Budget Summary 2021
What can get an accountant more…
3rd March 2021Do you need help coping with the financial impact of Coronavirus? Find out what help is available below.
[UPDATED 3 MAY 2020]
The impact of coronavirus on the country has spiralled in the past few weeks. Apart from worrying about the health of our families, we’re also worrying about health of our businesses.
We’ll leave the health advice to the experts, but we thought it would be useful to outline some of the help available for your business.
We also have specific help on the following pages of our website:
HELP FROM JON DAVIES ACCOUNTANTS
Our staff are working from home but will still be available to support your business through the coronavirus crisis.
If you do ring the office, the call is on divert to Rachael, our Client Relationship Coordinator. Rachael will take a message and get the appropriate team member to call you back. If Rachael is on another call, we use the wonderful team at Mi PA to cover our calls – again they’ll ask the appropriate team member to give you a ring.
We apologise if there is a short delay, but I’m sure you’ll forgive us just this once given the circumstances.
Or just drop your Client Manager an email and they’ll get right back to you.
Our team all have laptops and work remotely from time to time already, so all of the IT has been tested and you shouldn’t notice any impact on our service.
We use Zoom for video meetings with our clients around the country and are happy to switch any face-to-face meetings to Zoom or a simple, old-fashioned phone call.
If you need to drop off any records, the office building is still open and accepting deliveries. Let us know – we’re dropping into the office once a week to pick up the records.
HELP FROM GOVERNMENT
The Government has announced some support for small businesses during the coronavirus lockdown. The detail is here and is being updated daily
In summary, the main support is:
The Coronavirus job retention scheme
The Government will fund 80% of the wages of any employees that you need to “furlough”. This is to protect employees who you would have laid off otherwise.
The support is capped at £2,500 per worker per month and is initially available from 1 March to 30 June. The Chancellor will reassess at that point.
The £2,500 is the gross pay. The Government will also fund Employers NI and Pension contributions.
To be “furloughed”, the employee does need to be off work, ie the funding does not apply to anyone who continues to work in your business. You should also take HR advice.
The funding is only available for employees who were on your payroll prior to 19 March.
The portal for reclaims opened on 20 April and claims are paid within 6 working days.
Deferral of VAT payments
Any VAT payments due to HMRC between 20 March and 30 June 2020 will not need to be paid until 31 March 2021.
If you are on a Direct Debit, you should cancel the Direct Debit as HMRC will automatically take the payment.
If you are on a quarterly VAT return, this means your VAT payments for the quarters ended 29 February, 31 March or 30 April.
This will help with cashflow but please remember that you will have to pay the VAT owing in March 2021.
Deferral of Self-Assessment payments on account
Any payments of account for income tax due on 31 July 2020 will be deferred to 31 January 2021.
Again, this will help with cashflow not, but please remember you will need to pay the tax in January.
Statutory Sick Pay
Statutory Sick Pay (“SSP”) is usually paid to staff from the 4th day off. If a staff member is self-isolating, or has the coronavirus, they are entitled to SSP from the 1st day off.
If you’re a small business, ie with less than 250 employees, the Government will reimburse you for up to 2 weeks at £94.25 per week for each employee who is off.
Business Rates Relief for retail, leisure and hospitality
There will be a 100% discount on business rates from April if your business is in retail, leisure and hospitality.
There will also be a £10,000 grant for retail, hospitality and leisure businesses operating from premises with a rateable value of less than £15,000. This will rise to a £25,000 grant if you are operating from premises with a rateable value between £15,000 and £51,000.
These grants are per premises, ie you can have more than one grant.
These reliefs will be administered by your Local Authority, so any queries should be directed to them.
You can read the full guidance here
Most of these grants were paid in April 2020.
£10,000 small business grant
If you are a small business and already claim Small Business Rate Relief, there will be a one-off £10,000 grant from the Government.
Again, these reliefs will be administered by your Local Authority. Your Local Authority will write to you if you are eligible but you will then need to file an online claim – please check your Local Authority’s website for this as most published their forms at the end of March.
You can read the full guidance here
Most of these grants were paid in April 2020.
There was Top-Up scheme announced on 2 May for small businesses who missed out on the original grant. This is aimed at businesses who pay for premises but are not the rates payer.
You can read the full guidance here
Support for the Self-Employed
The Government will fund 80% of your net trading income for a period of 3 months from March to May 2020. This is capped at £2,500 per month and will be paid in June 2020.
This will be based on your average monthly profits in your 2018-19 tax return.
To be eligible, you must meet all of these criteria:
For criteria 2 and 3, you can average your income over your 2017, 2018 and 2019 tax returns to meet the criteria if your 2019 return alone doesn’t, ie you can average over 50% of your income in the 3 years and average under £50,000 profit.
Owners of Limited Companies are not included in this scheme.
There is minimal paperwork to fill in – the Government will work out who is eligible, and the amount of grant, based on submitted tax returns. They’ll contact you and there will then be a simple online form to complete
You can continue to work while getting the grant.
Coronavirus Business Interruption Loan Scheme
This loan scheme launched on 23 March to support loans from £50,000 up to £5m.
The Government will provide lenders with a guarantee of up to 80% of the loan and not charge for this guarantee.
What does this mean? It means that businesses that might not be accepted for a loan under normal circumstances should now be able to get a loan. However, it will be a loan – not free cash.
The Government will cover the first 12 months of interest payments, so you will not need to pay these yourself.
Full details are available here
Bounce Back Loan scheme
A “mini” version of the scheme above, this is for loans between £2,000 and £50,000.
This loan is 100% backed by the Government, will have an interest rate of 2.5% per annum, and no capital or interest repayments in the first 12 months.
More details are available here
Delays to paying your taxes
HMRC has a dedicated coronavirus helpline on 0800 024 1222 if you’re struggling to pay a tax bill. You might be able to get a Time To Pay agreement to stagger any tax payments.
IR35
If you’re a subcontractor/freelancer, the reforms to IR35 that were due to come in to force in April 2020 have been delayed to April 2021.
Mortgage repayment holiday
If you are suffering financial difficulties, you will be able to apply for a 3-month repayment holiday on a residential mortgage.
This only a “holiday”, ie the capital will remain and interest will be added. However, it may provide some breathing room for those 3 months.
Not every application will be approved as your lender will look at whether it would actually be helpful. The banks have confirmed it will not affect your credit rating.
HELP FROM EACH OTHER
Let’s not forget each other at this time. Help out other local businesses by buying from them and supporting them.
We’ll need each other to get through this – we’ve already spoken to a number of our clients who are seeing the impact. It’s hit the hospitality and travel clients already and will start to hit all of us soon.
WHAT ELSE CAN YOU DO?
From the financial side, we’d recommend that Step 1 is to not panic. This is going to have financial consequences for many businesses but it should be temporary.
In the meantime:
IS THERE ANY OTHER ADVICE?
We’d recommend the following:
HOW CAN WE HELP?
At this time, it’s vital to understand your cashflow and access to finance. You also need to know which costs you can cut, or where you can increase sales.
We can help in all of these areas and would be happy to do so. If you need more information or guidance then we would be happy to arrange a phone call/video call with you so that you know what you need to do.
If you’d like to (virtually) meet, please ring us on 0151 380 8080 or email us at support@jondaviesaccountants.co.uk . We look forward to hearing from you.