Chancellor Announces "A Plan for Jobs"
Many of the changes announced by the Chancellor in his statement on 8 July, such as the temporary Stamp Duty holiday, had already been leaked to the press but as in previous Budgets he still managed to keep a few surprises up his sleeve.
The main thrust of his statement was to introduce measures intended to avoid widespread redundancies when the current furlough scheme comes to an end in November. There was also welcome news for the hospitality sector with a temporary reduction in the VAT rate to 5% and the 50% discount for food in catering establishments in August.
The cost of the new measures announced was another £30 billion on top of the £158 billion already spent by the Government supporting employees and businesses since the COVID-19 pandemic started. In addition, there is a further £123 billion in loan guarantees and tax deferrals, some of which may not be recovered.
One day all of this will need to be repaid, but now is not the time for tax increases, quite the opposite.
JOB RETENTION BONUS
The Coronavirus Job Retention Scheme (CJRS) has so far supported over one million employers to protect over 9 million jobs. The scheme which started in March will wind down flexibly and gradually supporting businesses until the end of October. There has been pressure to keep the scheme in place but the Chancellor again confirmed the end date.
It is important that people who have been furloughed are supported to return to work. It is beneficial for everyone, including the individual, to prevent skills from fading and to maintain strong employment relationships. Therefore, the government is introducing a new Job Retention Bonus to reward and incentivise employers who retain their furloughed employees rather than make them redundant.
The government will introduce a one-off payment to UK employers of £1,000 for every furloughed employee who remains continuously employed through to the end of January 2021.
Employees must earn above the Lower Earnings Limit (£520 per month) on average between 1 November and the end of January 2021.
Payments will be made from February 2021. Further detail about the scheme will be announced by the end of July.
It is unclear whether this £1,000 bonus will persuade employers to retain staff as intended. Many employers may still be considering redundancies and if you choose to take that action please contact us as there are clearly tax and employment law implications.
KICKSTART SCHEME FOR NEW 16 TO 24-YEAR-OLDS
The new Kickstart Scheme is a £2 billion fund to create hundreds of thousands of high-quality 6-month work placements aimed at those aged 16-24 who are on Universal Credit and at risk of long-term unemployment.
The government funding will cover 100% of the relevant National Minimum Wage for 25 hours a week for each job, plus the associated employer National Insurance contributions and pension costs. This will amount to approximately £6,500 for each work placement.
The government will also fund employers who provide trainees with work experience, at a rate of £1,000 per trainee. The government will improve provision and expand eligibility for traineeships to those with Level 3 qualifications and below, to ensure that more young people have access to high-quality training.
There will also be a new payment of £2,000 to employers in England for each new apprentice they hire aged under 25, and a £1,500 payment for each new apprentice they hire aged 25 and over, from 1st August 2020 to 31st January 2021.
If you need help or advise on these latest set of changes then please feel free to get in touch by calling 01530 833474 or email me firstname.lastname@example.org