Weekly Digest – 24 February 2021

Weekly Digest – 24 February 2021

Welcome back to our Weekly Digest. Read on for the latest updates and some ideas to help us all move forward.

UK Unemployment Rises to 5.1%

The UK’s unemployment rate has risen to its highest level in almost 5 years, hitting 5.1% in the three months to December. The number of people on company payrolls were down 726,000 on pre-pandemic levels, according to the Office for National Statistics.

Almost three-fifths of these were younger than 25 years.

Business Tax Increase Expected in order to Pay for COVID-19 Support

British finance minister Rishi Sunak is set to increase a tax on business to pay for an extension to COVID-19 support schemes in the budget next month.

Sunak will announce on March 3 that he is increasing corporation tax from 19 pence in the pound and will outline a pathway where it rises to 23 pence in the pound by the time of the next general election.

Such measures will help pay for an extension to the furlough scheme, VAT cuts, and business support loans until at least August.

UK Study: One Dose of Pfizer COVID-19 Vaccine Reduces Risk by 72%

PHE’s Siren Study conducted on healthcare workers under the 65 years old found that one dose of the vaccine reduced the risk of infection by 72% after three weeks. Meanwhile, two doses can reduce the risk of infection by 85%.

£8 Million Government Boost for Manufacturers to Go Digital

New £8 million government funding for small- and medium-sized enterprises (SMEs) to help them modernise, go digital, and create new jobs was launched.

The funding, part of the government’s Made Smarter Adoption programme, will support up to 1,000 manufacturers across the North West, North East, Yorkshire and the Humber and the West Midlands regions, in adopting digital technology.

Loan Support for Foreign Buyers of UK Goods

UK Export Finance have launched a scheme to help importers of UK goods and services obtain the finance they need to buy British products. This will help boost exports and support post-Brexit global trading.

Banks will be able to offer loans up to £30 million. Buyers will benefit from flexible repayment terms over a longer period, while exporters will get paid upfront when fulfilling a contract.

New Online VAT Deferral Payment Scheme

Businesses that deferred VAT payments last year can join the new online VAT Deferral Payment Scheme to pay it in smaller monthly instalments.

To take advantage of this new payment scheme, businesses will need to have deferred VAT payments between March and June 2020 under the VAT Payment Deferral Scheme. These businesses will be given the option to pay their deferred VAT in 2 to 11 equal monthly instalments starting in March, April, May, or June 2021, with no interest.

The new scheme will be open until 21 June 2021. Further details can be found here.

Changes to the Construction Industry Scheme Effective April 2021

On November 2020, the government published draft legislation making changed to the Construction Industry Scheme (CIS) to ensure that rules apply fairly to everyone who is liable and HMRC can act quickly when rules are being broken.

Some of the key changes that will be implemented from 6 April 2021 include:

  • Under existing rules, a person is a deemed contractor when expenditure on construction operations is at an average of 1 million a year over the last three years. Under the amendments, a person will be a deemed contractor when their expenditure on construction operations exceeds £3 million within the previous 12 months.
  • It is only where a CIS subcontractor directly incurs the cost of materials purchased to fulfil a construction contract that the cost of those materials is not subject to deduction under the CIS.
  • HMRC will now have the power to correct the amount of CIS deduction a CIS sub-contractor has claimed on their employer payment return where they identify that the amounts which have been claimed are inaccurate.
  • Penalty rules will be extended such that penalties may also be charged on a second person. To be liable, the second person must be in a position to exercise influence over the person making the application and either make a false statement or provide a false document themselves or encourage the first person to make the offence.

You can read more about these changes here. You may also get in touch with us if you have any questions.

New £20 Million SME Brexit Support Fund Launched

The Chancellor of the Duchy of Lancaster Michael Gove has announced a £20 million SME Brexit Support Fund to support small- and medium-sized businesses (SMEs) adjust to new customs, rules of origin, and VAT rules when trading with the EU.

Traders will be able to apply for a grant of up to £2,000 to pay for practical support for importing and exporting. This fund will help businesses prepare for the implementation of import controls that will take effect from April and July.

More details can be found here.

Ongoing COVID-19 Business Support From the Government

After almost a year of lockdowns and COVID-19 restrictions, many firms in the UK are still in need of business support to stay afloat. Below is a comprehensive list of government support programmes that are available to your small business.

Bounce Back Loan Scheme

Deadline: 31 March 2021

  • Loans of between £2,000 and £50,000, up to 25% of turnover
  • The government guarantees 100% of the loan with no fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year
  • You can now apply for a top-up if you initially didn’t borrow the full amount available

More information can be found here.

