Weekly Digest – 10 February 2021

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

Two COVID-19 Tests for All UK Arrivals

All UK arrivals will be required to take two COVID-19 tests— on Day 2 and Day 8 of their quarantine period– in an attempt to prevent new coronavirus variants from entering the country.

This new requirement comes on top of the current rule which requires travellers entering the UK to show proof of a negative COVID-19 test taken within 72 hours prior to travelling. Anyone who fails to comply will face a fine of up to £500.

Also, from 15 February, UK residentents and Irish nationals arriving from 33 “red list” COVID-19 hotspots where variants may have already spread, will have to quarantine in hotels for 10 nights, with security guards accompanying them when they go outside. Non-UK travellers who have been in these countries within 10 days before travelling will be banned from entry.

‘Pay As You Grow’ Mechanism Launched to Extend Loan Payments

The ‘Pay as you grow’ mechanism was launched this week to offer relief to the 1.4 million small businesses in the UK that borrowed money through the Bounce Back Loan Scheme by allowing them to repay over a longer period.

Almost £45 billion has been borrowed under the state-backed initiative, which involves cheap loans of up to £50,000. Through this new system, the length of loans will be extended from 6 to 10 years, reducing monthly repayments.

Struggling businesses will also be able to choose interest-only repayments or payment holidays for up to 6 months.

UK Treasury Exploring Options for An Online Sales Tax

The UK Treasury is looking at options for an online sales tax to shift balance, as high street shops across the country face dual threat of internet shopping and COVID-19 pandemic.

With many shops forced into temporary closure, official figures show the amount spent online increased by 46% in 2020 compared with a year earlier. Online spending now accounts for about 30% of overall retail sales in the UK.

This shift means there was a need to address the disparity in taxes paid by those with physical retail shops and those operating mainly online.

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.

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.

What Changes Does Britain Want to North Ireland Post-Brexit Rules?

Britain is calling for a renegotiation of the post-Brexit trade rules governing trade with Northern Ireland. To avoid creating a hard border on Ireland, Britain agreed to a deal wherein Northern Ireland remained within the EU’s single market. However, this has created a regulatory border between Northern Ireland and the rest of the UK.

Reuters has compiled Britain’s demands due to be discussed with the EU this week, including:

  • SUPERMARKETS – Extend waivers on certification requirements from supermarkets and their suppliers to at least Jan. 1 2023, from April 2021 currently.
  • CHILLED MEATS – Extend the free transport of certain types of chilled meats until Jan. 1 2023, from June 30 2021 currently.
  • PARCELS – Extend a waiver on customs declarations on mail parcels sent from the UK to Northern Ireland until at least Jan. 1 2023 from March 31. 2021 currently.
  • MEDICINES – Extend the free movement of medicines until at least Jan. 1 2023 from Dec. 31 2021 currently.
  • SEED POTATOES – Renegotiation of arrangements preventing the movement of seed potatoes, other plants, and plant products.
  • STEEL – Tariff-free movement of steel between the UK and Northern Ireland. An anomaly in the way tariffs are applied by the UK and the EU has raised the prospect of a 25% tariff on steel moving to Northern Ireland.
  • PET TRAVEL – A bilateral arrangement with Ireland to remove barriers to owners taking their pets into Northern Ireland and Ireland from the rest of the UK.

When Should I Apply for a Business Loan?

Borrowing money is part of running a company, but it does come with a cost. This means you shouldn’t impulsively take on debt unless there’s a clear benefit for doing so.

Below are the top valid reasons for getting a business loan:

  • Opportunity to expand your business– Whether it’s for hiring new staff, developing a new product, or launching a new marketing initiative, if it will help you grow your future revenues, it is a smart time to get a loan.
  • Replace, repair, or upgrade equipment or systems– It is sometimes difficult to finance new business assets such as equipment, service vehicles, and systems out of your existing cash. A business loan can be used to cover these investments and help you improve your products or services.
  • Refinance existing debt– If you already have a business loan, you may qualify for better terms now compared to when you first borrowed. Refinancing to a better rate will let you enjoy lower monthly payments while covering your debt.

If you require some guidance on deciding what type of business loan to apply for, or need some help with the completion of your requirements, don’t hesitate to get in touch with us.

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