Winners
House buyers
The six-month Stamp Duty Land Tax (SDLT) holiday, removing the need for home buyers to pay SDLT for the first £500k of a property transaction, will save buyers as much as £15,000 when buying a new home. However, the second home surcharge does still apply (3% of the value of the transaction) and the SDLT cut only applies in England – Scottish and Welsh Land transaction taxes remain unchanged.
Estate agents
Estate agents will also welcome the temporary SDLT cut. The measure should help stimulate movement in the market, and estate agents and conveyancing solicitors will be looking forward to the increased activity. It remains to be seen whether buyers will be significantly better off overall as sale prices could well increase to counteract the tax saving. It is also possible that all it will achieve is to accelerate sales resulting in a slump once the holiday is over.
Home owners
The Green Homes Grant Scheme will provide up to £10,000 for home owners to make energy efficient improvements to their houses, including insulation, double glazing and replacement boilers. For the lowest income households, this will be a £10,000 voucher, for others up to £5,000 in matched funding for the works. The Chancellor said this could save each home up to £300 per year on their energy bills.
Restaurants, pubs and cafes
The hospitality industry saw some much-needed support to encourage people to return to restaurants, pubs and cafes. Not only did they receive the VAT cut from 20% to 5% for six months, Rishi also announced the “Eat Out to Help Out” scheme through which the Government would fund a 50% discount on a meal (up to £10 per head) for diners in certain establishments from Monday to Wednesday in August. He promised that restaurants would receive their cash within five days of the meal, however the mechanism behind the scheme remains to be seen. Restaurants will have to register for the scheme and, presumably, HM Revenue & Customs (HMRC) will perform checks of this against restaurants claiming furlough on their staff.
Leisure venues
While they have been allowed to open for a few days now, leisure venues such as theme parks are still comparatively empty for the early summer. The VAT cut which also applies to them will allow them to either lower their ticket prices, or perhaps more likely, increase the cash they take from a ticket sale. This will particularly help the smaller amusement parks in holiday areas as large swathes of the country go on ‘staycations’ in the UK over the school summer holidays.
Consumers
Both of the above measures should see prices fall for consumers; all practices are aimed at encouraging people to spend their money which they have not done for four months. This will enable their money to go further and, coupled with many staff returning from furlough and seeing salaries increase back to their full amount, should improve consumer confidence. This will have the knock-on effect on many businesses, even those not helped by the above measures.
Young people
It’s rare younger people do so well out of a Chancellor’s statement. There has been much concern that a whole generation could be left behind, with lost schooling, college and apprenticeships over the last four months. The Kickstart Scheme aims to get unemployed young people into work could stave off high unemployment amongst this generation. This scheme includes a raft of measures including subsidised six-month work placements for those aged 16 to 24, pledging 30,000 new traineeships for young people (by giving employers £1,000 per person on each scheme) and improved staffing at job centres and careers advisors across the country.
Employees who have received swab tests
Until the announcement yesterday, HMRC had advised that all employees who had received a Coronavirus test from their employer would have to be taxed on the benefit. The Chancellor confirmed yesterday that he was removing this tax burden.
Employers who furloughed staff
Employers will receive £1,000 for each employee who was furloughed at some point and is still in employment on 31 January 2021. This will encourage employers to keep staff on, but the limited amount compared to the cost will not swing the decision and is more a ‘thank you bonus’ to the employer for keeping the staff. However, those employers who decided they would not burden the state with the salary costs and kept the employees in full pay without using the furlough scheme (even if the staff were unable to fully do their role) will have every right to feel hard done by.
Losers
Young people
The estimates for the Government spend on the pandemic indicate that the cost over the last few months is nearly £300bn, with estimates likely to rise if unemployment rises. The young people of today will be paying this debt back for decades to come in the form of higher taxes and reduced public spending. Hopefully the measures above will enable this generation to get the training they need to have long-term careers.
Older people
While there have been measures to help the younger unemployed, these are likely to be at the expense of the older generations who are unemployed and looking for work. People who have been made redundant over the last four months (or who will be in the comings weeks and months as some businesses inevitably fail) will be overlooked for new roles if younger people can be taken and the employer can avail themselves of the various schemes and grants on offer.
Commercial landlords
The Chancellor has given nothing to landlords of commercial premises. Many property investors have received no rent from tenants in the retail, leisure and hospitality industry since December 2019. All leisure and hospitality businesses need premises and landlords who may miss out on 75% of their income for the year may be forced to appoint receivers and the buyers of distressed property will be looking for quick returns, not the long-term regeneration of our high streets. The recently announced plans to relax our planning rules will only encourage this behaviour and could lead to a significant reduction in the number of sites for restaurants, shops and other high street necessities.
Retail businesses
The lack of measures targeted at the hard-hit retail sector was conspicuous and regrettable. Town centres are still much quieter than usual, and many shops cannot afford to reopen yet. We can only hope that the Chancellor follows up soon with further measures to help stimulate the UK’s struggling High Streets.
The lack of measures targeted at the hard-hit retail sector was conspicuous and regrettable.
Gyms and nail bars
While most other sector sectors have been able to reopen (even if in a restricted format) gyms and nail bars have not yet been able to and have been given no additional support over the rest of the sector.
Charities
While the VAT cut for the hospitality sector is welcome, the Chancellor missed an opportunity to help the charitable sector with a similar cut to VAT for services provided to those organisations. Irrecoverable VAT costs the sector approximately £1.5bn a year. A cut to VAT for registered charities would have been a tangible way to help a sector whose income is expected to fall by £12bn this year and protect jobs in this vital part of our economy.
Airlines
In what could be a political play for demonstrating his green credentials, the Chancellor gave nothing to the struggling airlines in the UK. While other countries have moved to support their national carriers and other airlines, the UK has done relatively little. This could be due to the perceived abuse of the circumstances by British Airways in moving their more expensive older staff onto new, cheaper, less flexible contracts, but time will tell if more support is required.
Would you like to know more?
If you would like to discuss the above, or have any questions, please get in touch with your usual Blick Rothenberg contact or one of the contacts to the right.
You can also read our Summer Statement: commentary and analysis here.