What the chancellor’s summer statement will mean for you and your family

Rishi Sunak has announced today the economic schemes for post-coronavirus, and they include some pretty big changes.

Mr Sunak announced a £2bn kickstart scheme designed to create jobs, incentives for businesses to bring people off furlough, VAT cuts, a stamp duty holiday plus more.

Details of how this package will be paid for – by tax increases and borrowing – are expected to be unveiled in the chancellor’s Autumn budget.

Here’s a breakdown of his main points:

Furlough

Members of the public who have been placed on furlough as part of the government’s Job Retention Scheme are aware that this is coming to end in October, but many people have been concerned for the future of their jobs.

Mr Sunak today announced an incentive for businesses to bring back those employees that are on furlough, with a £1,000 bonus for every person they bring back into the workplace.

He said: “So for businesses to get the bonus, the employee must be paid at least £520 on average, in each month from November to the end of January – the equivalent of the lower earnings limit in National Insurance.”

Employment

The chancellor has also announced a £2 billion kickstart scheme that will pay employers to create jobs for people aged between 18 and 24. The government emphasised that they need to be ‘good jobs’, and the government will pay six months of wages plus an amount to cover overheads. The grant for a 24-year-old will be around £6,500. 

There will also be a new £2,000 payment to firms who take on apprentices. This is alongside an unspecified amount of funding for career advisors.

On top of that, there’ll be traineeships to get young people ready for work, including work experience placements and work preparation for 16-24-year olds. 

Tourism & Hospitality

The chancellor has cut VAT for the tourism and hospitality sectors on food, accommodation and attractions from the usual 20% to 5%, which will come into effect from next Wednesday and last until January 2021.

Mr Sunak has also announced that everyone in the country will be given 50% off meal and drinks for the whole of August through a ‘Eat Out to Help Out’ scheme.

This scheme sees a 50% reduction up to a value of £10 per head on sit down meals and non-alcoholic drinks Monday to Wednesday.

The chancellor hopes this will get 1.8 million people who work in the hospitality industry back in jobs and ‘customers back in restaurants, cafes and pubs’.

Businesses can claim the money back from the government and the funds will appear in their bank account within five working days.

More details on the Eat Out to Help Out scheme are yet to be confirmed.

It is currently being debated as to whether the reduced VAT will be passed onto the consumer in lower prices as many in the sector will consider this as an opportunity to shore up their finances and ail their business.

Buying a Home

If you’re in the market for house-buying, the chancellor announced a stamp duty holiday which could save you thousands.

The rate at which stamp duty will be placed on a home has been increased from the usual £125,000 to £500,000 in England and Northern Ireland, with immediate effect until March 31st.

The stamp duty holiday hopes to get people buying houses again, a sector which suffered a big drought throughout coronavirus.

The chancellor explained that on average people buying a home could save £4,500, and current homeowners moving on could see savings as big as £14,999.

Many people have expressed concerns regarding how this will help first-time buyers. Around 16% of housing sales in England are not liable for stamp duty as is the case with first-time buyers.

Currently, first-time buyers only pay a 5% stamp duty on houses between £300,000 and £500,000 which means this scheme will not affect new buyers directly.

Those buying a new home or second home will reap the benefits of this scheme.

Green Home Grant

Mr Sunak has announced a budget for home improvements that will help your home become ‘greener’, for instance, double glazing, eco-friendly boilers, low-energy lighting, energy-efficient doors and loft, floor or wall insulation.

The scheme will start in September and will see the government pay for at least two-thirds of the cost of home improvements that save energy, up to a value of £5,000.

Low-income households are expected to receive a larger contribution of up to £10,000.

This is expected to create new jobs and enable the UK to achieve its 2050 goal of net-zero carbon emissions. More information can be found here.