The Chancellor’s Summer Statement unveiled a number of new proposals aimed at cushioning the economic impact of the ongoing COVID-19 pandemic. Here are some of the key announcements made by Rishi Sunak:
The Government’s furlough scheme is set to be wound down and ultimately ended in October, with a £1,000 per employee incentive offered to firms who have participated in the scheme. This bonus will be paid for each employee who has been furloughed if they have returned to work by January 2021. While it remains unclear how many firms will take up this bonus and how this will be used, this move signals a clear intention to bring back the UK’s workforce.
The hospitality sector has been significantly impacted by the requirement for social distancing and as such is set to benefit from specific new measures aimed at increasing footfall for the UK’s pubs, restaurants and cafes. The Chancellor has cut the applicable VAT rate for food, accommodation and attractions from 20% to 5%. This measure is expected to cost up to £4bn in reduced tax revenues as the Government seeks to reduce costs for consumers in the hospitality sector. In addition to this, the ‘Eat Out to Help Out’ scheme will see consumers benefit from a discount of up to £10 a head on meals between Monday and Wednesday with the hopes that restaurants and cafes with receive more customers on these typically quiet days.
In order to boost activity in the housing market, the threshold for stamp duty in England has been increased from £125,000 to £500,000 until March 2021. Similar changes have subsequently been to the Stamp Duty equivalents in other areas of the UK such as Scotland (Land and Buildings Transaction Tax: £145,000 threshold temporarily increased to £250,000). As mortgage providers begin to offer higher LTV products again, this tax cut should reduce the total cost for many prospective buyers with an estimated 90% of house purchases expected to be exempt from Stamp Duty Land Tax.