The Positive Accountant - Vol 2 Ed 23
So there is such a thing as a free lunch...so long as it's Monday - Wednesday in August. And I suppose if we're really picky, it's not so much free as, when the bill arrives you simply say, 'It's OK, my children will pay for 50% of it over the next 30 years'
Today was the day for big announcements with big clarifications.
I'm not convincedthat what has been announcedwill do the job of kickstarting the economy into the hopedfor V-shapedrecovery. Personally I don't think the consumer is ready to consume - and when the economy is basedon a consumption model, that's a problem.
But, Debbie would be the first to point out how frequently I'm wrong - and on this occasion I hope I am.
It's a bit of a technicaledition tonight, I think today justifies that
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What were the key announcements ?
1. Furlough.
It has been confirmed that the furlough scheme stops end of October.
But for those employers who take staff back and are still employing them in January, there's a £1,000 per employee bonusto be had.
Odd one that, if the job no longer exists, then paying them Nov - Jan to get £1,000 isn't going to happen. On the other hand, many people are going to get taken back anyway, and that means the money is just being given away.
This only therefore changes the decision for those right on the margin of whether their job exists or not...and I reckon it's expensive for the low proportion of jobs that may be savedas a direct result.
2. Employing the Under 25's
Now, we know as employers that we're not allowed to discriminate because of age. But if we find someone aged16-24 who is claiming Universal Credit we can employ them and the Government pays for it (The Kickstarter scheme) - six months' salary at minimum wage,25 hours per week.
In addition, there is an extra £2,000 grant for each new modern apprenticeship hire under25, and £1,500 for each hire over25.
3. Stamp Duty
The nil rate threshold has been increased to £500,000 from £125,000 with immediate effect until 31st March. For those who are buying second (or more) homes the second home premium still applies but not the basic stamp duty.
This was well trawled, and I 'm glad that some of the rumours of this being deferreduntil October were ill-founded
4. Rishi's Happy Meals
Officially entitled'Eat out to help out', everyone gets 50% off, limited to £10 per person, on meals purchasedMonday - Wednesday in August.
I'm far from convinced here. People are going to be eating out anyway. Or if not it is because they are in the 'too scared/unable' category - eg those that are shielding or where the media has made them wary of going out - or they are in the 'can't be botheredwith the hassle ' category. There will be a third category, those that have sufferedor are fearful of suffering financially from the crisis and aren't preparedto spend.
In my opinion, it will only be the latter category that are persuadedto go out by this measure. But it's there for all of us
Quite how far it goes - is it just restaurants of cafes/coffee shops as well ? - remains to be seen
How it is going to be administered is, at the moment, uncertain. Compliance and fraud prevention is going to be a major issue for Government to overcome.
5. VAT Cuts
The media got this one completely wrong !
Yes, there is a VAT cut, not, as expected,20% to 17.5% but right the down to 5%. But only in the hospitality and tourism sector. Try as I might, I can't find a definition of the application. That may be deliberate, there are many commentators tonight suggesting that the projectedcost is nowhere close to that quotedunless the definitions are kept really narrow and tight.
A restaurant - yes
Hotel room - yes
A Hotel that has gym memberships - probably no
Bicycle hire - probably no
Cycling tours including hotel rooms and bicycle hire - probably yes
Theme park admission - yes
Museum admission - exempt from VAT already so no help there
And these are just some of the areas that immediately spring to mind
Whatever the impact of the above, most people, including the Chancellor are of the view that they are only the next stage in a lengthy recovery programme. It will be interesting to see what happens over the next few months.
In the meantime, watch this space for developments.
Stay safe, stay positive
Adrian