11thAug
News article

Government coronavirus schemes 'failing to provide support', BCC finds

The coronavirus (COVID-19) schemes announced in Chancellor Rishi Sunak's Summer Economic Update are failing to provide the support businesses need, according to the Coronavirus Business Tracker published by the British Chambers of Commerce (BCC).

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The coronavirus (COVID-19) schemes announced in Chancellor Rishi Sunak's Summer Economic Update are failing to provide the support businesses need, according to the Coronavirus Business Tracker published by the British Chambers of Commerce (BCC).

According to July's survey, although 43% of firms intend to use the Job Retention Bonus, other support schemes have low take up.

Over half of businesses said they did not intend to use the Kickstart Scheme. A further 31% said they had not heard of the scheme.

In addition, 62% of firms said they did not intend to use grants for employers who take on trainees, and 65% of firms said they did not intend to access grants for those who hire apprentices.

Almost a third of firms expect to decrease the size of their workforce in the next three months, while 55% reported a slight or significant decrease in their cashflow.

Commenting on the findings, Claire Walker, Co-Executive Director at the BCC, said: 'Expected usage of schemes announced in the Summer Statement is relatively low, indicating they do not provide the right kind of support for many businesses at this critical time and a rethink is needed.

'With confidence and demand not returning at the scale firms need, the government must take radical steps to slash the tax burden around employment to help companies pay valued staff.'

10thAug
News article

Bounce Back loans average 87,000 approvals a week since launch

Lenders have approved an average of 87,000 Bounce Back loans every week since the scheme was launched on 4 May, according to the latest figures from the Treasury.

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Lenders have approved an average of 87,000 Bounce Back loans every week since the scheme was launched on 4 May, according to the latest figures from the Treasury.

The Bounce Back Loan Scheme (BBLS) allows small businesses hit by the impact of the coronavirus (COVID-19) pandemic to apply for up to £50,000, with the government guaranteeing 100% of the advance.

Businesses can apply for a minimum of £2,000, up to a maximum of £50,000, or 25% of business turnover, with the government paying the interest for the first 12 months.

The BBLS has proved the most popular of the government's COVID-19 business support schemes. It saw 110,000 applications on the first day, and the latest figures show that 1.13 million small and micro businesses have now used Bounce Back loans.

Meanwhile, the Coronavirus Business Interruption Loan Scheme (CBILS) has now supported 58,600 businesses with over £13 billion worth of finance and facilities.

Lenders have also backed 480 larger businesses through the Coronavirus Large Business Interruption Loan Scheme (CLBILS).

Commenting on the figures, Stephen Pegge, Managing Director of Commercial Finance at UK Finance, said: 'Bounce Back loans are just one aspect of the sector's support package for the UK economy, alongside other measures including capital repayment holidays, extended overdrafts and invoice finance facilities.

'This support is designed to ensure businesses are able to navigate the coming months, but diverse sources of finance will be needed to help them prosper in the future.'

7thAug
News article

ICAEW warns taxpayers have 90 days to notify HMRC of overclaimed COVID-19 grants

The Institute of Chartered Accountants in England and Wales (ICAEW) has warned taxpayers that they have 90 days to notify HMRC of overclaimed coronavirus (COVID-19) grants.

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The Institute of Chartered Accountants in England and Wales (ICAEW) has warned taxpayers that they have 90 days to notify HMRC of overclaimed coronavirus (COVID-19) grants.

The 90-day period to inform HMRC of any overclaimed amounts is now law: Finance Act 2020 recently received Royal Assent, which confirms the taxability of the Coronavirus Job Retention Scheme (CJRS), as well as the Coronavirus Statutory Sick Pay Rebate Scheme and COVID-19 business support grants.

Finance Act 2020 also gives HMRC the power to recover grant payments if a recipient is not entitled to them, as well as the ability to charge penalties.

The law states that the onus is on the taxpayer to notify HMRC if they have overclaimed COVID-19 grants. A taxpayer who has overclaimed a grant and not repaid it must notify HMRC by the latest of either:

  • 90 days after the date they received the grant they were not entitled to
  • 90 days after the date they received the grant that they were no longer entitled to keep because their circumstances changed
  • 20 October 2020.

