Summer Economic Update - a couple of key points
Another raft of incentives and give-aways to support the economy at a critical juncture as we emerge from lock-down and anticipate the ending of the job retention scheme.
Measures include - Job retention bonus, VAT reduction for hospitality, stamp duty holiday and support for young people to find work. I will focus on just two of these.
Job retention bonus
The bonus of £1,000 will be claimable in February for any employee who has been furloughed at any time during the period, and who is still employed at the end of January 2021, provided:
- they have been employed continuously throughout the period
- employee must earn at least £520 per month
A company director who has furloughed themselves can claim. It also doesn't matter if an employee has been taken off furlough in the meantime.
So, an employer who is approaching the point at which furloughed employees will start to cost them money and may be considering making redundancies will need to make a decision - is the bonus worth keeping people employed? Are there circumstances in which their employment could be varied in order to keep them employed?
VAT reduction and 'Eat out to Help Out'
The VAT reduction from 20% to 5% for any eat-in or hot take-away food and drinks from restaurants, cafes and pubs will run to 12 January 2021. Hotels, B&Bs, cinemas and attractions are also covered by the reduction. Alcohol is excluded.
This is allied to the Eat out to Help Out scheme which will run for the month of August providing 50% off food and drinks (excluding alcohol) on Monday to Wednesday, up to a limit of £10 per person.Eating establishments will need to register to participate in this scheme.
These measures will certainly be welcomed by the hospitality industry. To what extent they will pass the VAT savings on to the customer rather than bolstering their margins is anyone's guess. The Eat Out to Help Out scheme is certainly original and cannot help creating a bit of a buzz as many of us take advantage of the £10 per head discount on offer.
This is all good news. The Chancellor is breaking new ground in coming up with innovative measures to support the economy. Listening to him on the radio this morning it is also clear that he does have good data to assist in making these all-important decisions.
If you have any questions regarding how this will work in your case, please feel free to contact us.