The Chancellor Announces his 2020 Mini-Budget

Rishi Sunak today announced his plans to kick start the UK economy as the country gradually eases out of lockdown.

The Chancellor’s plan has pledged to protect, support and create jobs through a new package of measures.  The key announcements were as following:

Boost for the hospitality sector

Mr Sunak wants to get pubs and restaurants “bustling again”.  To achieve this he has announced:

• A VAT cut for the hospitality sector from 20% to 5% on food, non-alcoholic drinks, accommodation and attractions from 15 July 2020 to 12 January 2021

• An “Eat Out to Help Out Scheme”. The Government will fund 50% of meals and soft drinks consumed at any participating business Monday to Wednesday during August 2020, up to £10 per head.  The business will need to register for the scheme with the funds being paid into their bank account within five working days of making each claim.

Coronavirus Job Retention Scheme Bonus

As the Government wants to protect jobs, Mr Sunak also announced: –

• Businesses that have used the Coronavirus Job Retention Scheme will be eligible for a bonus of £1,000 for every furloughed worker brought back and employed until the end of January 2021.  To qualify for the £1,000 bonus workers must be continuously employed in November 2020, December 2020 and January 2021 and earn an average of more than £520 per month during this period.  Businesses will be able to claim the bonus from February 2021.

• A new £2bn Kickstart Scheme as part of the Government’s “Plan for Jobs”.  The Government will subsidise jobs for unemployed young people and employers will be able to offer a six-month placement for people aged between 16 to 24. The Government will cover 100% of the National Minimum Wage for each young employee for up to 25 hours a week plus associated overheads with firms able to top up the worker’s pay if they wish.

MEASURES THAT DO NOT APPLY IN SCOTLAND 

1. Further assistance to protect jobs (does not apply in Scotland)

For the next six months, the Government will pay businesses:

• up to £2,000 for every new apprentice under the age of 25
• £1,500 for every new apprentice hired aged 25 or over
• £1,000 for every trainee taken on by businesses running trainee schemes. This grant will be capped at 10 jobs per firm.

2. Stamp Duty Land Tax reduction (does not apply in Scotland)

In England and Northern Ireland homebuyers will be temporarily exempt from paying the tax for the first £500,000 of any property price.  The increase in the threshold from £125,000 to £500,000 is effective immediately until 31 March 2021.

This is a devolved tax and it therefore remains to be seen if the devolved administrations in Scotland and Wales will follow suit.

3. Green initiatives (does not apply in Scotland)

The Chancellor also announced a £3bn package of green investment to help create thousands of jobs. Some £1bn has been set aside to help make public sector buildings greener.

Homeowners will be able to benefit from £2bn of grants to pay for upgrades to make their houses more energy efficient. The Government will provide at least £2 for every £1 homeowners spend on making their properties more energy efficient.

Vouchers worth up to £5,000 will be issued while poorer households could get up to £10,000 to make the upgrades.  Homeowners will be able to spend the voucher on the likes of loft and floor insulation, heat pumps, eco-friendly boilers etc.

Up to £40m will be provided for a Green Jobs Challenge Fund with an objective of creating 5,000 jobs at environmental charities and public authorities. £100m of new funding has been set aside for direct air capture, which is a technology that takes carbon dioxide out of the air.  Finally, an extra £10m will be available                for new electric car development projects.

The UK aims to be carbon neutral by 2050 and these measures could have both short and long term benefits.

We understand that the Scottish Government are apparently to receive additional funding of £800m to spend as they see fit in Scotland.

As ever the devil will be in the detail and we will provide more information on all the above as soon as it becomes available and of course any relevant announcements made by the Scottish Government.

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm

Photo by Shirota Yuri on Unsplash