Wylie & Bisset welcomes mini summer budget measures but questions their sustainability

Wylie & Bisset has welcomed the mini summer budget measures announced by Chancellor Rishi Sunak which will give a boost to those sectors that have been hit hardest by the coronavirus pandemic but questions whether they will ultimately prove sufficient to realise sustainable economic recovery.

july20 catherine mcmanus

While acknowledging the fact that restaurants, pubs, tourist attractions, hotels, campsites and B&Bs will have their level of VAT reduced from 20% to 5% until next January, Wylie & Bisset Tax Partner Catherine McManus questions if this reduced rate will be enough or whether we will see another economic dip in January 2021 because the recovery has not been as sustainable or as marked as we would have hoped.

“The mini summer budget has clearly been designed to boost recovery and I’m sure it will – but it is important to note that there are still significant challenges ahead. Those in the hospitality and tourism sector will of course benefit from the VAT reductions introduced but for them and many other businesses who have put VAT on hold via deferral until January 2021 it remains to be seen how they will cope as they face ongoing cashflow difficulties,” she said.

While welcoming the Job Retention Bonus which pays companies £1000 for every furloughed employee who returns to work and remains employed until January 31, 2021, McManus expressed doubt that this will be sufficient to stop a business owner confronting real financial difficulties from having to make redundancies.

“The reality is that a redundancy saving in a very tough economic climate for businesses struggling with ongoing income reductions will likely be more beneficial than a £1000 bonus from the government per employee. It may not necessarily have the impact that the Chancellor hopes for in terms of the prevention of mass redundancies next February and March” she said.

“Nevertheless, for those who always intended to bring staff back from furlough with the expectation of retention of that employee, the Job Retention Bonus will be a welcome cash boost in due course.” Further, McManus, while acknowledging that the ‘kickstart scheme’ aimed at creating jobs for 16 to 24-year-olds claiming Universal Credit does give young people seeking employment a much-needed boost, she believes it is the longevity of the support and the jobs themselves then created that will end up being the measure of its success to the UK employment market.

“It’s one thing to get assistance to secure initial job placements for young people, but if that job is not sustainable and the position proves to be short-term, then the kickstart scheme might need looked at again,” she cautioned.

“The mini summer budget is positive, with focused measures designed for those who are most in need – and these will definitely be a welcome financial boost that will cost the government a lot of money to put in place – but whether they deliver the economic recovery that we all hope for remains to be seen.”

ENDS

For further information please contact Catherine McManus on 0141 566 7000

Issued on behalf of Wylie & Bisset by Liquorice Media tel 0141 332 4935 www.liquorice-media.com

Date: 9 July20