Summer Economic Update Summary - July 2020
Chancellor Rishi Sunak has delivered a Summer Economic update to the nation outlining the Government’s plan to protect, support and create jobs as we enter Phase 2 of the economic response to the COVID-19 crisis.
Dated: 8 July 2020 Author: Richard McNeilly, Managing Partner
In the statement he said that although we face ‘profound economic challenges’ no-one should be left without hope and that unemployment should never be accepted as an unavoidable outcome.
Key announcements included the creation of a new Job Retention Bonus Scheme, cuts to VAT in the hospitality and tourism industry, a new ‘Kick Start’ scheme to create thousands of job placements for young people, a temporary change to stamp duty and and a green homes grant to help make homes more energy efficient.
Richard McNeilly, Managing Partner at Dains Accountants said: “We welcome the announcements, particularly the Job Retention Bonus Scheme and the VAT reduction for the hospitality and tourism sector, which could be a lifeline for thousands of businesses as we attempt to emerge from this economic crisis. It’s important that people return to work and financial support is crucial in helping businesses to get back on track and moving forward again.”
Key announcements from the statement are as follows:
Furlough – Job Retention Bonus Scheme
- Employers will get £1000 for every furloughed employee they bring back to full time employment from November to January
- Employees returning to work under the scheme need to earn on average at least £520 per month between the end of the Job Retention Scheme and the end of January 2021
- The Job Retention Scheme will end in October
James Hunt, Employment Services Senior Manager at Dains, said: "As with previous announcements relating to the Coronavirus Job Retention Scheme, full details will be required regarding the Job Retention Bonus Scheme to identify the range of entitlement criteria and to understand any process required for employers to claim the funding.”.
- VAT on food, accommodation and attractions in the hospitality and tourism industry is to be reduced from 20% to 5%
- The reduction takes effect from 15 July 2020 until 12 January 2021
- The stamp duty threshold has been increased from £125,000 to £500,000 for home buyers
- This temporary change comes into effect immediately and will be in place until March 2021
Kick Start Scheme (16-24 year olds)
- People aged 16-24 on Universal Credit will be eligible for six month work placements funded by the Government
- The scheme will be open to funding applications from August 2020, with the first jobs starting in Autumn
- Employers taking young people on will be funded to the tune of 100% of the minimum wage for 25 hours a week
- Firms topping up wages beyond that if they want to will receive a £1,000 admin fee
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