The Chancellor’s Summer Statement was presented to the House of Commons today, revealing a package of measures designed to support the economy as the country exits lockdown.
Among the measures announced by Sunak was a £30 billion VAT cut for the hospitality sector, zero stamp duty for property purchases up to £500,000, and a £1,000 bonus for employers bringing staff out of furlough.
In his statement to MPs, Sunak warned that “hardship lies ahead”, while also promising that nobody will be left “without hope” as the economy recovers from Covid-19.
Here are the 7 key things you need to know from Rishi’s Summer Statement:
Hospitality VAT cut
Value Added Tax (VAT) on food, accommodation and attractions will be cut from 20% to 5% from next Wednesday.
The VAT cut will last for six months, at a total cost to the Treasury of an estimated £30 billion.
Covered by the VAT cut are food and non-alcoholic drinks in restaurants, pubs and cafes. Hot takeaway food will also see its rate of VAT cut from 20% to 5% from 13th July through until 12th January 2021.
Accommodation in hotels and B&Bs and admission to theme parks and cinemas will also qualify for the lower rate of VAT until the New Year.
Welcoming the VAT cut was Jeremy Coker, Association of Taxation Technicians (ATT) President.
Stamp duty cut
Residential property buyers will pay no stamp duty in England and Northern Ireland, with the stamp duty threshold rising from £125,000 to £500,000 from today until 31st March 2021.
As a result of the threshold increase, almost nine in ten property transactions are expected to be free of stamp duty, costing the Treasury an estimated £3.8 billion.
Job retention bonus
Employers will bring staff off furlough and then keep them employed will receive a one-off bonus of £1,000 per staff member. To qualify for the bonus payment, employees will need to remain employed until at least the end of January 2021.
All employees in the UK who have been on furlough under the terms of the Coronavirus Jobs Retention Scheme will qualify for the new job retention bonus, as long as they earn more than £520 a month.
The job retention bonus will cost the Treasury an estimated £9.4 billion, assuming all furloughed employees keep their jobs until the end of January.
Eat out to help out
A new scheme designed to encourage people to eat out in restaurants, cafes and pubs goes live in August.
For meals out in qualifying experiences on Mondays, Tuesdays and Wednesdays in August, diners can claim a 50% discount, up to a maximum of £10 per head.
The discount can only be applied to food and non-alcoholic drinks at participating venues. To qualify for the scheme, restaurant owners will need to register and then claim the value of awarded discounts via an online form.
Younger workers will benefit from a £2 billion fund, covering the cost of work placements for six months.
16 to 24-year-olds who are in receipt of Universal Credit can take part in the kickstart scheme, with the grant covering the cost of the national minimum wage for 25 hours a week, as well as national insurance and pension contributions.
For trainees aged 16-24 in England, the Chancellor promised a £1,000 grant per trainee, with the aim of tripling trainee numbers.
And for apprentices, employers in England can claim a £2,000 grant for each apprentice under 25 hired, for six months starting on the 1st of August.
Chancellor Sunak also promised to double the number of work coaches at Jobcentre Plus across the country, providing extra support to young jobseekers.
Green homes grant
A new green homes grant will give households access to a grant of up to £5,000 to make properties in England more energy efficient.
The grant scheme will match homeowner or landlord spending on energy efficiency improvements, at a rate of £2 for £1 for most homes.
For low-income households, a green home grant of up to £10,000 per household will be fully funded by the government.
Two bicycles near a house, photo by Chris Ross Harris on Unsplash
Big capital projects
In an effort to support economic growth, the Chancellor pledged £1 billion in grants for public sector bodies to spend on energy efficiency improvements.
There was also a £50 million payment towards a social decarbonisation fund, which is designed to improve the energy efficiency of socially rented housing.
At the end of June, the Prime Minister announced a £5.6 billion package of infrastructure investment. The Chancellor provided further details on how this money will be spent on hospitals, schools, transport and housing.
With all of these changes occurring in England, and some applying to Scotland, only time will tell if the Scottish Government has similar plans to Rishi Sunak.
At times like this, it is important to plan your financial future to accommodate for many potential scenarios, especially if you’re a business owners or practice owner professional.
If you would like to speak with a wealth planner, you can contact us via email, scheduling your Exploration Call or by our online contact form on our website.
We provide lifetime wealth planning tailored to you and your personal situation and circumstance and would love to hear from you.