Coronavirus Business Interruption Loan Scheme (CBILS)

Deadline: 31 March 2021

  • Offers access to loans of up to £5m
  • 80% of the loan is guaranteed by the government.
  • Government pays interest and any fees for the first 12 months
  • Available for businesses with annual turnover of up to £45m

More information can be found here.

Business Rates Holiday

Deadline: 6 April 2021

Businesses in the retail, hospitality, and leisure sectors will not have to pay business rates for the 2020-2021 tax year.

More information can be found here.

Coronavirus Job Retention Scheme

Deadline: 30 April 2021

  • 80% of employees’ monthly salary covered for hours not worked, up to a maximum of £2,500
  • Employers will have flexibility to use the scheme for employees for any amount of time or shift pattern, furloughing employees on either a full-time or part-time basis
  • No employer contribution for hours not worked, employers only have to cover National Insurance and employer pension contributions

More information can be found here.

New Deadlines for Job Retention Scheme Claims
Use this list of monthly deadlines to help you submit before it’s too late.

15 February 2021– Final date to submit claims for January 2021 by 11:59pm
15 March 2021– Final date to submit claims for February 2021 by 11:59pm
14 April 2021– Final date to submit claims for March 2021 by 11:59pm
14 May 2021– Final date to submit claims for April 2021 by 11:59pm

Corporation tax filing extension

Deadline: Apply for the extension before your normal filing deadline

You can apply for a three-month corporation tax extension to the deadline of filing your accounts, as long as your deadline falls between 27 June 2020 to 5 April 2021.

More information can be found here.

Kickstart Scheme grant

Deadline: Not specified

  • Provides funding to create new job placements for 16 to 24-year-olds on Universal Credit
  • Covers 100% of the National Minimum Wage (or the National Living Wage) for 25 hours a week for a total of six months
  • Also covers National Insurance contributions
  • Employers can spread the start date of the job placements until the end of December 2021

More information can be found here.

Self-employed Income Support Scheme

Deadline: Fourth round yet to be announced

  • The fourth round of SEISS which will cover February-April 2021 is yet to be announced
  • The third round was calculated at 80% of three months’ average monthly trading profits, paid out in a single instalment and capped at £7,500

More information can be found here.

Statutory Sick Pay refund

Deadline: Not specified

  • Companies with fewer than 250 employees can apply for a full refund for staff who take statutory sick leave due to Covid-19
  • You must set up PAYE in your business by 28 February 2020

More information can be found here.

Top-up grant for retail, hospitality and leisure

Deadline: Not specified

  • A one-off top-up grant has been allocated for the struggling retail, hospitality, and leisure industries
  • The grant is available to rateable businesses:
    – Small businesses with a rateable value of £15,000 and under will receive £4,000
    – Medium businesses with a rateable value of between £15,000 and £51,000 will get £6,000

More information can be found here.

Flick us a message if you need our expert assistance on your applications and so we can help you evaluate your options.

Did you defer your VAT last year?

Due to COVID-19, last year it was possible for businesses to defer their VAT payments between 20 March and 30 June 2020 to help cashflow. This was a welcome relief for many businesses, but the time has now come to pay that VAT.

HMRC’s guidance says there are three options:

  • pay the deferred VAT in full on or before 31 March 2021
  • opt in to the VAT deferral new payment scheme when it launches in 2021
  • contact HMRC if you need more help to pay

To access the new payment scheme, businesses must opt into it – this process will be launched soon.

The new payment scheme means businesses can make up to 11 smaller monthly instalments interest free. All instalments must be paid by the end of March 2022.

Now is the time to plan ahead. Get in touch with us if you’d like a cashflow forecast to plan your repayments.

For more information about the new scheme, check out the gov.uk website for guidance.

5 Simple Ways to Keep Your Business Finances On Track

Small steps can lead to a tremendous ripple effect on your business. Here are some simple things you can do to better manage your finances.

  • Record all transactions, whether big or small. Expense tracking technologies can help you avoid errant spending.
  • Make it a habit to keep your business and personal expenses separate.
  • Reconcile what you know from your books with what your business bank accounts reflect. Do this financial reality check on a regular basis.
  • Create a budget for new projects you’re planning to define its relative value from other projects and the ongoing expenses within your business.
  • Work closely with your bookkeeper/accountant. Communicate regularly and ensure that important messages don’t get lost in the cracks.

Accounting and bookkeeping are integral aspects of business growth. However, many business owners loathe these tasks. If you need expert assistance for the finance-side of your business, get in touch with us today.

Get in touch

Contact us if you have any questions or want to discuss the next steps for your business.

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