Summer Economic Update: round-up
09 July 2020
Along with the flurry of measures highlighted by Rishi Sunak in relation to kickstarting the economy, and protecting and generating new jobs, the ‘Plan for Jobs 2020’ also revealed the further plans of the government to help the UK recover from the economic turmoil caused by the outbreak of coronavirus.
Some of the additional plans in place include:
- Reduced rate of VAT for hospitality, accommodation, and attractions – From 15 July to 12 January 2021, a reduced rate of 5% VAT will be applied to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafes and similar premises throughout the UK. This substantially lower rate will also be applied to supplies of accommodation and admission to attractions. HMRC will publish further guidance on this subject shortly
- Eat Out to Help Out – To support approximately 130,000 businesses and to help protect the jobs of their 1.8 million staff, the government will implement the Eat Out to Help Out scheme. The intention of the scheme is to encourage people to return to eating out, and will give ever diner a 50% discount of up to £10 per head on meals at any participating eligible food service establishment. Throughout the duration of August, from Monday to Wednesday, the discount can be applied to any eat-in meal and non-alcoholic drink. Those establishments who are participating will be reimbursed in full for the 50% discount
- Infrastructure package – At Budget 2020 in March, the government confirmed its plans to spend £640 billion on capital spending and public investment over a period of five years. Boris Johnson has more recently, in June, announced that the government will accelerate over £5 billion of infrastructure projects to assist the recovery of the economy and start to change UK infrastructure. The infrastructure and the Plan for Jobs mean that the government is accelerating £8.6 billion of capital spending. Many projects will begin earlier than previously planned
- Public sector and social housing decarbonisation – The government’s aim is to halve greenhouse gas emissions from the public sector by 2032. In order to achieve this and to support economic recovery, the government is investing £1 billion over the next year in a Public Sector Decarbonisation Scheme. The scheme will provide grants to public sector bodies, including both schools and hospitals, which will be used to fund energy efficiency and low carbon heat upgrades
- Green Homes Grant - A Green Homes Grant will be introduced by the government, which will provide at least £2 for every £1 homeowners and landlords spend on making their homes more energy efficient. There will be a limit of £5,000 per household. For those on lower incomes, the scheme will fully fund emergency measures of up to £10,000 per household. This could potentially support more than 100,000 green jobs and strengthen a supply chain vital for meeting net zero greenhouse gas emissions by 2050
- Stamp Duty Land Tax temporary cut - The Nil Rate Band of Residential Stamp Duty Land Tax (SDLT) will temporarily be increased from £125,000 to £500,000 in England and Northern Ireland. The dates will be from 8 July 2020 up until 31 March 2021, and will cut the tax for everyone who have paid SDLT. It means that nine out of ten individuals getting onto or moving up the property ladder will not paid SDLT at all
For an update on the government measures focused solely on protecting and creating jobs, please see the CIPP’s news article here.
The CIPP welcomes the announcements in relation to how the government intends to restart the economy and to protect and create new jobs. There will be plenty to keep payroll professionals busy, but they have already shown how adaptable and flexible they are in their approach to operating the Coronavirus Job Retention Scheme (CJRS) whilst still performing business as usual tasks.
We await the Autumn Budget, which does not currently have a fixed date, for further discussion of policies that will impact on the way in which payroll is processed, and people are paid.
The information in this article is accurate at the time of publication. For all the latest information, news and resources on how the COVID-19 pandemic is affecting payroll professions, visit our Coronavirus hub.