Summer Economic Update – ‘Plan for Jobs 2020’

by Matt Herd

The Chancellor Rishi Sunak presented his “Plan for Jobs 2020” speech this afternoon detailing the next phase of the government’s response to the ongoing economic impact of the COVID-19 pandemic.

The announcements included a Job Retention Bonus to encourage employers to retain furloughed workers as well as a Kickstart Scheme aimed at creating jobs for those aged 16-24.

To support the hospitality and entertainment sectors, the chancellor outlined a temporary reduction in the rate of VAT to 5% for food, non-alcoholic drinks, accommodation and attractions as well as introducing the Eat Out to Help Out scheme which provides diners with a 50% discount at participating restaurants, cafés and pubs throughout the month of August.

In an attempt to get the property market moving, the chancellor also announced a temporary Stamp Duty Land Tax (SDLT) cut by increasing the SDLT nil rate band for residential property from £125,000 to £500,000.  The announcement, which has immediate effect, will see property buyers paying significantly less SDLT with many paying no SDLT at all.

Summary of the main announcements:

  • Job Retention BonusThe 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 detail about the scheme will be announced by the end of July.
  • Kickstart SchemeThe government will introduce a new Kickstart Scheme, designed to create hundreds of thousands of 6-month work placements aimed at those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment. 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.
  • High quality traineeships for young peopleThe government will provide additional funding for traineeships in England, to provide work placements and training for 16-24 year olds. The government will fund employers who provide trainees with work experience, at a rate of £1,000 per trainee.
  • Payments for employers who hire new apprenticesThe government will introduce a new payment of £2,000 to employers in England for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over, from 1st August 2020 to 31st January 2021. These payments will be 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 – where that applies.
  • Eat Out to Help OutThe 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. 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.
  • Temporary cut in the VAT rate for food and non-alcoholic drinksFrom 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.
  • Temporary cut in the VAT rate for accommodation and attractionsFrom 15 July 2020 to 12 January 2021, to support businesses and jobs, the reduced (5%) rate of VAT will apply to supplies of accommodation and admission to attractions across the UK.
  • Temporary Stamp Duty Land Tax (SDLT) cutThe government will temporarily increase the Nil Rate Band of Residential 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.
  • Green Homes Grant The government will introduce a £2 billion Green Homes Grant, providing at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, 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 chancellor confirmed that the third phase of the government’s plan will be set out in the autumn with measures to support the longer-term recovery through a Budget and a Spending Review.

Detailed guidance in relation to today’s announcements is available here.

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Matt Herd

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