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    9 July 2020

    Summer Statement 2020

    Yesterday the chancellor announced his summer statement to kick start the UK economy. Key points within the summer statement include: A VAT cut for hospitality, a cut in stamp duty until 31 March 2021, an ‘eat out to help out’ scheme with discounts on eating out and a job retention bonus when bringing employees back from furlough.

    It is no surprise that coronavirus has had a detrimental effect to the economy, with significant losses to businesses and job prospects. We are optimistic that these schemes will give the economy the kickstart it needs and have reviewed the key points of the summer statement and what this will mean for our clients.

    Hospitality industry:

    To encourage consumers to support local restaurants and cafes and give the hospitality industry the additional boost it desperately needs, the Chancellor has introduced an ‘eat out to help out discount’ scheme throughout August.  In addition, VAT has been cut with immediate effect until January 2021 from 20% to 5%. This scheme will help the consumers who have been financially affected by the pandemic start to visit restaurants again and we are confident that this will give the hospitality sector the boost it needs as we continue to navigate a difficult period, particularly during the summer season which would ordinarily be their busiest time.

    UK property market:

    While many estate agents report an upturn in the property market, the market was initially hit hard in the early stages of lockdown. As the market reopened, we saw a surge in buying and selling enquiries. This is due to many having the ability to save money in lockdown due to lack of spending if they had not been financially affected. Others found themselves at home more in a house that no longer works for them and their family, particularly bearing in mind the prolonged period of remote working for many.

    Estate agents quickly adapted as the lockdown restrictions allowed them to reopen and many now report that the housing market is as strong as it has ever been. In order to encourage the housing chains to move again, the Chancellor has announced a stamp duty holiday until 31st March 2021, meaning that first time buyers will have their stamp duty increased from £125,000 to £500,000. Those buying homes for more than £5000,000 will still have to pay stamp duty but it will be lower as a result of these short-term changes.

    “After a short period of closure, it is great to see the residential property market open again. We have seen all areas of the property process adapt to social distancing well, with virtual house viewings and socially distanced conveyancing meetings. I am confident the changes announced to stamp duty in the summer statement will only further strengthen the housing market”, said Michael Fahy, Director and Head of Property.

    Furlough and Kickstart Scheme

    As the furlough scheme starts to be phased out from August with flexible working, the scheme will ultimately come to end in October this year. “Leaving the furlough scheme open forever gives people false hope that it will always be possible to return to the jobs they had before,” says the Chancellor. However, he has announced a job retention bonus which will pay businesses £1,000 to retain furloughed staff.  There will be terms that need to be met in order to claim the bonus and staff should not be brought back ‘for the sake of it – they need to be doing decent work’. Employers will need to continuously employ workers through to January 2021.

    A ‘kickstart’ scheme was also announced to financially support businesses recruiting those aged 16-24 who may otherwise struggle to find employment in the current climate. A £2,000 incentive is also available for businesses looking to recruit apprentices.

    “The Job Retention Scheme has been a lifeline for many as we continue to navigate our businesses though this unprecedented situation. Now is the time for businesses to look to the future and decide the shape of their workforce as we begin to bring our businesses back to work in line with social distance guidelines. The new bonuses and ‘kickstart scheme’ will give employers the confidence to bring employees back and look to grow their workforce as they start to rebuild their businesses” said Oliver Brabbins, Managing Director and Head of Employment Law.

    If the Chancellor’s summer statement has inspired you to get a foot on the property ladder and you would like to talk to us about conveyancing, or you would like to speak to our employment team about how the furlough scheme could work for you and your business, please call our team on 01603 598000 or email info@steeleslaw.co.uk and a member of the team will be pleased to contact you directly.

    *The information provided in this article is designed to provide useful information on the subject, not to provide specific legal advice.

     

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