New tax year: new set of circumstances
6 April 2020: deferrals, emergency funding, furloughing, and government support are not words we usually associate with the new tax year. Coronavirus has significantly changed the landscape.
The tax year 2020-21 is starting like no other. We have a whole new language to conjure with across all businesses including the Coronavirus Job Retention Scheme and furloughing. VAT payments due up to 30 June can now be deferred; and there is even the prospect of change to insolvency rules to help companies trade during these difficult conditions.
For the self-employed, the Self-employment Income Support Scheme will provide grants to self-employed individuals or partnerships negatively impacted by COVID-19 and with profits below £50,000, worth 80% of their profits; up to a cap of £2,500 per month. And, apart from VAT deferral mentioned above, another deferral is allowed for the self-employed: the deferral of the self-assessment payment on account, that is ordinarily due to be paid to HMRC by 31 July 2020 (which may now be deferred until January 2021).
Small businesses have the prospect of receiving Small Business Grant Funding if they have premises and already pay little or no business rates because of small business rate relief or rural rate relief. And the Coronavirus Business Interruption Loan Scheme – in its newly revised format – aims to help businesses access bank lending and overdrafts if they need to do so. Further, the Statutory Sick Pay Rebate will allow small and medium-sized businesses to reclaim Statutory Sick Pay paid for staff absence due to coronavirus.
Large businesses have the COVID-19 Corporate Finance Facility available under which the Bank of England will buy short-term debt for them. Yet another new term to work with. Last week brought the Coronavirus Large Business Interruption Loan Scheme.
Some sectors are feeling acute pain as we enter this new tax year. Retail, hospitality and leisure businesses are cases in point. There is a business rates holiday for retail, hospitality and leisure sectors for the 2020-21 tax year (except in Northern Ireland); and up to £25,000 per property cash grant for these sectors. Nursery businesses have a business rates holiday in England for the 2020-21 tax year too.
The tax year 2020-21 is unique. We are learning what emergency trading, funding, employment and living looks like. All the while we are testing new concepts and feeding back to government on how well this new landscape is working. Please keep in touch.