The Chancellor's Summer Statement
I think I should say that the statement is full of good news about the help that the government is providing to boost the economy. Where we can add some clarity I will deal with each measure in turn.
The Job Retention Bonus will pay £1,000 to an employer for furloughed employees retained until January 2021 and will be payable in February 2021 which I am sure will be very welcome. A measure that could cost £9.4 billion it is difficult to see that it will have any impact on the employers' decision making. Additionally, it comes with the caveat of “subject to certain eligibility conditions” that are not yet defined.
Eat Out to Help Out is a well-targeted measure that should benefit restaurants and consumers by giving a 50% discount up to £10 on meals Monday to Wednesday in August. Each establishment will need to register with the scheme and the customers will need to confirm the registration when booking.
The Temporary VAT cut to 5% for food, accommodation and attractions from 15/7/20 to 12/1/21 is welcome but will create administrative problems due to the short period between announcement and implementation. At the time of writing the details of how a mixed supply will be dealt with is not clear. There are additional complications with the tax point of a transaction. The current advice from the government can be found on this link here.
The temporary Stamp Duty Land Tax amendment to raise the Nil Rate band to £500,000 is a huge boost to the housing market. It is likely that this will shore up values of properties under this limit. However, the overall structure of Stamp Duty Land Tax is a clear hindrance to the operation of the housing market and is in need of significant reform. If this is not done before 31/3/2021 these changes may inadvertently lead to a crash rather than an adjustment. Additionally, the shoring up of prices will make it more difficult for first-time buyers to get on the housing ladder, particularly when combined with the very difficult market for mortgage lending. The government's guidance on temporary reduced rates of stamp duty, can be found here.
The chancellor also advised that he would set out a longer term plan for the country’s finances at this next budget in the autumn. Alongside the OBR forecast this will have to at least address the significant spending to support the Covid-19 measures and how the deficit can be dealt with. There are numerous tax raising plans being put out to the press to gauge reaction but these will need to be measured so as not to slow the economy further.
The above is merely a summary of some aspects of the statement so no action should be taken without seeking further advice.