Today – 8 July 2020 – saw a Mini Budget to report some updated Government spending and taxation decisions as part of the Coronavirus response.
Main New Announcements
Here are the main new points:
- Job Retention Bonus – £1,000 paid to employers who keep a formerly furloughed member of staff on past the end of January 2021. Conditions:
- Must be paid more than £520/m in three months to end of January 2021
- Must have been subject to a claim under the Coronavirus Job Retention Scheme (now closed)
- Payments made in February 2021
- Further details to be made available by end of July 2020
- Payment is to employer, no obligation or expectation to pass it on.
- Six month VAT reduction for hospitality sector – from 20% to 5% From 15 July 2020 to 12 January 2021:
- Applies to (i) food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises (ii) supplies of accommodation and admission to attractions
- The main restriction seems to be it doesn’t apply to alcoholic drinks
- Not clear if takeaways included or not for the food / drink aspect
- For hotels presumably food and drink is included alongside accommodation
- More detailed guidance to follow “in the coming days”
- “Eat Out to Help Out” – encouraging people to eat out:
- August 2020 only, Mondays to Wednesdays, unlimited use
- 50% discount per head up to maximum £10
- Applies to eat in meals and non alcoholic drinks from restaurants, pubs, bars, cafés and similar premises
- Business will give the discount and claim back from Government weekly.
- “Further guidance on the scope of this relief will be published by HMRC in the coming days”
- Stamp Duty Cut:
- Temporary increase the Nil Rate Band of Residential SDLT from £125,000 to £500,000.
- 8 July 2020 until 31 March 2021
- England and NI only
- Green Homes Grant
- Up to £5,000 per household for projects to make homes more energy efficient in England
- “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.”
- Support for young workers:
- £1,000 grant for providing work experience to trainees 16-24 year old
- £2,000 grant for employers per apprentice under 25 hired, £1,500 for those over 25, for six months starting 1 August
- “Kickstart scheme” – 6 month work placements for 16-24 year olds on Universal Credit – funds employers for 25 hours /w week at minimum wage
- Assorted expansion of Careers Service, skills funding, job funding support.
- In all these section of the announcement has a lot of content. but needs more detail
There are a lot of other spending announcements, but many rehashed from earlier announcements – such is the pace that things are moving at. We haven’t commented on these as they are either for specific sectors or are more general spending initiatives, eg “Safeguarding high streets” – many lack detail at present.
The economic context is set out briefly, eg
- Retail sales were 23% lower in April than in February
- Spending on restaurants, travel and entertainment fallen 80%
- May ATM transactions were 52% lower than a year earlier
- ONS estimates that GDP in April was around 25% reduced to previous months
And what was missing – well:
- No announcements on extending business support grants more generally – those hoping for further grants are left disappointed
- Nothing for those “left behind”, eg newly self employed, businesses with low profits due to re-investment, small limited companies, limit ed company contractors