There was a lot of speculation in the run up to March’s budget announcement. Following the cost of the pandemic, it seemed inevitable that taxes would need to rise somewhere. But although there were some rises, there was also a great deal of welcome news, and support to businesses in many areas was extended, further helping through the ongoing effects of this troubling time.
But now another quarter has passed, and there are still many changes happening all the time. So here is a summary of where we’re currently at:
Options for paying back Bounce Back Loans
As of this month, for businesses that took out a Bounce Back Loan at the start of the pandemic, it is the end of the 12 month payment holiday, and they have to start paying it back. Companies can opt to pay back or all some of their loan to reduce the interest costs, but to help those who are still struggling, there is also the option for Pay as You Grow. With this companies can:
- Request an extension of their loan term to ten years from six years, at the same fixed interest rate of 2.5%
- Reduce their monthly repayments for six months by paying interest only. This option is available up to three times during the term of their Bounce Back Loan
- Take a repayment holiday for up to six months. This option is available once during the term of their Bounce Back Loan
I owe a supplier money and I still can’t afford to pay them, can they wind me up?
The temporary restrictions preventing statutory demands and winding-up petitions being issued were due to come to an end on 30 June 2021. The Government announced on 16 June 2021 that they intend to pass legislation to extend these restrictions to 30 September 2021. These restrictions mean that a creditor may not issue a statutory demand or present a winding-up petition unless it has reasonable grounds to believe that Covid-19 has not had a financial effect, and the debtor would not have been able to pay its debts irrelevant of the pandemic.
Can my landlord now evict me?
Last year the government put a ban on landlords evicting firms for unpaid commercial rent. This was due to end on 30 June 2021, but it has now been extended for another nine months. This ruling stops landlords taking tenants to court for non-payment.
Is the Coronavirus Job Retention Scheme still active?
The Coronavirus Job Retention Scheme (also called the furlough scheme) remains in place. For claims made up to and including June, the government will continue to pay 80% of an employee’s wages for the hours that they cannot work, capped at £2,500 each month.
The government then intends to begin removing the support over a period of time, tapering the amount that they are prepared to fund. In July they will pay 70% of wages, capped at £2,187.50 each month, and the employer will need to pay 10% (up to £312.50). Then between 1 August to 30 September 2021 the government will pay 60% of wages, capped at £1,875 each month, and the employer will need to pay 20% (up to £625).
Despite the recently announced delays to what has been termed Freedom Day, the government has said that there are no current plans to extend the scheme beyond 30 September 2021, when it is due to come to an end.
What are the Corporation Tax changes?
One of the taxes that did get changed dramatically in the budget was the policy of encouraging businesses to come to the UK with an appealing low corporation tax rate. You may recall that in recent years it has dropped to 19%, irrespective of whether you were a large corporation or a small business.
However, in April 2023 the rate of Corporation Tax will no longer be aligned between the two bands and the rates will be split as follows:
- Businesses with profits of £50,000 or less will continue with the 19% rate of tax
- Firms with profits of more than £250,000 will pay 25% rate
- There will be marginal relief for profits between £50,000 and £250,000.
I’m Self-Employed, can I still get income support?
The Self-Employment Income Support Scheme will be available until September. The fourth grant under the scheme will be paid at 80% of 3 months’ average trading profits. It is paid out in a single instalment and capped at £7,500. The grant will be open to those who filed a Self-Assessment tax return for 2019-2020. The remaining eligibility criteria is unchanged. However, as widely reported in the press, the government is scrutinising professional advisors and whether they are complicit with assisting their clients in making false claims. It would be worthwhile for all self-employed workers to review the guidance to make sure that they genuinely meet the criteria.
What are the current VAT and Business Rates?
The existing VAT rate of 5% for hospitality, accommodation and attractions in the UK will be extended until the end of September. The subsequent rate will be 12.5% until 31 March 2022.
Eligible retail, hospitality and leisure properties in England will continue with 100% business rates relief from 1 April to 30 June 2021 and then, following this, 66% business rates relief is planned to be in place until 31 March 2022. There is a wide range of businesses that may be eligible for relief or assistance with business rates and we recommend that you contact your local Council to see what support they offer.
Suspension of wrongful trading provisions
The suspension of liability for wrongful trading in Great Britain continues until 30 June 2021 for directors who continue to trade a company through the pandemic with the uncertainty that the company may not be able to avoid insolvency in the future. This essentially means that if a company ultimately does get liquidated, the directors won’t get prosecuted for trading whilst it wasn’t making any profit. However, this will no longer be in place from July 2021.
At BLB Advisory, we offer advice and guidance to businesses helping them through difficult financial periods. If you’d like to discuss any issues, please don’t hesitate to get in touch.