HMRC has published guidance on how to repay overclaimed COVID-19 grants – this can be found here.

7thAug
News article

Government further extends Tax-Free Childcare scheme as result of coronavirus

The government has further extended Tax-Free Childcare (TFC) to 31 October 2020 for parents who may have fallen below the minimum income requirement as a result of the coronavirus (COVID-19) pandemic.

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The government has further extended Tax-Free Childcare (TFC) to 31 October 2020 for parents who may have fallen below the minimum income requirement as a result of the coronavirus (COVID-19) pandemic.

HMRC confirmed that key workers who may exceed the income threshold for the 2020/21 tax year as a result of working more due to the pandemic will continue to receive support.

The TFC scheme provides families with a £2 government top-up for every £8 they pay into their child's account, up to the value of £2,000 per child, or £4,000 per disabled child. The money can be used towards the cost of qualifying childcare for a child up to the age of 11, or 17 for a disabled child.

Commenting on the matter, Angela MacDonald, Deputy Chief Executive at HMRC, said: 'HMRC has been providing vital financial support to families during a time when it has been needed most, and we will continue to help them as they gradually transition back to a normal life.

'We want to make sure families will not be adversely affected by any abrupt change in circumstances, which is why we have extended available support through TFC to give families that extra boost.'

6thAug
News article

Bank of England holds rates as economy set for record slump

The Bank of England (BoE) left interest rates unchanged at 0.1% as it predicted a record slump for the UK economy due to the coronavirus (COVID-19) pandemic.

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The Bank of England (BoE) left interest rates unchanged at 0.1% as it predicted a record slump for the UK economy due to the coronavirus (COVID-19) pandemic.

The BoE's Monetary Policy Committee (MPC) voted unanimously to hold rates as it said it expected Britain's economy to take longer to get back to its pre-pandemic size.

The BoE expects the economy to shrink by 9.5% in 2020, which would mark the biggest annual decline in 100 years. However, that is better than its initial estimate of a 14% contraction.

However, the BoE warned that the jobs market recovery would take longer.

In its first official forecast since the pandemic hit, the BoE said the recovery had been 'earlier and more rapid' than it had assumed in May, reflecting a faster easing of lockdown restrictions.

It said spending on clothing and household furnishings was now back to pre-COVID levels, while consumers have carried on spending more on food and energy than before the lockdown.

However, it stated that leisure spending and business investment 'remained subdued', which would weigh on the recovery.

6thAug
News article

Ensure interaction between VAT and Eat Out to Help Out is understood, ICAEW urges

The Institute of Chartered Accountants in England and Wales (ICAEW) has urged businesses to ensure that they understand the interaction between VAT and the government's Eat Out to Help Out scheme.

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The Institute of Chartered Accountants in England and Wales (ICAEW) has urged businesses to ensure that they understand the interaction between VAT and the government's Eat Out to Help Out scheme.

The new Eat Out to Help Out discount is applicable to food and/or non-alcoholic drinks purchased for immediate consumption on premises, up to a maximum discount of £10 per diner, which includes VAT.

The discount can be used unlimited times and is valid Monday to Wednesday on any eat-in meal for the month of August across the UK. 

HMRC has published guidance which outlines how the scheme operates, including the accounting treatment for VAT. The guidance covers many different situations, such as food purchased with or without alcohol and the interaction with the temporary VAT rate of 5% for the hospitality sector.

In the guidance HMRC also highlights how the £10 cap applies and how it interacts with other offers provided by the serving establishment.

The ICAEW has outlined that VAT will always be due on the whole amount of the bill, including the subsidy received from the government.

The guidance can be read here.

5thAug
News article

SME manufacturing activity plummets, says CBI

SME manufacturing output volumes fell at the fastest rate on record, according to the latest quarterly Confederation of British Industry (CBI) SME Trends Survey.

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SME manufacturing output volumes fell at the fastest rate on record, according to the latest quarterly Confederation of British Industry (CBI) SME Trends Survey.

The survey of 331 small and medium-sized enterprise (SME) manufacturers reported that output volumes were down by 53% in the three months to July, the worst quarter since October 1988.

