This week, Chancellor Rishi Sunak unveiled his £30bn ‘mini’ Summer Budget as phase two of his Covid-19 response, consisting of a series of rescue measures to combat the effects of the pandemic.
“Eat out to help out”
As part of the stimulus package, Sunak stated that everyone in Britain will be given half-price discounts on meals and non-alcoholic drinks between Monday and Wednesday throughout August. The dining-out discount, described by Sunak as “eat out to help out”, will protect over 1.8m employees in the hospitality sector, which has been one of the hardest hit so far. The discount scheme will also encourage consumers to spend, which will no doubt cast some positivity for the UK markets.
To further boost the hospitality and tourism sector, the Chancellor announced a cut in VAT from 20% to 5% from next Wednesday for any food, accommodation and leisure facilities throughout England.
Stamp duty holiday to boost the property market
Sunak has unveiled a temporary holiday on stamp duty on the first £500,000 of all property sales in England and Northern Ireland until March 2021. The move is aimed at helping home buyers who are struggling due to the financial hit from the pandemic and to boost the property market.
Green investment plan
As part of a £3bn green investment plan, the Government will be handing out grants to households to help them make their homes more energy efficient. The grants will consist of vouchers that will cover at least two-thirds of costs and the aim will be to ‘save money, cut carbon and create jobs’.
Although the summer budget has provided some hope for the hospitality and property sectors, for many the question will still be how the unprecedented government support will ultimately be paid for in the aftermath of the crisis. The chancellor insists that phase three of his Covid-19 response will involve rebuilding, and that includes the rebuilding of the public finances.
Reducing current tax allowances, such as higher rate pensions relief, has however been speculated upon previously, and there is little reason to think areas like these will not be revisited now. It is also believed that pensions and investment taxation have not been impacted greatly by the changing economic crisis.