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Summer economic update – what has changed?

This week (8th July 2020) Chancellor Rishi Sunak gave a Summer Economic Update, involving a new job retention plan, changes to stamp duty, and VAT cuts aimed at helping get the hospitality sector back on its feet.

The Chancellor of the Exchequer Rishi Sunak recently presented his ‘Plan for Jobs’, outlining how the government will boost job creation in the UK. Below are some of the highlights from the announcement.

New job retention scheme

In his announcement, the Chancellor stood firm on the end date for the Coronavirus Job Retention Scheme. The furlough scheme, designed to prevent mass redundancies due to the Coronavirus outbreak, will wind up as planned in October 2020.

The government has instead introduced the new Job Retention Bonus, set to help companies keep employing workers who are currently furloughed. Under the scheme, employers in the UK will receive a one-time £1,000 bonus for each employee who remains continuously employed through to 31st January 2021.

Kickstart scheme for young people

The Chancellor also announced a new Kickstart Scheme, a £2 billion scheme set to create new, fully subsidised 6-month work placements for young people across the country. 16-24-year-olds who are deemed at risk of long-term unemployment are eligible, with the funding covering a 25-hour week on minimum wage.

Scaling up employment

The government has also introduced funding to triple the scale of traineeships in 2021, providing £111 million for high quality work placements and training for young people. In order to ensure more young people have access to training, employers will be funded £1,000 per trainee.

Businesses will also be given £2,000 for each new apprentice they hire under the age of 25, from 1st August 2020 to 31st January 2021.

Green homes grant

A £3 billion green investment package is also set to support new jobs. The scheme was introduced to coincide with a £2 billion Green Homes Grant, which allows homeowners and landlords in England to apply for vouchers this year, in order to pay for green improvements for their homes, such as loft, wall, and floor insulation.

Stamp duty holiday

The chancellor also announced a temporary holiday on stamp duty on the first £500,000 of property sales in the UK and Northern Island.

Property purchasers below this new level will no longer need to pay stamp duty, as long as the deal is completed before 31st March 2021. The level has been temporarily raised with immediate effect, until next March, to help buyers who are struggling due to the effects of the Coronavirus crisis. The housing market, along with the rest of the economy, has been greatly impacted by the pandemic.

Help for the hospitality industry

Lastly, it was announced VAT on hospitality and tourism will be reduced from the current rate, 20%, down to 5%. The VAT cut applies to food, non-alcoholic drinks, accommodation, and admission to attractions across the UK, and should see prices fall, helping those whose income has been affected by the virus.

A new “eat out help out” scheme was also introduced, involving 50% discount vouchers for diners eating out in August.

The aim of the move is to protect jobs in the hospitality sector, an industry hit hard by the outbreak. It is hoped the cut will help get the industry back on its feet.

Recovery from economic harm

The schemes brought forward in the Summer Economic Statement are hoped to aid financial recovery across the UK, after many sectors were impacted by the Coronavirus crisis.

Find more blogs from Lodders’ team of experts here, and sign up for our next free webinar, Life planning – protecting your estate in times of uncertainty.

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