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.'

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.

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.'

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.'

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.

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.' 

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.'

The government is considering suspending Sunday trading laws for a year in order to aid UK economic recovery once the coronavirus (COVID-19) lockdown ends.

Under the Sunday Trading Act 1994, large retailers are currently permitted to trade for six hours on Sundays. There are no restrictions on small retailers.

As part of the plans, trading hours will be extended to help reduce queues and ease overcrowding in shops. Cafes and pubs could also be given approval to serve food and drink outside, and councils will be encouraged to allow more outdoor markets to give businesses time to adapt to social distancing measures.

Commenting on the plans, Adam Marshall, Director General of the British Chambers of Commerce (BCC), said: 'Businesses need to be given every possible opportunity to start to generate sales again. If there are rules that can be relaxed to give more companies a fighting chance to trade their way through this crisis without compromising safety, ministers should do everything in their power to make it happen.'

The Institute of Directors (IoD) has warned that business debt will hinder the economic recovery from the coronavirus (COVID-19) unless steps are taken to make the burden more manageable.

The IoD polled 720 company directors and found that 51% believe that debt their company has taken on during the pandemic will have a negative impact on their recovery. 57% said that debt will hold back their investment plans for the next two years.

The business group is calling on the government, banks and businesses to work together in order to deal with the 'debt mountain' faced by UK firms. The IoD has proposed that small businesses should be able to convert government-backed loans into 'student loans' and make repayments once the business turns a profit.

'During the crisis, government loans have been a lifejacket for business, but they could become an anchor dragging back the recovery,' said Jonathan Geldart, Director General of the IoD.

'If we don't deal with the debt mountain businesses have had to take on because of coronavirus, the economy will take much longer to heal.'