Yesterday the Chancellor made a statement to the House of Commons and unveiled his ‘Plan for Jobs’, as the second phase of the Government’s response to the COVID-19 pandemic. He announced a number of measures designed to support, protect and create jobs, with a particular focus on the hospitality and accommodation sectors and in a bid to get the property market moving.
The most high profile announcement was the confirmation that the Coronavirus Job Retention Scheme (i.e. the ‘furlough’ scheme) will cease at the end of October. Instead, and in a bid to encourage employers to retain employees, a Job Retention Bonus will be paid to employers, being a payment of £1,000 for every furloughed employee who remains continuously employed to the end of January 2021. It remains to be confirmed whether this bonus will be paid in respect of employees who had been ‘furloughed’ at any time since the beginning of the scheme in March, or will be restricted to employees who are only brought back to work after a certain date. Further detail about how the scheme will operate will be published by the end of July. Additional announcements included a wide range of new policies to fund various training, apprenticeship and job support schemes over the coming months.
To boost the hospitality and tourist industries, one of the more eye-catching announcements was the ‘Eat Out to Help Out’ scheme, which will apply for the month of August across the UK. Under the scheme, participating restaurants, cafes, pubs and other food service establishments can offer a 50% discount to every diner, of up to £10 per head, on any eat-in meal, with such discount being reimbursed by the government. The scheme only applies from a Monday to Wednesday each week.
From a tax perspective, the only changes were in the areas of VAT and Stamp Duty Land Tax (“SDLT”).
VAT has been reduced from 20% to 5% for the period from 15 July 2020 to 12 January 2021 in respect of the following:
- supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafes and similar premises across the UK (in order to support businesses and jobs in the hospitality sector), and
- supplies of accommodation and admission to attractions across the UK (in order to support the tourist industry).
Regarding SDLT, it was announced that the Nil Rate Band of Residential SDLT in England and Northern Ireland would increase from £125,000 to £500,000 for the period from 8 July 2020 to 31 March 2021. This temporary reduction is designed to support the housing market, and it is estimated that this will mean that nearly nine out of ten people getting on or moving up the property ladder will pay no SDLT at all. It is to be confirmed whether this applies to all residential property transactions, or only those for a person’s ‘main’ residence.
The Chancellor stated that he would “never accept unemployment as an inevitable outcome” of the pandemic. It is to be fervently hoped that all of the measures announced yesterday will yield a positive impact for employers and employees as the economy begins to recover from the effects of the pandemic.