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The Chancellors Summer Announcement - The Headlines
Chancellor Rishi Sunak has today made his long awaited summer announcement setting out his proposals to getting the economy back on its feet after the last few months of lockdown. Here is our summary of the main points:
Stamp Duty holiday
The threshold for stamp duty on residential property in England and Northern Ireland will rise from £125,000 to £500,000. Therefore property purchases under £500,000 will have no stamp duty to pay, whereas previously you may have been looking to pay 2% on the transaction. That rise will apply from 8 July until 31 March 2021.
Jonathan Throp, Partner in our Residential Conveyancing team believes this is encouraging news.
“We are already seeing an increase in activity in the market as the lockdown eases and the signs are encouraging. We anticipate that there may be a further slump when the true reality of the unemployment situation hits as the furlough schemes become less generous and then eventually stop. However, no doubt we will see a rush of activity as we head towards the end of March and I will go even greyer than I am now!”
Full details of the temporary rates can be found here - https://www.gov.uk/guidance/stamp-duty-land-tax-temporary-reduced-rates?utm_source=25ad05f8-92d2-4849-b49b-79e83ad9ae28&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate
Furlough Scheme bonus
From 1 August 2020 the furlough scheme will change and firms will be asked to contribute towards some of their employee’s costs gradually as we head towards October when the scheme will come to an end. The Chancellor is clearly very worried by the recent news of businesses up and down the country closing down or reducing their workforce. He has therefore has decided to offer a one-off payment of £1,000 to employers for every employee they bring back from furlough that remains with the company until the end of January 2021. Workers will have to be earning £520 per month to be eligible for the payment.
Claire Darby, Head of Dispute Resolution and Employment, comments that “although all firms will be grateful for the small cash injection, it does not appear that this one-off payment would be sufficient to sway an employer to keep a member of staff on if it was not economically viable for them to do so. While we appreciate that the Chancellor is trying to be creative and the furlough scheme cannot last in its current guise forever, it is difficult to see how this will make much of a difference”
Support for Young Workers
The Government will introduce a “kickstart scheme” to pay for 6 month work placements for 16-24 year olds on universal credit and £1,000 grant for those who take on trainees in the same age category. There will also be additional money for those who take on apprentices and a range of other support packages for those who find themselves out of work for more than 3 months. The range of ideas is aimed at supporting the younger generation who will have been hit hard by the impact of the pandemic on the leisure and hospitality industry.
6 month VAT cut for restaurants, hotels and attractions
The hospitality industry has been some of the worst affected by the pandemic as they were closed for 3 months. Even now with the economy starting to open up, eating in restaurants and staying in hotels is not as easy as it once was. The VAT cut will be a welcome break for those industries. The Government has also introduced the “Eat out to help out” scheme which offers a 50% discount for every diner, up to £10 per head, for anyone who wants to eat out on a Monday to Wednesday in August.
There will also be a VAT cut from 20% to 5% from 13 July 2020 to 12 January 2021 for selected areas.
If you would like to know more about how any of the above may affect you then please do get in touch with any of our team on 0208 949 9500 or email firstname.lastname@example.org and your enquiry will be sent to the relevant department.