Having only assumed the role in February 2020, Chancellor Rishi Sunak has had the unprecedented job of dealing with the UK fiscal policy during a global pandemic. Yesterday he announced a host of measures to help employers retain staff and to encourage us to spend. Here are five of the key points to take away from what’s being called the Chancellor’s ‘mini-Budget’.
Reduction in stamp duty on the first £500,000
Typically stamp duty was paid on properties over the threshold of £125,000. This has now been increased with the threshold moving up to £500,000, with the idea being that a significant saving in the cost of purchasing a new home may help to boost house sales. This could potentially save buyers thousands of pounds. The change comes into effect immediately and is due to last until 31 March 2021*.
*Different rules apply in Scotland and Wales.
Reduction in VAT rates in the hospitality sector
In a bid to encourage spending, VAT rates are being reduced across certain areas in the tourism and hospitality sector. From 15 July 2020 to 12 January 2021, VAT will be reduced from 20% to 5% to motivate people to spend and holiday in the UK.
This isn’t the first time a reduction in VAT has been used to encourage spending, with the last cut during the 2008 financial crisis.
Cheaper Early-Week eating out
With the vast majority of restaurants having been closed during the Covid lockdown, the Chancellor has announced that he will be footing the bill for 50% of the cost of diners’ meals up to a maximum of £10 off per head. This will be available to participating and eligible eateries Monday to Wednesday during August 2020.
£2 billion “Green homes Grant”
From September owner-occupied homes and landlords will be able to apply for part of the £2 billion made available to make homes more energy efficient. This will be issued with vouchers of up to £5,000. However low-income households will be able to apply for up to £10,000.
Employers to receive bonuses to keep staff
With many people being helped by the furlough scheme during the coronavirus lockdown and worried about their jobs at the end of the scheme, a new announcement was made today. Employers who bring back furloughed staff and continuously employ them through to January 2021 will be paid £1,000 bonus per employee, as long as the employee is paid at least £520 on average a month. Qualifying employers will also be paid £1,000 to take on trainees and up to £2,000 to hire young apprentices.
Do get it touch if you’d like to discuss any of the points in more detail.