The UK government has unveiled its latest package of support measures1 aimed at boosting consumer demand and helping businesses recover quickly from the Covid-19 pandemic. So far this year, chancellor of the exchequer, Rishi Sunak, has introduced a furlough scheme which has seen the government covering salary costs for around nine million employees, with further support for almost three million self-employed people. He has also cut business rates for thousands of firms and provided loans and grants to businesses to help them cope with the closures and trading difficulties caused by the UK’s lockdown policies. In his summer statement this week, Sunak announced a further wave of measures targeting sectors such as hospitality, tourism and housing that have been hit hardest by the pandemic over the past few months.
Stamp duty threshold lifted
The policy change with the potential to have the greatest financial impact on households is likely to be the decision to raise the starting threshold for stamp duty to £500,000 from its current £125,000. This will apply immediately to residential property purchases in England and Northern Ireland and will last until the end of March next year.
Sunak pointed out that housing market activity has slowed markedly during the lockdown period with prices down year-on-year in June for the first time since 2012, according to figures from Nationwide. The idea is that the stamp duty cut will encourage people to get moving again: on a £500,000 property the new system will mean buyers pay £15,000 less tax.
Help for hospitality and tourism firms
Businesses such as hotels, restaurants and pubs have been among those that have suffered most as a result of the pandemic, with the majority of them having to close their doors throughout April, May and June. In response, the chancellor has announced two policies aimed at boosting demand in the hospitality and tourism sectors:
- On Mondays, Tuesdays and Wednesdays in August, the “Eat Out to Help Out” scheme will entitle diners to a 50% discount, up to a limit of £10 per person, on meals at restaurants, cafés or pubs – this doesn’t include alcohol, but does includes kids’ meals.
- From 15 July until 12 January 2021 VAT will be reduced from 20% to 5% on food and non-alcoholic drinks sold by restaurants, pubs and cafés, as well as on accommodation and admission to tourist attractions. The exact details of what will and will not qualify for this reduced rate will be published in the next few days.
Domestic energy efficiency
Job retention bonus
To address the issues that could be caused by the withdrawal of the furlough scheme at the end of October, the government will pay a £1,000-per-person bonus to employers which bring staff back off furlough and keep them employed until 31 January 2021. One of the government’s biggest concerns at present is that businesses may make large numbers of people redundant once state furlough payments to inactive workers are brought to a halt.