Yesterday’s statement from Rishi Sunak was much more positive in that it announced a very considerable amount of support for businesses in these difficult times. It is likely that there will be further support packages announced in the coming days and weeks.
In the meantime, the business support now announced by the Chancellor falls broadly into four categories:
- Grants and business rates holidays. The grants are being provided through the business rates system and are targeted at those companies in the retail, leisure and hospitality sectors – ie those that are likely to be hit hardest by the restrictions implemented Monday night. There is also a smaller grant to all businesses (with premises), again through the business rates system.
- The government stepping in to cover Statutory Sick Pay for SMEs in coronavirus cases
- Government backed loans – up to £330 billion is available
- The ability to defer tax payments, including PAYE and VAT. This opportunity should not be taken lightly and will provide many businesses with an invaluable additional short term credit facility.
Details of the support available are still being worked on by the government.
It has also been announced that individuals will be able to request a three month mortgage deferral from their lender.
Personal service companies “IR35” in the private sector
It was announced last night that the changes to IR35 in the private sector which were due to be introduced on 6 April this year have now been postponed for 12 months until 6 April 2021.
There is nothing yet available on the HMRC website. The following quotes from the speech made by Steve Barclay MP, Chief Secretary to the Treasury in parliament last night:
“I can also this evening announce the government is postponing the reforms to the off-payroll working rules, IR35, from April 2020 to April 6, 2021.
This is a deferral in response to the ongoing spread of Covid-19 to help businesses and individuals.
This is a deferral not a cancellation and the government remains committed to reintroducing this policy to ensure people working like employees but through their own limited company pay the same tax as those employed directly.”
Many individuals have already seen their contracting arrangement change in anticipation of 6 April 2020, but for those where the arrangements are still subject to negotiation, this announcement should provide some comfort that the position no longer needs to be agreed immediately.
End of the tax year
In all of the events of recent days, it is easy to forget that 5 April is the end of the tax year, and that this date is fast approaching.
The end of the tax year is the date to which rental accounts are drawn up to each year. Those who may wish to bring their taxable income below a particular threshold for the tax year, for example £100,000, may wish to bring forward proposed repairs or maintenance expenditure so that the tax deduction falls in the current, rather than the next tax year.
In addition, for those with cash available, 5 April is an important deadline for making pension contributions, using ISA allowances, and also making tax efficient investments such as EIS and VCT.
It is therefore important not to forget to complete your customary end of tax year planning. We remain open and can assist you with your tax queries in relation to such matters, and can also refer you to a number of different financial advisors where investment advice is required.
Go to the UK Government website for up-to-date details
Information correct at time of posting.
Please note that Harts Accountants cannot be responsible for information on 3rd party websites