This afternoon, Chancellor Rishi Sunak has delivered his summer statement, which outlines his ambitions for a recovery from the economic harm done by the virus.
We set out below the brief highlights of what Rishi said and if you require any further clarification of the points or questions on how these changes may affect you, please do not hesitate to contact us.
Jobs and wages
There have already been some previous announcements in the way that the Furlough scheme will be operated in the coming months, with the employer starting to contribute towards the costs of furloughing employees.
There is a new Furlough bonus that businesses can claim in January next year of £1,000 per employee that has been brought back from Furlough and then employed through January. To qualify the employee must have been paid at least £520 each month through to January.
Mr Sunak also announced various incentives to employers to encourage them to employ young workers, and to improve skills training. Companies will get £2,000 for new apprentices aged 16-24 and £1,500 for the over 25’s. Businesses can also claim £1,000 for new trainees.
Changes to VAT
The sales tax – VAT – included in the cost of food, accommodation and attractions will be cut until mid-January from 20% to 5%.
This will be a welcome relief for those in the hospitality and tourism industry.
For instance, the temporary cut should see prices fall when eating out or going out, which should help those whose income has been affected by the virus. The chancellor said that there will be discounts of up to £10 per head for anyone eating out at participating restaurants from Mondays to Wednesdays in the month of August.
The Chancellor called the plans ‘Eat out to help out’
Many in the sector will consider this an opportunity to shore up the finances of their ailing businesses. This means they may, in effect, keep the extra money by not cutting their prices.
Stamp Duty Holiday
Currently, stamp duty has been paid on land or property sold for £125,000 or more.
Buyers usually pay their duty based on the price on the day the sale is completed, and they have to give the money to HM Revenue and Customs within 14 days. Now, the chancellor has said this threshold in England and Northern Ireland will increase – with immediate effect – to £500,000 until 31 March 2021. There are different rules for Wales and Scotland.
He said that, on average, people buying a home would save £4,500. Current homeowners moving on could see a saving of up to £14,999.
The housing market, as with the rest of the economy, has been hit hard by the coronavirus pandemic. The lockdown meant activity slowed sharply, with sales at half the levels of a year earlier.
Before the chancellor’s announcement, first-time buyers paid no tax on properties up to £300,000 and 5% on any portion between £300,000 and £500,000. So the new stamp duty holiday would not benefit many of those young, new buyers directly.
Those buying homes for more than £500,000, or second homes, will still have to pay stamp duty, but their total bill will be lower as a result of these changes.
Additional Home improvement relief
There will be help with the cost of insulating your home, including double glazing, in England.
In the scheme, which will start in September, the government will pay at least two-thirds of the cost of home improvements that save energy. This will be paid as a voucher when the work is approved.
For example, a homeowner of a semi-detached or end-of-terrace house could install cavity wall and floor insulation for about £4,000 – the homeowner would pay £1,320 while the government would contribute £2,680.
Low-income households could receive a bigger contribution.
If you have any questions on the above please do not hesitate to contact us today. We have Accountants in Essex, Manchester and London waiting to take your call.