Summer Statement: Further Clarity Needed on VAT Changes for Local Shops

Today (8th July) the Chancellor delivered a financial statement to Parliament setting out the Government’s latest Covid-19 related policy measures.

During his statement, Chancellor of the Exchequer Rishi Sunak confirmed that the furlough scheme will end ‘flexibly and gradually’ in October.

The Chancellor unveiled plans for a new ‘jobs retention bonus’ for every employee brought back from furlough. This means that if employers bring people back from furlough and continue to employ them to January, they will be given a £1,000 bonus per employee. In order to be eligible, the employee must be paid at least £520 in each month from November to January. 

The Chancellor also announced a VAT cut from 20% to 5% starting on 15th July until 12th January 2021. The cut applies to eat-in or hot takeaway food from restaurants, cafes and pubs, accommodation in hotels, B&Bs, campsites and caravan sites, attractions like cinemas, theme parks and zoos.

ACS chief executive James Lowman said: “The Government needs to provide further clarity on whether local shops with hot food counters will be able to benefit from the VAT cut and ‘eat out to help out’ discount announced during his statement.”

The 2019 Local Shop Report shows that almost a quarter (23%) of local shops have a hot food counter or cabinet and 9% of stores have indoor seating areas for customers.

Mr Lowman continued: “We welcome the Government’s commitment to encouraging the return of furloughed workers in his summer statement. Local shops have been a lifeline for the communities that they serve and the support that has been offered so far has enabled retailers to keep their businesses going and continue feeding their communities.”

The Chancellor outlined a timetable for the next Budget and spending review, which will take place in the Autumn and will outline plans to ‘rebuild’ the economy.

The full ‘A Plan for Jobs 2020’ documents are available here:

This entry was posted by Chloe on Wed, 08/07/2020 - 14:26