Chancellor's Summer Economic Statement

On Wednesday 8 July, the Chancellor delivered an economic update announcing the second phase of the Government’s response to the coronavirus (COVID-19) pandemic. He also announced that a full Budget will follow in the Autumn. The Chancellor’s statement included a ‘green recovery’ and a ‘plan for jobs’. A summary of the tax announcements is set out below.

Jobs & employment 

  • Coronavirus Job Retention Scheme new bonus - the furlough scheme will wind down over the next few months and will close on 31 October 2020. A new one-off job retention bonus of £1,000 will be paid to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021. Employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021. Payments will be made from February 2021. Further details will be announced by the end of July.
  • Kickstart Scheme - an initial £2billion Kickstart Scheme was announced to create more jobs for young people. The fund will subsidise six-month work placements for people on Universal Credit, who are aged between 16 and 24 and at risk of long-term unemployment. The funding will cover 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.  The first kickstarters will be in their new jobs in the Autumn. 
  • Traineeships - Additional funding will be provided to fund work placements and training for 16-24 year olds. The Government will fund employers who provide trainees with work experience, at a rate of £1,000 per trainee. 
  • Apprenticeships - A new payment of £2,000 to employers in England for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over, will be available from 1st August 2020 to 31st January 2021. These payments will be in addition to the existing £1,000 payment already provided for new 16-18 year-old apprentices, and those aged under 25 with an Education, Health and Care Plan – where that applies.

 

Employers across the UK are likely to be heartened by the Chancellor's £30bn plan for jobs, a considerable economic stimulus, aimed to protect existing jobs, and develop the skills and opportunities to get people back to work - and quickly. The scale of investment reflects the scale of the challenge and the need for speed to create a difference.

Hospitality sector

  • VAT - A temporary cut in the rate of VAT to 5% will be applied to the hospitality & tourism sector from 15 July 2020 to 12 January 2021. This rate will apply to: supplies of food and non-alcoholic drinks (from restaurants, pubs, bars, cafés and similar premises across the UK); accommodation; and attractions. Further details will be published by HMRC shortly. 
  • “Eat Out to Help Out” - An Eat Out to Help Out scheme will be introduced for August to encourage people to return to eating out. This will entitle every diner to a 50% discount of up to £10 per head on their meal, at any participating restaurant, café, pub or other eligible food service establishment. The discount can be used an unlimited number of times and will be valid Monday to Wednesday on any eat-in meal (including on non-alcoholic drinks) for the entire month of August 2020 across the UK. Participating establishments will be fully reimbursed for the 50% discount.

 

The Chancellor has recognised the unique role that leisure and hospitality industries play in Britain’s economy and the temporary reduction in VAT for hospitality and tourism businesses, and the August “Eat Out to Help Out” discount will be a welcome relief for a sector that was hardest hit during the lockdown and which employs almost 2.5 million people.

Property

  • Stamp duty land tax (SDLT) - the SDLT Nil Rate Band on residential property in England and Northern Ireland will be temporarily increased from £125,000 to £500,000. This will apply from 8 July 2020 until 31 March 2021. The further 3% rate for second (and additional) properties will continue to apply.
  • Green Homes Grant - A new Green Homes Grant is introduced, providing at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, up to £5,000 per household. For those on the lowest incomes, the scheme will fully fund energy efficiency measures of up to £10,000 per household.

Both the Chancellor’s stamp duty holiday and energy efficiency stimulus package could be the start of the scale and ambition required to transform our buildings, skills and our broader economy.

Contact us

Marissa Thomas

Marissa Thomas

Head of Tax, PwC United Kingdom

Jon Richardson

Jon Richardson

Partner, PwC United Kingdom

Tel: +44 (0)7764 132134

Follow us