It’s safe to say Chancellor Rishi Sunak did not expect to be delivering the first official fiscal statement less than four months after his maiden Budget speech back in March, but here we are.
The economic impact of COVID-19 has resulted in the UK’s debt-to-GDP ratio breaking the 100% mark for the first time since 1963, while the economy shrank by a monthly record of 20.4% in April.
While Sunak’s latest announcement was more of a fiscal plan than an emergency summer budget as some were predicting, and ran for around only 30 minutes, there was more to it in terms of tax than we have seen in many recent spring and autumn statements.
The headline measures announced continue the theme of recent months and are focused on a “plan for jobs” – a phrase the Chancellor repeated no less than 11 times.
That includes grants for employers who continue to employ staff brought back from furlough, for those who create new jobs for young jobseekers aged 16-24 and for those who take on apprentices.
There were also measures designed to stimulate the housing market. First, a green homes grant will provide a minimum of £2 for every £1 property owners, including landlords, spend on making residential properties more energy efficient, up to £5,000 per household. Lower income households will be able to claim up to £10,000 under the same scheme, fully funded. Secondly, a stamp duty land tax holiday, raising the tax-free threshold to £500,000.
On VAT, a targeted cut was announced for food, non-alcoholic drinks, accommodation and attractions, temporarily reducing the rate to 5%. Not quite the across-the-board cut some had hoped for, but welcomed by the especially hard-hit hospitality and tourism sectors.
Finally, with much flourish, Sunak announced that the Government will underwrite dining-out discounts in August, with up to 50% off bills from Monday to Wednesday, up to £10 per head. This measure is perhaps less exciting than the Chancellor seemed to think and certainly fell short of the £500 high street vouchers for which some had been lobbying. But every little helps.
There were no economic forecasts from the Office for Budget Responsibility or major long-term tax decisions. Those are on hold until what looks like a huge Autumn Budget and subsequent spending review later in the year.
In this special report, we offer informed analysis of Sunak’s speech to suggest how the next six months might pan out.
To read the full report and learn whats ahead for businesses, click on the link below.