Four Big Perks Aimed at Rescuing the U.K. Economy From Virus Damage
(Bloomberg) -- A big tax break on your next home purchase, a discounted summer vacation, incentives to hire young people and half off meals for you and the whole family.
Those are some of the main takeaways for consumers in the U.K. government’s latest pandemic economic rescue plan, which was released Wednesday by Chancellor of the Exchequer Rishi Sunak.
The chancellor, a former financial analyst, is making these surgical moves to try to avoid massive job losses and prevent an already terrible economic situation from becoming even worse.
And while Sunak has already offered up billions in support for corporations, worries are running high that consumers are losing confidence in the country’s recovery even as it reopens for business in stages after three months of lockdown. The package didn’t include incentives for investors such as capital-gains tax cuts.
Here are the main items:
Splitting the Bill
This August, British people will essentially get a big coupon that’s good for dining out on Mondays through Wednesdays.
The U.K. government will pick up half the bill for meals and non-alcoholic drinks in restaurants, cafes and pubs on those three days of the week, up to £10 per person. Restaurants have to register to participate in the program.
Tax Breaks for Your Holiday
The state will also help people save money when they stay in hotels or campsites, go to theme parks and enjoy other leisurely pursuits. Consumers will only have to pay a 5% value-added tax on such activities, instead of 20%, from July 15 to Jan. 12, 2021.
About 80% of the U.K.’s hospitality industry was shut down from April to this past Saturday, with 1.4 million workers furloughed.
Helping You Buy a House
The Treasury is giving tax breaks to people who purchase homes that are worth up to £500,000. The change saves the average buyer £4,500 pounds, and nearly nine out of 10 people buying a primary residence this year won’t pay stamp duty at all, Sunak said. The new rule went into effect Wednesday and will last until March 2021.
The upshot is that homeowners contemplating a move up the property ladder will now get a big break. Previously, they had to pay a 2% tax on properties valued between £125,000 and £250,000, and 5% on homes between £250,001 and £925,000. (First-time homebuyers were exempt on homes up to £300,000.)
In addition, there’s £2 billion allocated for homeowners who want to make drafty residences more energy efficient with better insulation and weather-stripping.
Jobs for Young People
It’s been rough for young people looking for work in the battered retail and restaurant industries. Now the Treasury is putting £2 billion toward funding jobs at small- and medium-sized companies for those aged 16 to 24.
“We cannot lose this generation,” Sunak said in Parliament on Wednesday.
The Treasury will directly pay employers to hire younger workers, helping to fund wages for six months for 25 hours a week.
The grant will cover a salary at the minimum wage, so employers can’t expect to be reimbursed for more than that. The minimum wage ranges from £4.55 per hour for 16-year-olds to £8.20 an hour for 24-year-olds. A grant for the latter might total £6,500, Sunak said. Employers are expected to provide training and support to help the new hires find permanent work.
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