In addition, total new orders in the three months to July were down 56%, the quickest pace on record, reflected in the fastest falls on record in both domestic and export orders.

However, business sentiment in the quarter to July improved slightly, following its record pace of decline in April, while firms expect output to recover at a slow pace in the next three months.

Commenting on the figures, Alpesh Paleja, Lead Economist at the CBI, said: 'SME manufacturers faced an exceptionally challenging quarter due to the coronavirus (COVID-19) crisis. While firms believe that the worst of the downturn is behind them, ongoing cashflow issues and tough trading conditions mean that they aren't back on their feet yet. Expectations of another heavy fall in headcounts is a sign of what is to come.

'It's clear that firms need more immediate support, from grants to further business rates relief, to tide them over until demand conditions improve more substantially.'

5thAug
News article

HMRC publishes guidance on claiming Job Retention Bonus

HMRC recently published guidance on the eligibility requirements for the Job Retention Bonus.

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HMRC recently published guidance on the eligibility requirements for the Job Retention Bonus.

From February 2021, employers will be able to claim the Job Retention Bonus through the gov.uk website. The Job Retention Bonus will be a one-off payment of £1,000 to the employer for every eligible employee that is claimed for. The bonus will be taxable, so the business must include the whole amount as income when calculating their taxable profits for corporation tax or self assessment.

The guidance states that an employer will be able to claim the Bonus for any employees that were eligible for the Coronavirus Job Retention Scheme (CJRS). Where a claim for an employee was incorrectly made, a Job Retention Bonus will not be payable.

All employers are eligible for the scheme, including recruitment agencies and umbrella companies.

The guidance can be read in full here. HMRC stated that additional guidance on the Job Retention Bonus will be published by the end of September.

4thAug
News article

Data reveals significant decrease in inheritance tax receipts

Data published recently by HMRC has revealed that there has been a significant drop in inheritance tax (IHT) receipts.

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Data published recently by HMRC has revealed that there has been a significant drop in inheritance tax (IHT) receipts.

According to the data, HMRC collected £5.2 billion in IHT during 2019/20. This represents a decrease of 4% (£223 million) on 2018/19. The data covers the 2019/20 tax year and is based on payments received by HMRC.

The introduction of the main residence nil-rate band (RNRB) is cited as a cause for the decrease.

Commenting on the RNRB, Clare Moffat, Head of Intermediary Development and Technical at insurers Royal London, said: 'If you are a cohabiting couple this will not apply to you.

'In addition, the RNRB can only be used for direct descendants. This means that if you are single, have no children and your property is passing to a nephew that might be your full-time carer, then your estate would only be able to claim the nil-rate band of £325,000. Careful estate planning is vital to avoid nasty shocks and potential huge tax bills.'

4thAug
News article

FSB calls for further help for employers as furlough wind-down begins

The Federation of Small Businesses (FSB) has called for the government to provide further help to employers as the Coronavirus Job Retention Scheme (CJRS) begins to be wound down.

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The Federation of Small Businesses (FSB) has called for the government to provide further help to employers as the Coronavirus Job Retention Scheme (CJRS) begins to be wound down.

From 1 August, employers have to pay national insurance contributions (NICs) and pension contributions for furloughed employees. Starting from this date the level of the grant will be reduced each month. Employers will take on an increasing proportion of pay for employees who are furloughed.

The CJRS will close at the end of October, and will be followed by the Job Retention Bonus, which will see UK employers receive a one-off payment of £1,000 for each furloughed employee who is still employed as of 31 January 2021.

Commenting on the matter, Mike Cherry, National Chairman of the FSB, said: 'One in five small firms have been forced to let staff go over the last three months. Even with critical emergency measures in place, jobs are sadly being lost in the here and now.

'As we look to the autumn, it's clear that we cannot afford to pull up the business support drawbridge any time soon. Giving firms £1,000 for every employee they bring back from furlough is welcome, but Job Retention Bonus funds won't manifest until next year – jobs are being lost today.'

The FSB is urging the government to help employers in regard to NICs, either through an uprating of the Employment Allowance or an NICs holiday for firms who employ those furthest from the workplace.