Chancellor Rishi Sunak announced on Wednesday a ‘£30bn plan to prevent mass unemployment’ as the economy continues to suffer the impact of Covid-19.
We’ve summarised below the key takeaways (on which VAT has now been reduced) for startups and accountants.
The Chancellor announced the VAT rate on food, accommodation and attractions is to be cut from 20% to 5% for the next six months.
Sounds great for consumer’s pockets, but will it cause havoc for businesses and accountants?
Starting next Wednesday 15th July, the VAT reduction will apply to food from restaurants, cafes and pubs, accommodation in hotels, B&Bs, campsites, as well as attractions including cinemas, theme parks and zoos.
We don’t expect businesses to be forced to pass on these savings to customers, and could therefore use the opportunity to increase profit margins.
Key steps to take:
A reminder of the current Coronavirus Job Retention Scheme (CJRS) rules:
To encourage employers to return furloughed employees to work when the scheme comes to an end in October, there is now a “job retention bonus programme”; a one-off £1,000 payment to businesses for each employee reinstated to the workplace.
There is no cap on the total bonus value; the Government have confirmed £9bn is available if the UK brings back all 9m furloughed employees to the workplace.
To qualify for the Job Retention Bonus, furloughed employees must remain continuously employed to the end of January 2021, with payments being made from February.
Key steps to take:
The Chancellor announced a £2bn "kickstart scheme" to create more jobs for young people.
Under a new ‘Traineeships’ programme, employers will be paid £1,000 for every trainee offered a work experience placement. This applies to 16 to 24-year-olds, for periods from six weeks to six months.
Subsidies for Apprenticeships are also due to be enhanced, with a new payment of £2,000 per apprentice, as well as a new bonus of £1,500 for businesses to hire apprentices aged 25 and over.
As always, the devil is in the detail and we await further clarification on the rules and technicalities relating to the schemes outlined above.