide grants to fund energy efficiency in schools, hospitals and other public sector settings. A separate scheme will fund improvements to the environmental sustainability of the courts and tribunals, and £102m will be directed towards modernising the court estate in England and Wales with £37 invested in technology to ‘fast-track’ the digitalisation of the courts.
The Treasury’s Plan for Jobs document (a mini-Red Book) also recaps some of the other business and individual support measures already put in place, including the business loan schemes and the job retention and self-employment income support schemes, noting that HMRC has agreed more than 70,000 time to pay arrangements so far during the pandemic.
The government intends to set out further plans for recovery in its autumn budget, presumably alongside details of how to pay for it.
Chancellor Rishi Sunak has revealed the next phase of the government’s economic response to the coronavirus pandemic, with promises to support, protect and create jobs.
The chancellor’s 8 July statement A plan for jobs covered a wide range of measures designed to support the UK’s economic recovery, including announcements on VAT and SDLT.
VAT
Across the UK, from 15 July 2020 until 12 January 2021 the 5% reduced rate of VAT will apply to:
food (including hot takeaway food) and non-alcoholic drinks supplied in restaurants, pubs, cafes and similar premises;
accommodation in hotels, B&Bs, campsites and caravan parks; and
admission to attractions such as cinemas, theme parks and zoos.
It is unclear from the announcement whether the effect of the reduced rate will be limited, given that some ‘attractions’ already benefit from the VAT exemption for cultural services. Further details on the VAT changes are expected in the coming days.
Accompanying the VAT support for the hospitality sector is a novel ‘Eat Out to Help Out’ scheme, under which the government will pay up to half the bill for diners who eat out on Monday to Wednesday at participating establishments during August 2020. The scheme will operate via a refund system, where businesses claim back the discount.
Welcoming support for the tourism industry, Kate Forbes MSP, Cabinet Secretary for Finance in Scotland tweeted that the VAT rate cut ‘will make a significant difference’ but hoped that the Chancellor would ‘reconsider ending the VAT reduction in mid-winter’.
Stamp duty land tax
The SDLT nil-rate band for residential transactions in England and Northern Ireland will be increased from £125,000 to £500,000. The increase will apply from 8 July 2020 until 31 March 2021.
Business support measures
Although no plans were announced to extend the coronavirus job schemes, a number of new support measures for businesses are to be introduced:
Job retention bonus: a one-off payment of £1,000 will be available to UK employers for every furloughed employee remaining in continuous employment to the end of January 2021, subject to the employee earning above the lower earnings limit (£520 per month) on average between the end of the coronavirus job retention scheme and 31 January 2021.
Kickstart scheme: £2bn will be allocated to creating 100,000s of high-quality, six-month work placements for those aged 16–24 who are at risk of long-term unemployment. The funding will cover 100% of the relevant national minimum wage for 25 hours a week and will also cover secondary NICs and minimum auto-enrolment pension contributions.
Green economy
One other area of focus for the chancellor was support for ‘green’ schemes including a £2bn green homes grant, worth potentially up to £10,000 for some households for expenditure on making their homes more energy efficient. A social housing decarbonisation fund will help social landlords provide warmer homes with lower energy bills.
A £1bn public decarbonisation scheme will provide grants to fund energy efficiency in schools, hospitals and other public sector settings. A separate scheme will fund improvements to the environmental sustainability of the courts and tribunals, and £102m will be directed towards modernising the court estate in England and Wales with £37 invested in technology to ‘fast-track’ the digitalisation of the courts.
The Treasury’s Plan for Jobs document (a mini-Red Book) also recaps some of the other business and individual support measures already put in place, including the business loan schemes and the job retention and self-employment income support schemes, noting that HMRC has agreed more than 70,000 time to pay arrangements so far during the pandemic.
The government intends to set out further plans for recovery in its autumn budget, presumably alongside details of how to pay for it.
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