To support the recovery of the UK economy from the effects of the COVID-19 pandemic, Chancellor, Rishi Sunak, has announced a series of measures to encourage employers to keep on staff and make new hires, and to boost spending. Our Tax and HR experts comment on the measures announced in the Chancellors Summer Statement.
Incentives for employers to keep staff on
“The Job Retention Bonus is a timely, tactical measure that will boost business confidence just as the furlough scheme begins to wind down. The £1,000 bonus payable to employers for every furloughed worker that they choose to keep on through into next year is a significant cash incentive, particularly for SMEs and businesses that have been forced to furlough a large proportion of their workforce.
“It’s a shame the Chancellor didn’t take further action to support employers in this area by cutting Employer National Insurance Contributions, which are often described as a ‘tax on jobs’.”
Incentives for employers to hire staff – traineeships / apprenticeships
“The new Kickstarter Scheme will encourage employers to create new, well-supported jobs for young people (aged 16-24) who are at risk of long-term unemployment. The Government will pay the wages of every new ‘Kickstarter’ appointed for the first six months. We expect this scheme to popular for businesses in all industry sectors, not just those worst-affected by the lockdown restrictions. The funding announced for new apprenticeships is also welcome.
“This funding (Kickstarter Scheme and apprenticeships) is an opportunity for all businesses, regardless of the impact of Covid-19, to improve their resilience by refreshing their talent pool for the future while contributing to increased employability across the economy.”
VAT and consumer spending
“This dramatic reduction of the VAT rate for food, accommodation and attractions, from 17% to 5% (until 12th January 2021) is unprecedented and will be massive cash boost to the businesses worst affected by the lockdown restrictions. Coming at the start of the summer, it will also help these businesses to optimise profits and take full advantage of the staycation market.”
Cash incentives for consumer spending
“Cash contributions are the best way to get cash into the economy quickly. Gifting consumers a generous discount when eating out in the month of August is designed to get the hospitality and leisure sector off to good re-start by ensuring there is plenty of supply-side demand.”
Incentives for business spending
Nothing to encourage businesses to bring forward investment in capital equipment or R&D, but that may come in the Autumn Budget.
Stamp duty land tax and the housing market
“The decision to raise the SDLT threshold to £500,000 for all buyers for six months is a welcome move, which will benefit the majority of homebuyers in the UK and help to reboot the housing market and encourage consumer spending. However, with first-time buyers already exempt up to £500,000 in London and £300,000 elsewhere, the only question is will this be enough?”
Menzies is a top 20 leading firm of accountants, finance and business advisors that operate out of a network of offices across Surrey, Hampshire and London, providing our clients with easy access and local knowledge. Described as the ‘best performing firm outside of the top 10’ by Accountancy Magazine, Menzies has over 400 employees and an annual turnover of more than £40m.
