I can’t believe there is a TV channel dedicated to Christmas films over the summer. But maybe the season of goodwill has come early given Rishi Sunak’s summer economic update, as it’s very much give, give, give – with no take, take, take, as there were no implied tax increases.
Perhaps the most interesting news for advisers was the much-anticipated temporary increase to the Nil Rate Band of Residential SDLT (Stamp Duty) from £125,000 to £500,000 until 31 March 2021.
In England and Northern Ireland, it’s estimated that this change will mean that nearly 9 out of 10 people getting on or moving up the property ladder will pay no Stamp Duty at all. Such breaks in Stamp Duty have a proven track record of boosting the housing market, though it’s worth noting that first time buyers already pay nothing up to £300,000 and, according to the Halifax, the average house price they pay is just £231,455.
Also, on the tax front, a reduction in VAT was much anticipated. However, the reduction is targeted solely at tourism and hospitality-related activities, with the rate being cut from 20% to 5% from 15 July 2020 until 12 January 2021. It’s estimated this will save households around £160 per year on average and will help support more than 2.4 million staff at over 150,000 businesses.
It was hoped as part of the package to support jobs that there would be a reduction in Employers National Insurance but that’s not happening. Instead, a Job Retention Bonus will be introduced to help firms retain furloughed workers. UK Employers will receive a one-off bonus of £1,000 for each furloughed employee who is still employed as of 31 January 2021.
In addition, a new £2 billion Kickstart Scheme will be launched to create hundreds of thousands of new, fully subsidised jobs for young people across the country. Those aged 16-24, claiming Universal Credit and at risk of long-term unemployment will be eligible. Funding available for each six-month job placement will cover 100% of the National Minimum Wage for 25 hours a week with employers being able to top this up.
There will be a £1.6 billion investment in scaling up employment support schemes, training and apprenticeships in order to help people looking for a job. This will include £2,000 for each new apprentice a business hires under the age of 25, which will be in addition to the existing £1,000 payment the government already provides for new 16-18-year-old apprentices, and those aged under 25 with an Education, Health and Care Plan.
Bringing forward £8.8bn of new infrastructure work will also create jobs. This includes a £2bn Green Homes Grant scheme to pay for improvements such as loft, wall and floor insulation, and is open to homeowners and landlords in England.
A further £5.8bn will be spent on shovel-ready construction projects such as hospital, school and road upgrades and maintenance.
Finally, to incentivise people to return to eating out at restaurants and support part of the hospitality industry, the government is introducing the ‘Eat Out to Help Out’ discount scheme. It’ll provide a 50% reduction for sit-down meals in cafes, restaurants and pubs, up to £10 per head, across the UK from Monday to Wednesday every week throughout August 2020.
If the idea of cheap meal fills you with cheer, then enjoy it while it lasts. Rishi Sunak’s summer Santa act may be short-lived, for there’s the growing feeling that tax rises are just around the corner. Come the Budget later this year it’s unlikely to be Santa, but rather the Grinch who stands at the dispatch box!
Neil MacGillivray is head of technical support at James Hay