What the government’s Summer Economic Update means for small business clients

Summer Economic Update

Earlier today, the Chancellor revealed the next stage of the government’s plans for economic recovery following the unprecedented turbulence brought about by the coronavirus crisis. Here’s what the government’s ‘Plan for Jobs’, which was announced in today’s Summer Economic Update, means for small business clients.

Job Retention Bonus

Reiterating that the Coronavirus Job Retention Scheme for furloughed workers will end on 31st October, as planned, the Chancellor announced a new bonus scheme for employers who successfully bring furloughed employees back to work.

As long as certain conditions are met, these employers will be eligible for a ‘Job Retention Bonus’ of £1,000 per returning employee. To qualify for the bonus, employers must bring employees back in roles that will pay a minimum salary of £520 per month between November 2020 and January 2021.

Limited company directors who are employees of their own company and who had placed themselves on furlough through the Coronavirus Job Retention Scheme will qualify for this bonus as long as their return to work meets the qualifying conditions.

More information on the Job Retention Bonus is expected from the government by the end of this month.

Kickstart Scheme

The Kickstart Scheme is designed to help young people with entering or returning to employment following the coronavirus crisis. The scheme provides employers with an incentive to create six-month work placements for people aged 16-24 who are receiving Universal Credit and are deemed to be at risk of long-term unemployment.

Under the scheme, employers will be eligible to receive funding that covers 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance and minimum pension contributions, for each qualifying work placement.

Eat Out to Help Out

The ‘Eat Out to Help Out’ initiative will entitle diners in participating “food service establishments”, such as restaurants, pubs and cafes, to a government-funded 50% discount of up to £10 per person on meals and non-alcoholic drinks purchased on Mondays, Tuesdays and Wednesdays throughout August. The government will reimburse participating businesses directly for the 50% discount provided to customers through the scheme.

VAT reduction in the hospitality and tourism sectors

Finally, a temporary reduction in VAT was announced to support business clients in the hospitality and tourism sectors. From 15th July 2020 to 31st March 2021, a reduced rate of 5% VAT will apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafes and similar premises. The same reduction will apply over the same period of time to the supply of accommodation and admission to attractions. This temporary VAT reduction will apply to all qualifying VAT-registered businesses across the UK.

You can read more about all the changes announced in today’s Summer Economic Update in the ‘Plan for Jobs’ report on gov.uk. To stay up to date with the latest news regarding the coronavirus crisis and its impact on your small business clients, take a look at our practice support coronavirus hub.