Freelancers experienced a drop in income during the coronavirus (COVID-19) lockdown, according to research published by the Association of Independent Professionals and the Self-Employed (IPSE).

The research showed an average drop of 25% during the second quarter of this year.

The drop in income was driven by a record fall in the average number of weeks freelancers worked this quarter. Between March and June, the average freelancer went five and a half weeks out of 13 without work.

This, combined with a 3% fall in freelancers' average day rates, lead to a decline in average quarterly earnings from £20,821 in the first quarter of 2020 to £15,709 in the second quarter.

Inna Yordanova, Senior Researcher at IPSE, said: 'It's been clear for some time that the economic impact of coronavirus has fallen particularly hard on freelancers.

'Freelancers are a vital and extremely productive part of the workforce who have historically always been essential to recovery from economic depressions. If they are to play this crucial role, however, the government must make sure that in the event of a second wave, all freelancers have the support they need. Otherwise, going through another full lockdown and the resultant slump in work and income could be utterly devastating for them.'

The Federation of Small Businesses (FSB) has urged local councils in England to ensure the speedy issuance of small business grants to firms that require them.

The business group found that only 23% of councils across England have issued 100% of funds to businesses. The FSB has urged all local authorities to expedite the issuance of funds, whether it be the Discretionary Grant Fund or the Small Business Grants Fund.

The FSB is also urging small firms to sign up for coronavirus (COVID-19) small business grants as the deadline for applications approaches.

Commenting on the issue, Mike Cherry, National Chairman of the FSB, said: 'Small businesses have been through what for many has been and will be the most difficult period they have ever faced, and while things are slowly starting to improve, we're not out of the woods yet.

'That is why we are making this call . . . for small firms to apply as soon as possible so that they don't miss out on grant funding that could prevent a business from going under.'

Lockdown measures introduced as a result of the coronavirus (COVID-19) pandemic have pushed the UK economy into recession, data published by the Office for National Statistics (ONS) has revealed.

The data showed that the economy shrank by 20.4% in the second quarter of 2020. Construction and factory output slowed as the lockdown took effect and household spending decreased as a result of the closure of shops.

Additionally, the UK services sector experienced the largest quarterly decline since records began, according to the ONS.

Commenting on the data, Tej Parikh, Chief Economist at the Institute of Directors (IoD), said: 'These dire figures highlight the painful reality households and businesses across the country are facing. The battle now is to prevent longer-term scarring from this coronavirus-induced plunge in economic activity.

'Job losses have been mounting and may only increase as we reach the end of the furlough scheme. The pile of debt businesses have had to take on could also cause a lasting hangover. With flimsy balance sheets, directors will find it difficult to push ahead with any spending plans. Meanwhile, sales and operations will remain limited by the need for social distancing and ongoing uncertainty around the virus.'

The IoD has urged the government to respond with measures to support jobs, such as reducing employers' national insurance contributions (NICs).

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.'

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.'

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.

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.'

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.

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.