Latest Business Support & Tax Update

Happy New Year (albeit it feels very different to any other!)

Given the announcement of ‘Lockdown 3’ by the Prime Minister on Monday, we wanted to write to provide an overview of the business support measures available.

Additionally, yesterday, the Chancellor made an announcement regarding the availability of further grant funding that we wanted to update everyone on.

The Government’s news story on yesterday’s announcements can be found here.

We are expecting further announcements over the coming weeks, and obviously in the Budget on 3 March 2021.

Further Business Support Grants

Yesterday, the Chancellor announced a further round of one-off grants for the retail, hospitality and leisure sector businesses.

As with the previous rounds of such funding the grants will be based on rateable value of property, and on a per property basis. The amounts being as follows:

  • £4,000 for businesses with a rateable value of £15,000 or under
  • £6,000 for businesses with a rateable value between £15,000 and £51,000
  • £9,000 for businesses with a rateable value of over £51,000

The grants will be administered by local authorities/councils.

As with the previous rounds of funding, there should be no required action from qualifying businesses as the relevant local authority/council should be in contact with them in relation to this new grant.

As with previous funding rounds, the Chancellor announced a discretionary grant fund that will be made to councils to administer support businesses that are impacted by the restrictions but do not qualify for the above one-off grant.

Cornwall Council and the Council of the Isles of Scilly are yet to update their website, however, we understand that the information from Cornwall Council should appear here when it is available.

Coronavirus Job Retention Scheme (CJRS)

The CJRS was extended in December 2020 and is currently now in place until 30 April 2021.

There are many finer points that should be considered by those claiming the CJRS that we have advised on in previous updates, be sure to look at articles on our website for a reminder of these (e.g. managing annual leave for furloughed staff, ensuring the current documentation is in place, seeking HR/employment law advice etc.).

By way of a reminder, from February 2021 HMRC will be publishing the names of employers who have made claims under the scheme for periods starting on or after 1 December 2020, together with an indication of the amount each employer has claimed.

Self-employed Income Support Scheme – 3rd and 4th Grants

The Scheme was previously extended to include a 3rd and 4th grant.

The 3rd grant is worth 80% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.

The 3rd grant covers the 3 month period to 31 January 2021.

Applications for the 3rd grant are now open and must be made by 29 January 2021.

The 4th grant will cover the 3 month period from 1 February 2021 to 30 April 2021, and the level of the grant is yet to be announced.

See the Government guidance here  for more information on how to claim.

Self-Assessment – Income tax and NIC 

The deadline for submitting 2019/20 Self-Assessment tax returns continues to be 31 January 2021. HMRC have stated that they “will consider coronavirus as a reasonable excuse for missing some tax obligations (such as payments or filing dates)”, however, we would expect this to be applied very narrowly and would only apply in exceptional cases.

Remember, the tax payment due on 31 January 2021 will be made up of:

  • The balancing payment for the 2019/20 tax year – being the 2019/20 tax liability less any 2019/20 payments on account made in January 2020 and July 2020; and
  • The 1st payment on account of your 2020/21 tax liability (based on your 2019/20 tax liability).

However, many will have deferred the payment of their July 2020 2nd 2019/20 payment on account (taking advantage of the business support measure), meaning much larger payments are now required on 31 January 2021.

It has been previously announced that Self-Assessment taxpayers will be able to set-up payment plans with HMRC where the following applies:

  • you must have no outstanding tax returns, debts or existing payment plans with HMRC;
  • you owe no more than £30,000;
  • you must set up the payment plan within 60 days of the original payment date; and
  • you have to pay the instalments by direct debit.

Crucially, the 2019/20 tax return will need to be submitted on time (i.e. by 31 January 2021).

Self-Assessment taxpayers should also consider whether to claim a reduction to their 2020/21 payments on account if they are expecting a lower tax liability in 2020/21, compared with 2019/20.

Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loans

In December, the Government backed loan schemes were extended so that applications can now be made up to 31 March 2021.

VAT temporary reduced rate

The 5% temporary reduced rate of VAT for hospitality, holiday accommodation and attractions that commenced on 15 July 2020 is currently in place until 31 March 2021.

VAT Payment deferrals

In September, the Chancellor announced that businesses who deferred VAT due from 20 March to 30 June 2020 will now have the option to pay in smaller payments over a longer period.

Instead of paying the full amount by the end of March 2021, you can make smaller payments up to the end of March 2022, interest free.

You will need to opt-in to the scheme, and for those who do, this means that your VAT liabilities due between 20 March and 30 June 2020 do not need to be paid in full until the end of March 2022.

The ‘opt in’ process is still unavailable, but HMRC states it will be available in early 2021, so you would expect this to be imminent. Please see the HMRC guidance here.

Importantly, you must opt in yourself, your agent cannot do this for you.

Business interruption insurance – Test case

The Supreme Court is still considering the FCA’s test case regarding the validity of wording of business interruption insurance policies.

In order to assist businesses to make their claims, the FCA has produced draft guidance, based on the initial judgment at the High Court. The FCA is currently consulting on the draft guidance which can be found here.

This draft guidance will likely be useful for clients and businesses either making a claim, or considering making a claim.

Stamp Duty Land Tax – Temporary reduced rates

The temporary reduced rates of SDLT for residential property are currently in place until 31 March 2021.

If we can help and advise you in any way, please get in touch with your usual RRL contact (direct dial numbers can be found here), we continue to largely work remotely. We will respond to emails as usual. We are currently conducting meetings via Microsoft Teams.

We will provide further updates, as and when further announcements are made and detail/guidance released.