Mini budget announcement and what it means for you

What does the Summer Statement mean for small businesses?

Chancellor Rishi Sunak has announced a package of measures to help small businesses survive the coronavirus pandemic, as the second phase of government action.

Job Retention Bonus

Mr Sunak announced a £9bn initiative to reward businesses that bring furloughed employees back into work.

Any small business that takes back a furloughed employee will be given a £1,000 grant for each worker, providing they are still in employment by the end of January. Workers must have been continuously employed and earn an average of more than £520 per month in November, December and January.

Mr Sunak said: “If you stand by your workers, then we will stand by you.”

Kickstart jobs scheme

As expected, Chancellor Rishi Sunak has announced a £2bn scheme for small business owners to hire young people as part of his Summer Statement.

 

The new Kickstart scheme will help half a million 16-to-24-year-olds claiming Universal Credit to find work, as the government will directly pay the National Minimum Wage for 25 hours a week for six months, giving small business owners a £1,000 grant to cover admin costs.

Each young Kickstart worker will receive £5,000 from the government over half a year, with small business owners able to top up minimum-wage pay packets.

The first jobs will be taken up in the autumn and the scheme will run until December 2021, though it is likely to be extended if it proves successful.

Small businesses can apply to be part of the traineeship scheme from next month.

The Treasury estimates that over 700,00 school leavers will come into the jobs market when they leave school this year, and they find it 2.5x more difficult to find their first job.

Mr Sunak said that young people “bear the brunt” of recessions and are at particular risk from the Covid-19 crisis because they work in sectors “disproportionately hit” by lockdown, such as bar work and waitering.

 

Unpaid traineeships

Rishi Sunak confirmed that the government will be paying small business owners £2000 to take on other 16-to-24-year olds as unpaid trainees.

Small businesses that offer training for young people aged between 16 and 24 will be given cash “bonuses” of grants worth £2,000 per youth up to a maximum of £10,000 per firm.

The government will also pay £1,500 for every new apprentice above 25 hired.

This unpaid on-the-job training is seen as a gateway to an apprenticeship and, ultimately, full-time work.


Mr Sunak said that 91 per cent of traineeships turn into full-time jobs. The £111m scheme is the first-time small businesses will receive direct government subsidies for taking on trainees and is expected to help around 45,000 young people outside of the Kickstarter scheme.

VAT cut to 5% for hospitality and leisure

The chancellor announced he was cutting VAT cut from 20 per cent to 5 per cent for over 150,000 businesses in the hospitality and attractions sectors in a £4bn initiative. The VAT cut will come into effect on Wednesday, July 15. Hotels, restaurants, accommodation and attractions, including cinemas, will all qualify for the new 5 per cent VAT rate.

Over two million people work in the hospitality and tourism, 1.4m of whom have been furloughed since lockdown.

Eating out subsidy

Pubs and restaurants will be able to claim back up to £10 per person from customers eating out between Monday and Wednesday, with the government subsidising meals out by 50 per cent throughout August.

Warning of grave times ahead, Mr Sunak said that the UK economy has shrunk by 25 per cent in just two months, wiping out 18 years of growth.

“We face profound economic challenges … the greatest recession ever known, according to the IMF,” Mr Sunak warned.

 

Further information will be released as it becomes available. To discuss how these latest changes affect you, feel free to contact us on 0121 271 0336 or on info@sfaccountants.co.uk

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