Today the Chancellor Rishi Sunak, provided a ‘mini summer Budget’, designed to get the country back on track and recover from the worst effects of COVID-19.
The initial reaction to the Chancellor’s measures been mixed, some sectors have applauded the changes, but there has been a real lack of support for some badly affected sectors such as retail and aviation. Domestic Tourism has received a boost from some of the measures, but there are a lot of Travel Companies that feel that the Government needs to do more to assist an industry deeply affected by COVID-19.
We have put together a list of the changes announced — please peruse to see if any will impact you and/or your business.
Coronavirus Job Retention Bonus
Whilst confirming that the Coronavirus Job Retention Scheme will be flexible and gradually taper off through to October, Sunak also stated that the Scheme was not going to be extended. Instead, he provided an incentive for companies to bring back furloughed employees.
In these announced measures, any employer who brings back a furloughed member of staff through to January 2021 will receive a £1,000 bonus per employee.
For businesses to qualify for this bonus, the employee must be paid £520 on average each month from November 2020 to January 2021, which is in effect the lower earnings limit for National Insurance contributions.
This new incentive could cost the government £9 billion, as there are currently 9-million furloughed employees.
The Chancellor also announced the Kickstart Scheme for employers who create new jobs for any individuals aged 16 to 24 years old at risk of unemployment.
The Government will pay the wages of such young people for 6-months — plus an amount for overheads — which will give employers a grant of approximately £6,500 for each employee taken on.
Conditions: This funding is conditional on these being new jobs, paid at National Minimum Wage and for at least 25 hours a week.
The Government will pay employers involved £1,000 to recruit new trainees, with the aim of tripling the number of Level 2 and Level 3 courses, at a cost of £100 million.
Apprentice and Trainee Funding
In addition to the Kickstart Scheme, the Chancellor announced that over the next 6-months the Government will pay employers to create new apprenticeships, with a grant of £2,000 per apprentice hired. There will also be a new bonus payment of £1,500 for hiring those aged over 25 years old.
There is also £1 billion available to the Department for Work and Pensions to fund additional support to help those on Universal Credit get back into work.
As already announced, from September 2020 landlords and homeowners will be able to apply for vouchers to make homes more energy efficient and to create local jobs.
The Government will cover two-thirds of the cost up to £5,000 per household, and up to £10,000 for those on low incomes.
Stamp Duty Cut
The housing market has been hit hard during this pandemic, so the Chancellor has announced a boost in the form of a stamp duty cut.
The Chancellor has temporarily increased the threshold for payment from the current £125,000 to £500,000. This reduction will be available until 31 March 2021 and will take effect immediately.
Initial estimates suggest the average homebuyer will see their bill fall by around £4,500 and nine out of ten homebuyers will pay no duty at all.
VAT Cut for Hospitality Sector
Another sector severely affected by COVID-19 has been hospitality and tourism. The Chancellor said that it was important to “get pubs, restaurants, attractions and B&B’s bustling again”.
The Chancellor has announced two changes to legislation:
- There is a VAT cut from 15 July 2020 to 12 January 2021. The VAT rate in this sector will be reduced by 15% (20% to 5%). This VAT rate reduction will last for 6-months. We will see the VAT cut applied to food, accommodation, eat-in/hot takeaways, cinemas, zoos and theme parks.
- In a bid to get customers back into restaurants, pubs and cafes and to protect the jobs of workers in such establishments, for the month of August 2020, an “eat out to help out” discount will be rolled out. This discount will be 50% on meals in participating restaurants in August 2020. Furthermore, the half-price meals — from Monday to Wednesday — will see the discount extend to £19 per head for adults and children as he hopes to encourage people to eat out as the hospitality sector tries to recover.
White Hart Associates are specialist accountants for the travel industry.
Visit whitehartassociates.com or contact 0208 878 8383 for more information.