close
Share with your friends

The Chancellor’s Summer Statement – key announcements

The Chancellor’s Summer Statement

The Summer Statement focused on protecting and creating jobs and boosting the economy, temporarily cutting VAT and Stamp Duty Land Tax.

1000
Melissa Geiger

Partner, Head of International Tax and Tax Policy

KPMG in the UK

Contact

Also on home.kpmg

In his Summer Statement on 8 July 2020 the Chancellor outlined up to £30 billion of investment, focussing on jobs and offering some small steps towards addressing intergenerational fairness. From a tax perspective the key announcements were temporary cuts to Stamp Duty Land Tax (SDLT) for residential properties and VAT for the hospitality and tourism sectors. HMRC will also be administering a ‘Job Retention Bonus’ for employers for employees brought back from furlough and an innovative ‘Eat Out to Help Out’ scheme to encourage people to visit restaurants and other eating establishments during August. The Chancellor confirmed there will be a Spending Review and Budget in the autumn which is where we expect to see longer term tax policy announcements.

Key Tax / HMRC related announcements

We have included separate articles in this edition of Tax Matters Digest on:

Other announcements

The Chancellor’s announcement focused on three areas –supporting, creating and protecting jobs.

Supporting jobs

Support for jobs focused on a raft of measures to help the unemployed and particularly young people seeking work including additional funding for job centres and training.

Most notably for employers, under the new ‘Kickstart Scheme’ the Government will fund six month work placements for those aged 16-24 who are on Universal Credit and deemed at risk of long-term unemployment. Funding available for each job will cover 100 percent of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions.

It was also announced that employers in England will receive a payment for hiring new apprentices from 1 August 2020 to 31 January 2021. The payment will be £2,000 for apprentices aged 16-24 and £1,500 for those over 25. The Chancellor also announced a scheme to provide new traineeships aimed at 16-24 year olds with £1,000 per trainee given to participating employers.

Creating jobs

The measures announced to create new jobs focused on housing (the SDLT cut was included in this category) and infrastructure with the ‘green agenda’ much in evidence. The Government confirmed it will provide ‘green homes grants’ totalling £2 billion of at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, up to £5,000 per household. For those on the lowest incomes, the scheme will fully fund energy efficiency measures of up to £10,000 per household. A further £1 billion will be spent on improving the energy efficiency of public sector buildings and previously announced capital spending on infrastructure projects will be brought forward to 2020-21 and 2021-22.

There was no mention of the most crucial infrastructure used during the lockdown – the internet. Accelerating the build-up of fast broadband and 5G is arguably a vital component of the future growth of the economy.

Protecting jobs

The focus here was on helping the hospitality and leisure sector get back on its feet and this is where the substantial temporary VAT cut and Eat Out to Help Out scheme were mentioned.

What next?

Going forward, we expect there to be a balancing act between investment in the economy and managing national debt and there will almost certainly be tax raising measures in the Autumn Budget later this year to help pay for the raft of support measures announced to date. Overall, given the Government’s focus on jobs, we may see limited tax raising measures on business leaving the tax revenue raising measures in the autumn being focused on individuals. Businesses in the retail, leisure and hospitality sectors will also be keen to understand what the Government’s longer term policy on business rates will be as the Conservative Party election manifesto included a commitment to review business rates and the 100 percent rates relief under the Expanded Retail Discount scheme is due to expire in March 2021.

Full details of the Government’s announcement can be found in its ‘Plan for Jobs’ which was published immediately following the Chancellor’s statement. We expect further guidance from the Government on the measures to be released in the coming days.

For further information please contact:

© 2020 KPMG LLP a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal