16thJun
News article

HMRC updates guidance for self-employed coronavirus scheme

HMRC has updated its guidance regarding the eligibility of businesses for the two Self-employment Income Support Scheme (SEISS) grants.

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HMRC has updated its guidance regarding the eligibility of businesses for the two Self-employment Income Support Scheme (SEISS) grants.

The tax authority has published a number of examples that show when a business has been 'adversely affected' and meets the criteria for the first and second grants.

Those self-employed individuals (including those trading as a partnership) adversely affected in the period up to 13 July 2020 can claim the first grant. If they are adversely affected in the period from 14 July 2020 they can claim the second grant.

The first taxable grant is worth 80% of average monthly trading profits, paid out in a single instalment covering three months' worth of profits and capped at £7,500.

A second and final grant can be claimed in August 2020. It is worth 70% of average monthly trading profits and will also be paid out in a single instalment covering three months' profits. The grant is capped at £6,570.

HMRC confirmed that those who are self-employed and able to return to work as normal in June will not be eligible for a second grant, although they can claim a grant for the first period. HMRC's guidance of how a business might be adversely affected includes such reasons as shielding and supply chain disruption.

A full list of circumstances can be found here, and details of the SEISS can be found here.

16thJun
News article

UK economy could contract by 8% in 2020, data suggests

Data published by economic forecasting group EY Item Club has suggested that the UK economy could contract by 8% in 2020.

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Data published by economic forecasting group EY Item Club has suggested that the UK economy could contract by 8% in 2020.

It estimates a record 15% contraction in the second quarter of 2020. The EY Item Club said that the figures 'reflect a poor economic performance in April due to the coronavirus (COVID-19) lockdown, and deeper than expected contraction' in the first quarter of 2020.

In positive news, EY Item Club now predicts year-on-year GDP growth of 5.6% in 2021, a rise when compared to its previous estimate of 4.5%. However, the data also suggested that the UK economy is not expected to return to its late 2019 size until 2023.

'The impact of COVID-19 on the UK economy will depend on just how long the pandemic lasts, how many people are affected and how long restrictions to activity have to be in place,' said Howard Archer, Chief Economic Adviser to EY Item Club.

'The UK economy had been disappointingly lacklustre over the first two months of 2020, even before COVID-19 started to become a factor. After a challenging first half, our forecast shows that the UK economy is expected to start to recover in quarter three 2020 on the assumption that the government continues to gradually relax lockdown restrictions.'

15thJun
News article

Jobs and training for the young must be prioritised to boost economy, says CBI

The Confederation of British Industry (CBI) has called on the government to prioritise jobs and training for young people in order to help boost the UK economy once the coronavirus (COVID-19) lockdown ends.

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The Confederation of British Industry (CBI) has called on the government to prioritise jobs and training for young people in order to help boost the UK economy once the coronavirus (COVID-19) lockdown ends.

In a letter to Prime Minister Boris Johnson, the CBI stated that unemployment is the biggest threat to livelihoods. The business group outlined an economic recovery plan that would 'help secure a jobs-rich, fair and sustainable future for the UK economy'.

The CBI has urged the government to make jobs, skills training and opportunities top priorities, especially for young people. It also promotes targeted financial support to help kick-start consumer demand and reinvigorate UK competitiveness.

Investing in the green economy will also help to create new jobs, according to the CBI.

'The last few months have seen a nation rightly and relentlessly focused on health,' said Carolyn Fairbairn, Director General of the CBI.

'That will remain the case for some time. But this must not stop the country from implementing an ambitious economic recovery plan. Time is of the essence. Smart, fast policy is needed now to accelerate the process to minimise the human cost and in particular protect the futures of our young people.'

15thJun
News article

MPs call for VAT reduction to help firms affected by coronavirus

MPs have urged the government to reduce VAT for firms in the tourism sector in order to help them recover from the coronavirus (COVID-19) lockdown.

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MPs have urged the government to reduce VAT for firms in the tourism sector in order to help them recover from the coronavirus (COVID-19) lockdown.

A report published by the All-Party Parliament Group (APPG) for Hospitality and Tourism has called for a reduction in VAT for businesses in the hospitality sector, alongside an overhaul of the business rates system in England and Wales and the creation of a new autumn Bank Holiday.

Just 11% of businesses in the UK hospitality sector have been able to trade through the COVID-19 pandemic, according to the APPG. Figures published recently by the Treasury also revealed that accommodation and food services companies have furloughed 1.4 million people, and have claimed £2.6 billion in furlough funds.

Commenting on the matter, Steve Double, Chair of the APPG, said: 'The UK's hospitality and tourism sectors have been devastated by the COVID-19 crisis, and this report highlights the scale of the damage done to businesses.

'Whilst the support provided to the sector so far has been very welcomed, we are under no illusions that the path to recovery will be tough.'

12thJun
News article

LITRG warns self-employed that SEISS is taxable

The Low Incomes Tax Reform Group (LITRG) has warned self-employed individuals that the government's coronavirus (COVID-19) Self-employment Income Support Scheme (SEISS) is taxable.

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The Low Incomes Tax Reform Group (LITRG) has warned self-employed individuals that the government's coronavirus (COVID-19) Self-employment Income Support Scheme (SEISS) is taxable.

The group is concerned that many may wrongly assume that the SEISS funds are exempt from tax, particularly as they are termed 'grants' by the government. It is warning that many people may have to pay a third of the grant back in tax and Class 4 national insurance contributions (NICs).

The LITRG said that grants made to the self-employed via the SEISS are likely to be included in claimants' 2020/21 self assessment tax returns.

Commenting on the issue, Victoria Todd, Head of the LITRG, said: 'Many claimants of the SEISS grants might, understandably, use the money as soon as they get it, for example to catch up on liabilities or to meet essential living costs – but they need to think now about budgeting for income tax and national insurance on it.'

More information on the SEISS can be found here.

12thJun
News article

UK economy shrinks record 20.4% as result of coronavirus lockdown

The UK economy shrank by 20.4% in April as the coronavirus (COVID-19) lockdown paralysed business activity, according to the Office for National Statistics (ONS).

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The UK economy shrank by 20.4% in April as the coronavirus (COVID-19) lockdown paralysed business activity, according to the Office for National Statistics (ONS).

The record month-on-month decline in Gross Domestic Product (GDP) completely eclipsed the previous record contraction of 5.8%, which was recorded in March.

The services sector – which constitutes around 80% of the UK's economic output – fell by 19.0% in April. Industrial output fell by 20.3%.

There were also significant falls in the manufacturing and construction sectors, which decreased by 24.3% and 40.1% respectively. In addition, import and export trade with the rest of the world was badly affected by the pandemic, according to the ONS.

Some businesses began to reopen in May, so analysts expect April's contraction to represent the worst of the impact.

In the three months to the end of April, the UK economy contracted by what the ONS called an 'unprecedented' 10.4%, with widespread falls across nearly all industries.

Commenting on the figures, Jonathan Athow, Deputy National Statistician for Economic Statistics at the ONS, said: 'April's fall in GDP is the biggest the UK has ever seen, more than three times larger than last month and almost ten times larger than the steepest pre-COVID-19 fall. In April the economy was around 25% smaller than in February.

'Virtually all areas of the economy were hit, with pubs, education, health and car sales all giving the biggest contributions to this historic fall.'

11thJun
News article

Significant number of SME owners using personal savings to keep business trading

Research carried out by finance provider Nucleus Commercial Finance has suggested that one in seven small and medium-sized enterprise (SME) owners have used personal savings to keep their business trading.

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Research carried out by finance provider Nucleus Commercial Finance has suggested that one in seven small and medium-sized enterprise (SME) owners have used personal savings to keep their business trading.

44% of business owners polled stated that their firm has been negatively impacted by the coronavirus (COVID-19) pandemic. A quarter of businesses have taken out a loan or have extended an existing one, whilst 7% have applied for additional funding.

The findings come amidst reports that almost half of government coronavirus Bounce Back Loans may never be repaid.

Commenting on the research, Chirag Shah, Chief Executive of Nucleus Commercial Finance, said: 'While some owners might believe that this is the best option for short-term cashflow needs, taking this measure can have a detrimental effect on the business and also their personal situation, especially if activity does not improve immediately once lockdown measures are eased.'

11thJun
News article

Government extends furlough scheme for parents on statutory leave

The government has extended the Coronavirus Job Retention Scheme (CJRS) for parents on statutory maternity and paternity leave.

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The government has extended the Coronavirus Job Retention Scheme (CJRS) for parents on statutory maternity and paternity leave.

The Treasury recently announced that parents who are returning to work over the coming months will be eligible for the CJRS despite the scheme closing to new entrants on 30 June. Individuals on adoption leave, shared parental leave and parental bereavement leave will be eligible, but only if they work for a business that has furloughed employees.

Commenting on the matter, Chancellor Rishi Sunak said: 'When I announced these changes to the furlough scheme . . . I was clear that we wanted to do this in a fair way, that supports people back to work as the country begins to re-open following coronavirus.

'But for parents returning from leave, their circumstances have meant that they are still in need of support, and I'm pleased that they will be able to receive the financial assistance they and their family will need.'

The CJRS will close to new entrants on 30 June. In order for the minimum three-week furlough period to be completed by then, the final date which an employer was able to furlough an employee for the first time was 10 June.

The Chancellor recently announced changes to the CJRS that will apply from 1 July until its scheduled closure at the end of October. The changes mean businesses will be able to bring furloughed employees back on a part-time basis from 1 July. HMRC intends to publish further guidance on these changes on 12 June.

Information on the CJRS can be found here.

10thJun
News article

Pension savers warned over scams and transfers

The Pensions Regulator (TPR) has issued a warning to savers over the dangers of scams and making transfers during the coronavirus (COVID-19) pandemic.

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The Pensions Regulator (TPR) has issued a warning to savers over the dangers of scams and making transfers during the coronavirus (COVID-19) pandemic.

The warning followed the publication of figures by Action Fraud which showed that over £5 million of fraud has been reported since February, with reports totalling over 2,100.

According to the fraud prevention body Cifas, the most common COVID-19 scams Britons have been targeted with during the pandemic include pension scams, where fraudsters convince their victims to transfer their pension pots or release funds.

The TPR has also produced a factsheet for savers who have a defined benefit (DB) pension.

The factsheet tells savers that they do not need to rush a decision about their pension and should seek advice first. It also reminds DB pension holders that transferring into another type of arrangement is unlikely to be in their best interest.

Commenting on the issue, Charles Counsell, Chief Executive of the TPR, said: 'These figures once again show the true devastation of scams. We know, on average, victims of pension scams lose £82,000.

'Anyone can be a victim, and COVID-19 has created the sort of environment fraudsters thrive in. That's why it is vital savers don't rush decisions about their retirement funds.' 

10thJun
News article

£35 billion loaned to businesses through coronavirus schemes

Business loans through government-backed coronavirus support schemes have reached almost £35 billion, according to the latest figures published by the Treasury.

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Business loans through government-backed coronavirus support schemes have reached almost £35 billion, according to the latest figures published by the Treasury.

The figures show that £3.6 billion has been granted to 85,000 businesses in the past week, taking the total to £34.9 billion.

The Bounce Back Loan Scheme (BBLS), which allows small businesses adversely affected by the COVID-19 pandemic to apply for up to £50,000 with the government guaranteeing 100% of the advance, continues to be the most popular scheme.

The BBLS is averaging 156,000 loan approvals per week, and £2.5 billion was borrowed through it in the past week.

Over 48,000 businesses have received funding through the Coronavirus Business Interruption Loan Scheme (CBILS) to date, with lenders approving £9.6 billion in total.

Another 53 larger businesses secured finance through via the Coronavirus Large Business Interruption Loan Scheme (CLBILS) last week.

Commenting on the figures, Mike Conroy, Director of Commercial Finance at UK Finance, said: 'The industry acknowledges the role it must play and is providing an unprecedented level of support, with £35 billion approved to 830,000 businesses through government-backed lending schemes in less than three months.

'This sits alongside the broad package of measures the industry has introduced to help businesses access the support they need, including overdraft extensions and capital repayment holidays.'