RISHI'S SUMMER STATEMENT
Friday 10th July 2020
You may have seen earlier this week that Chancellor Rishi Sunak gave a 'Summer Statement' which many are regarding as a mini-Budget, and we thought you may find this summary of the key points helpful.
• In the first two months of the FY 2020/21, UK government borrowing has exceeded £100bn and according to most estimates is heading towards £300bn by the end of the FY 2020/21.
• The March 2020 budget was forecasting borrowing of £55bn for the FY 2020/21.
• Total Government Debt is now more than 100% of GDP. As the ONS commented public sector debt is "just under £2.0 trillion"!
• UK economy contracted by 2.2% in the first quarter of 2020
• Bank of England forecasts unemployment at 10%. OECD have commented that unemployment could spike at 15% IF we seek a second wave of Covid-19 infections.
Job Retention Scheme
• The Coronavirus Job Retention Scheme (CJRS) will NOT be extended beyond October.
• However, the Chancellor will introduce a "Job Retention Bonus"
• This scheme will pay £1,000 for every furloughed employee who remains continuously employed from the closure of the CJRS until the end of January 2021
• Employees must earn on average more than the Lower Earnings Limit (£520 per month) in that period. The payments will be made to employers in February 2021.
• More details will be published at the end of July.
• A new scheme that covers England, Wales and Scotland but NOT Northern Ireland.
• The aim is to create "hundreds of thousands" of 6 month placements for individuals aged between 16-24 and deemed to be at risk of long-term unemployment.
• The Government will provide the necessary funding for each job up to the level of 100% of the "relevant minimum wage" for 25 hours per week plus the associated Employer NI costs and minimum pension automatic enrolment contributions.
• For a 21-24 year old whose minimum hourly rate is £8.20 per hour. This equates to a payment of circa £6,500.
• Employers will also receive a payment of £1,000 for each 16-24 year old to whom they offer and provide work experience.
• Government will also invest in better provision for traineeships
Temporary VAT cut for food, non-alcoholic drinks, accommodation and attractions
A 5% rate of VAT will apply to supplies of:
• Food and non-alcoholic drinks from UK restaurants, pubs, and
• Accommodation and admission to attractions operate from across the UK.
• The temporary rate will be in force from the 15th July 2020 until the 12th January 2021.
Further details to be published by HMRC in due course.
Temporary Stamp Duty Land Tax Cut
• The nil rate band threshold for residential SDLT will increase from £125,000 to £500,000 with immediate effect until 31 March 2021.
• That offers a maximum saving of £15,000. For second homes, the 3% additional rate will continue to apply.
• The devolved administrations in Scotland and Wales set their own rates of tax on Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT) respectively. When there have been SDLT rate changes previously, the administrations have tweaked their bands, although not necessarily in line with Westminster's numbers. As at the 9th July, neither administration has announced any change but this may alter in the days ahead.
Green Homes Grant
• A £2 billion Green Homes Grant is to be introduced. This will provide at least £2 for every £1 spent up to £5,000 per household to homeowners and landlords making their properties more energy efficient.
• For those on the lowest incomes, the scheme will fully fund energy efficiency measures of up to £10,000 per household.
Sources: Technical Connection and CommissioningHR
Full details of the Summer Statement can be found at the Government website
In terms of the future we are expecting far more detailed tax and spending plans to be put before Parliament in the Autumn Budget.