Rishi Sunak, the chancellor, has unveiled what is effectively an emergency coronavirus budget, pledging new measures worth up to £30bn that are intended to help protect jobs when the current furlough scheme runs out and the economic crash starts to send unemployment soaring.
The government will also pay firms a £1,000 bonus for every staff member kept on for three months when the furlough scheme ends in October.
Sunak is to cut VAT on hospitality and will introduce kickstart scheme to prevent mass unemployment as the economy is hit by coronavirus.
The “Eat Out to Help Out” discount scheme for people eating out in August has the point that stuck out for most and this deal will be valid from Monday to Wednesdays.
Businesses will need to register, and can do so through a website, which will open next Monday.
The most significant, and expensive, was the £9bn job retention bonus. In his speech Sunak said the furlough system had to end in October.
He added: "Leaving the furlough scheme open forever gives people false hope that it will always be possible to return to the jobs they had before."
The job retention bonus will pay firms £1,000 if they retain furloughed staff, provided they are kept on until January. Arguably this might just delay the point at which people are made redundant.
Labour said the chancellor's plans did not go far enough and the job retention money should be better targeted to prevent it going to firms that were already planning to bring staff back.
The chancellor also announced a £2.1bn "kickstart scheme" to create more jobs for young people.
The fund will subsidise six-month work placements for people on Universal Credit aged between 16 and 24, who are at risk of long-term unemployment.
A temporary stamp duty holiday, costing £3.8bn, to stimulate the property market was another measure unveiled by the chancellor.
This will exempt the first £500,000 of all property sales from the tax, from midnight.
Meanwhile, Sunak, has reversed a decision to force workers to pay income tax on Covid-19 tests purchased by their employers.
HMRC guidance published this week stated that workers would face a taxable benefit in kind when their employer pays for coronavirus testing, meaning a reduction in take-home pay.
But the Treasury select committee chair, Mel Stride, said the move was unfair, pointing out that workers could face mounting tax bills that risked discouraging them from getting checked.
Now Sunak has relented, telling Stride that the government is “introducing a new income tax and NICs (national insurance contributions) exemption from income tax for employer-provided Covid-19 antigen tests.”
Stride welcomed the move, saying: “It would not have been right to increase the tax bill for workers every time that they had a coronavirus test. I’m glad that common sense has prevailed. And I’m grateful that the chancellor has listened to the Treasury committee and reversed this decision so swiftly.”
The original guidance published by HMRC stated: “Coronavirus testing kits or tests carried out by a third party which have been purchased by you to provide to your employees are treated as a taxable benefit in kind on the employee.”
Benefits in kind are those that workers receive from employers that are not included in their salary, such as cars. Employees have to pay income tax calculated on the value of these benefits, which is then deducted from wages through PAYE.