The chancellor, Rishi Sunak, announced his summer statement, with a number of attention grabbing pledges to protect furloughed jobs, to reduce VAT for the hospitality sector and to reduce Stamp Duty Land Tax for home buyers.
A cut in VAT had been widely anticipated, however it was eventually restricted to the hospitality, tourism and accommodation sectors (including pubs, restaurants, cafes, hotels, zoos and cinemas). The VAT rate of 20% will be temporarily reduced to 5% until 12 January next year. It remains to be seen however whether businesses pass on those savings to consumers. It is also worth noting that the reduction does not apply to sales of alcohol.
An immediate Stamp Duty Land Tax holiday for buyers of homes was announced, dramatically increasing the 0% band up to £500,000, and will apply in England and Northern Ireland until 31 March next year. The measure is designed to kick start the housing market and, as a result, protect jobs in the construction sector.
One of the key balancing acts relates to the furlough “job retention” scheme coming to end, albeit in a flexible manner, over the next few months. It was announced that businesses will be paid a one-off bonus of £1,000 per employee if they are brought back from furlough and employed until at least the end of January. If every furloughed employee was brought back for that period the total bonus payable would be as much as £9.4bn.
