Stamp Duty Cut, Jobs for the Young and More: The Summer Statement

The chancellor has announced a temporary cut to stamp duty charges in order to stimulate home buying.

In a statement delivered to MPs, Rishi Sunak also announced a £2 billion scheme to create thousands of job placements for young people, as well as a temporary cut to VAT for hospitality and tourism, and a bonus for businesses bringing back furloughed staff.

So how might the government’s plan to avoid economic disaster after the coronavirus pandemic affect you?

Stamp duty

The chancellor has announced that stamp duty will be cut on properties worth up to £500,000 until March 2021. The temporary holiday is being brought into effect immediately.

On average, this will result in a drop to stamp duty charges by £4,500.

Sunak explained that the house building industry supports around 750,000 jobs, but that transactions fell by 50% in May. The intention is to give property buyers and sellers the confidence to complete their home moves.

In response, auctioneers and estate agency Cheffins has said “cutting stamp duty on purchases up to £500,000 really will be the catalyst to get the industry flying”.

The firm added: “The most likely impact of this measure will be a flood of buyers coming into the market who previously had sat on their hands due to political and economic uncertainty, and this flurry of activity will bring with it price rises as demand outweighs supply.”

Homes will also be made more environmentally friendly, with the chancellor having previously announced vouchers of up to £5,000 for energy-saving improvements, such as insulation.

Kickstart jobs scheme

£2 billion is to go towards creating job placements for young people. It forms part of the chancellor’s plans to prevent mass redundancy and unemployment across the country after the effect COVID-19 has had on the economy.

The funds will subsidise six-month work placements for young people aged 16-24 claiming Universal Credit and are at risk of long-term unemployment. The government will cover the cost of 25 hours of work per week at the National Minimum Wage. Employers can top that amount up.

Sunak said the “kickstart” is designed to stop a generation being “left behind”.

Director general of the Confederation of British Industry Dame Carolyn Fairbairn said: “The chancellor’s jobs plan will be a much needed down payment in young people’s futures.

“By investing in skills, the government can lessen the potential scarring impact of the pandemic for the next generation. Business and government must now work to deliver the kickstarter scheme simply and at speed. There can be no time lost in preparing young people who are entering one of the toughest jobs markets we’ve seen in decades.”

Training and apprenticeships

The chancellor also announced that the number of work coaches in Job Centres will be doubled to give people the best chance of finding employment.

He added that the government is going to support apprenticeships, in an attempt to make them more attractive to businesses. Companies will receive a £2,000 payment for each apprentice they bring on board. Those firms taking on apprentices over the age of 25 will receive a £2,500 payment.

Businesses can apply between August 2020 and January 2021.

Furlough return bonuses

Businesses that bring workers back from furlough will be rewarded with a financial bonus. The chancellor told MPs that any employer that brings someone back from furlough and keeps them in their role until January will receive a £1,000 bonus.

In order to secure the bonus, businesses will have to pay at least £520 per month. Sunak explained that if everyone on furlough was to benefit from the scheme, it would cost £9 billion.

He also said that furlough cannot be extended forever as this would give people “false hope” that they would remain in their jobs.

The furlough scheme is set to retain jobs until October, gradually winding down and requiring employers to take on more of the financial responsibility for workers themselves until then.

VAT cut for hospitality

Those employed in the tourism and hospitality industries are set to be supported with a temporary cut of VAT. The tax on food, accommodation and tourist attraction businesses will go from 20% to 5% until January.

Sunak said that 80% of hospitality firms stopped trading in April when the nationwide lockdown was announced. He explained that reopening the industry is the best form of retaining and stimulating jobs.

He also announced a “eat out to help out scheme”, in which customers will receive a discount of up to £10 per head when they visit a restaurant from Monday to Wednesday in August. It is the first time such a measure will be attempted in the UK, he said.

Employment concerns

Not all of the chancellor’s announcements were welcomed. Labour’s shadow chancellor Annaliese Dodds said: “Today, Britain should have had a back to work budget, but instead we got this summer statement with many of the big decisions put off until later as the benches opposite know full well.”

With so much economic uncertainty facing the country, there remain questions over many people’s work lives.

If you are struggling with an employment issue that the chancellor’s statement has not addressed, our expert solicitors are ready to help. To find out how, just give us a call, request a call back at the top of your screen or make an enquiry here.