The Chancellor Rishi Sunak has unveiled his plan to spur the UK’s recovery from the coronavirus pandemic. Here, Andrew Diver, head of tax at Beatons, examines how the new measures will help both businesses and individuals get back on their feet.
The Plan for Jobs is the second part of a three-phase plan and aims to give businesses the confidence to retain and hire staff as well as provide people with the tools they need to get better jobs.
It is designed to:
- Support jobs by focussing on skills and young people
- Creating jobs with investment in shovel-ready projects
- Greening the UK’s infrastructure
- Protecting jobs through a VAT cut for the hospitality sector
Also, not forgetting a landmark Eat Out to Help Out discount scheme for diners.
Job Retention Bonus
Firms who were forced to furlough workers under the Coronavirus Job Retention Scheme during the pandemic can now benefit from a Job Retention Bonus.
This will see employers receive a one-off bonus of £1,000 for each furloughed worker who is still employed as of January 31, 2021. To be eligible for the bonus, the employee must be paid at least £520 on average – the equivalent of the lower earnings limit in National Insurance – in each month from November until the end of January.
Supporting jobs
A new £2billion Kickstart Scheme will create hundreds of fully subsidised jobs for those aged 16-24 currently claiming Universal Credit and at risk of long-term unemployment.
Each six-month job placement will be government funded up to 25 hours a week at the National Minimum Wage.
A huge investment will also be made in scaling up employment support schemes, training, and apprenticeships.
- Businesses will be given £2,000 for each apprentice they take on under the age of 25
- The number of job centre work coaches will be doubled,
- Sector-based work academy placements will be tripled
- A £111m investment will help triple the scale of traineeships.
Creating jobs
Work on new £8.8bn infrastructure, decarbonisation and maintenance projects will be brought forward to create thousands of jobs. This includes a green investment package that could support around 140,000 green jobs to upgrade buildings and reduce emissions.
Homeowners and landlords in England will be able to apply for vouchers from a Green Homes Grant scheme to pay for green improvements such as insulation which could save households hundreds of pounds a year on energy bills.
VAT cut
The hospitality and tourism sector has undoubtedly been one of the sectors hardest hit throughout the pandemic. Around 80% of hospitality firms stopped trading in April with 1.4million workers placed on furlough.
To help the industry recover, the Chancellor announced two specific measures:
- The first is a VAT reduction on tourism and hospitality-related activities from 20% to 5%. This will be applicable from July 15, 2020, to January 12, 2021, for eat-in food and non-alcoholic drinks from restaurants, cafes and pubs, hot takeaway food from similar establishments, accommodation in hotels, B&Bs, campsites and caravan sites as well as attractions such as cinemas, theme parks and zoos.
- The second announcement was an Eat Out to Help Out discount which will help protect 1.8million jobs. Diners who have meals (including non-alcoholic drinks) at any business participating in the scheme will have a 50% reduction – up to £10 per head – from Monday to Wednesday every week throughout August.
Businesses will need to register and can do so online on July 13 (website to be confirmed).
Stamp duty
In a move to stimulate the property market, a temporary stamp duty holiday has been announced. This would exempt the first £500,000 of all house sales from the tax from July 8, 2020, to March 31, 2021.
It is a move that will mean nine out of 10 people on the property ladder will pay no stamp duty at all.
The PM and Chancellor have said this ‘recovery’ phase of the plan has a clear goal: to protect, support and create jobs.
The third stage will focus on ‘rebuilding’, with a full budget to take place in the autumn.