On The Spot Blogs
Summer Statement - Staycation Staycation Staycation?
Today's summer statement is a call to get us out more during July and August and shows how concerned the government is about the economy.
The headline is the 50% discount up to £10 per head 'eat out to help out' scheme to use against food and soft drinks from Monday to Wednesday during August, which indeed it will.
However, the reduced VAT from 20% to 5% for food, accommodation and attractions, brought in even earlier from next Wednesday 15 July, and lasting until 12 January, way past Christmas, highlights the struggle this sector is having.
Businesses in this sector should use this potentially additional 15% margin wisely. With coronavirus safety measures in place, fewer people can be accommodated at any one time, so takings will be down even if the demand is there. Plus businesses are incurring more costs such as for PPE, cleaning equipment, and cleaners.
Hence, this 15% shouldn't necessarily get passed on to the consumer in full. Each business needs to look at their own venue, market, customer base and decide.
In addition, moving back up to 20% from 13 January, during the usual quiet January, will presumably be hard to pass on to customers from a 5% base. If so, the margin and profit hit will be even more pronounced.
If you do take a staycation this year, you'll help these businesses keep on staff who otherwise may have been made redundant, particularly younger people. Jobs generally for younger people received a further boost from the Chancellor with a new Kickstart scheme paying 6 months of wages, £1,000 per work experience trainee and £2,000 per new apprentice (or £1,500 if 25 or over) and several other initiatives. Might your own business benefit?
Businesses with furloughed employees who keep them on until the end of January will receive a £1,000 grant in February under the Coronavirus Job Retention Scheme.
The minimum monthly pay for this is only £520, so it looks as though this could include owner-directors, probably receiving £732 per month. We shall see by the end of the month. If so, it'll be a welcome payment for those companies who have received very little so far and whose market collpased overnight.
And when you return from your UK staycation, don't forget to get on with that house move you'd been planning if it's for a home costing under £500,000. Make sure you complete in time before 31 March to save all your stamp duty. A great incentive for the property market where we know it's all about location, location, location...
After you've moved in make use of the Green Homes Grant scheme to install low energy lightbulbs, cavity wall insulation etc for a 1/3 of the usual cost, the rest, up to £5k, government funded.
Green is going to be a big part of the long term recovery and businesses who can move more into this area or set up from scratch should continue to receive indirect taxpayer funding and assistance for many years. Perhaps you could set up this new business after your staycation, house move and home improvements... It might be a busy year...