The Summer Statement 2020 round up

A plan for jobs

With the furlough scheme ‘flexibly’ coming to an end in October, the focus of Rishi Sunak’s Summer Statement was jobs, with incentives for employers to retain furloughed staff, a temporary VAT cut for the hospitality and tourism sectors and “Eat Out to Help Out” vouchers for diners all announced.

However, there was a significant, if temporary, Stamp Duty Land Tax (SDLT) change, with the threshold from which this is paid increasing from £125,000 to £500,000 until 31 March 2021.

Crucially, this applies to “everyone who would have [previously] paid SDLT” and this is therefore great news for people moving home, who will save £15,000 when buying a property for £500,000+.

However, this is potentially not so good news for first time buyers who temporarily lose the relative advantage they previously enjoyed over homeowners due to their reduced SDLT rates. That said, first time buyers previously paid 5% SDLT between £300,000 and £500,000, so they could also benefit from a saving.

Another beneficiary of the change is anyone purchasing a second home or buy to let property, as they will also temporarily qualify for the saving.  

Though the Treasury have indicated the additional 3% SDLT charge paid in these circumstances will still apply, there is still a potential saving of up to £15,000 per property purchased and this could prove attractive for individuals who were considering a purchase but had put their plans on hold due to the current circumstances.

Mr Sunak confirmed the changes take effect immediately and he will be hoping to provide an instant boost to the housing market.

Following phase one where the Government laid out plans to prop up the economy with a £160 billion support package, on Wednesday we entered phase two, with phase three expected to be how we’re going to pay for all of this.

The main initiatives announced

The kick start scheme

  • The ‘kick-start scheme’ to encourage employers (excluding Northern Ireland) to create new six month work placements for 16-24 year olds on Universal Credit and deemed to be at risk of long-term unemployment.
  • The government will provide funding for each job at the level of 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.
  • A Job Retention Bonus consisting of a one-off payment of £1,000 for employers that have used the Coronavirus Job Retention Scheme (CJRS) for each furloughed employee who remains continuously employed until 31 January 2021. To be eligible, employees will need to earn at least £520 per month (above the Lower Earnings Limit) on average for November, December and January. Employers will be able to claim the bonus from February 2021. More information will be available by 31 July and full guidance will be published in the Autumn.
  • Employers will receive a payment of £1,000 for each 16-24 year old trainee to whom they provide work experience. The government intends to improve provision and expand eligibility for traineeships to those with Level 3 qualifications and below, ensuring more young people will have access to training.

Infrastructure and green jobs

  • Investment in infrastructure projects.
  • Incentives to create ‘green’ jobs.
  • Green Homes Grant is to be introduced to provide at least £2 for every £1 spent up to £5,000 per household to homeowners and landlords making their properties more energy efficient. For those on the lowest incomes, the scheme will fully fund energy efficiency measures of up to £10,000 per household.

Stamp duty

An immediate temporary Stamp Duty Land Tax (SDLT) holiday in England and Northern Ireland until 31 March 2021 by raising the threshold above which the main rate of SDLT is payable from £125,000 to £500,000. For second homes, the 3% additional rate will continue to apply. The new rate table is shown below (and the previous position can be seen here (https://www.gov.uk/stamp-duty-land-tax/residentialproperty-rates):

Slice of residential property  Value SDLT Rate %
Up to £500,0000 0
£500,001 - £925,000 5
£925,001 - £1,500,000 10
Over £1,500,000 12

Note: The devolved administrations in Scotland and Wales set their own rates of tax on Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT) respectively. At the time of writing, neither country has announced their plans.

VAT cuts

  • A temporary cut in VAT for the hospitality sector will start from the 15 July to January 2021. A 5% rate of VAT will apply to supplies of food and non-alcoholic drinks from UK restaurants, pubs, etc and accommodation and admission to attractions across the UK. Further guidance will be published by HMRC shortly.

Meal discounts 

  • Half-price discounts on meals at participating restaurants on Mondays to Wednesdays in August, of up to £10 per head.

 

The Chancellor confirmed that there will be a Budget and Spending Review in the Autumn.

The Chancellor Rishi Sunak said “Our plan has a clear goal: to protect, support and create jobs. It will give businesses the confidence to retain and hire. To create jobs in every part of our country. To give young people a better start. To give people everywhere the opportunity of a fresh start.

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