Archive for May, 2020

Claiming Child Benefits for new-borns

Tuesday, May 5th, 2020

General Register Offices are currently operating with reduced capacity and with government guidance to social distance and stay at home, new parents are advised not to visit them. They can however still claim Child Benefit without having to register their child’s birth first to ensure that they do not miss out.

If they already claim Child Benefit, they can complete the form or add their new-born’s details over the phone on 0300 200 3100. They will need their National Insurance number or Child Benefit number.

Child Benefit claims can be backdated by up to 3 months.

This announcement is timely as Child Benefit payments increased from 6 April to a weekly rate of £21.05 for the first child and £13.95 for each additional child. Child Benefit is paid into a parent’s bank account, usually every 4 weeks.

Only one person can claim Child Benefit for a child. For couples with one partner not working or paying National Insurance contributions (NICs), making the claim in their name will help protect their State Pension.

Coronavirus Business Interruption Loan Scheme

Tuesday, May 5th, 2020

There has been considerable commentary in the media about this support initiative as business owners – struggling to cope with the reduction in their cash resources due to the COVID-19 outbreak – are finding it difficult to secure support from their bank.

Readers will be encouraged by the Chancellor’s recent comments when he confirmed that personal guarantees should not be requested for loans under £250,000.

The government’s offer to guarantee 80% of loans taken out and cover all the set-up and interest charges for the first year of the loan remains an attractive solution for businesses that need the additional liquidity.

If you are considering an application you will be required to produce certain evidence to back-up your request. This is likely to include:

  • Management accounts
  • Cash flow forecast
  • Business plan
  • Historic accounts
  • Details of assets

The above requirements will vary from lender to lender.

An alternative scheme for micro-sized businesses

Smaller businesses may decide to apply for the “Bounce-Back” Loan Scheme that is now available. Loans can be obtained between £2,000 to £50,000 but limited to 25% of turnover.

These smaller loans are 100% guaranteed by government and with no fees or interest charges payable for the first year.

Self-employment income support scheme

Tuesday, May 5th, 2020

If you are eligible, payments under the above scheme are due to be made by HMRC next month, June 2020. Readers who need financial support at an earlier date can still apply for Universal Credits as an interim measure.

Who can claim under SEISS?

To qualify for a payment under SEISS you will need to be a self-employed individual or a member of a trading partnership. You will also need to comply with the following:

  • you carry on a trade which has been adversely affected by coronavirus
  • you traded in the tax year 2018-19 and submitted your Self-Assessment tax return on or before 23 April 2020 for that year
  • you traded in the tax year 2019-20
  • you intend to continue to trade in the tax year 2020-21

HMRC have further confirmed that if you are not eligible based on the 2018-19 Self-Assessment tax return, they will then look at the tax years 2016-17, 2017-18, and 2018-9.

You will need to confirm to HMRC that your business has been adversely affected by coronavirus. HMRC will use a risk based approach to compliance.

Finally, your trading profits must also be no more than £50,000 and more than half of your total income for either:

  • the tax year 2018-19
  • the average of the tax years 2016-17, 2017-18, and 2018-19.

How to claim

HMRC will aim to contact you by mid May 2020 if you are eligible for the scheme and invite you to claim using the GOV.UK online service. If you are unable to claim online an alternative way to claim will be available.

The online registration page will also be updated with the steps you can take to make it easier to claim using the GOV.UK online service.

You do not need to contact HMRC, as this will only delay the work being undertaken to introduce the scheme.

E-publications get VAT boost

Tuesday, May 5th, 2020

From 1 May 2020, VAT on e-publications has been scrapped. Good news for those of us who subscribe to newspapers online or buy books to read on electronic devices.

The change will potentially slash the cost of e-books and newspapers making reading more accessible as people stay at home.

Newspapers will also benefit from up to £35 million additional government advertising revenue as part of the coronavirus communications campaign.

The Treasury announcement said:

Plans to scrap VAT on e-books and e-newspapers have been significantly fast-tracked in a boost to readers and publishers during the coronavirus outbreak, the Chancellor announced today.

The zero rate of VAT will now apply to all e-publications from 1 May 2020 – seven months ahead of schedule – potentially slashing the cost of a £12 e-book by £2 and e-newspapers subscriptions by up to £25 a year.

In support of the print newspaper industry, the government has also announced it will be spending up to £35 million on newspaper advertising over the next 3 months as part of its Covid-19 communications campaign to ensure the whole UK is aware of the latest government guidance and advice.

Chancellor of the Exchequer further commented:

We want to make it as easy as possible for people across the UK to get hold of the books they want whilst they are staying at home and saving lives.

That is why we have fast tracked plans to scrap VAT on all e-publications, which will make it cheaper for publishers to sell their books, magazines and newspapers.

With the nation staying in their homes during lockdown and schools closed, millions have been relying more on e-publications to pass time, home school and read the news. The Chancellor has opted to bring the zero rating forward to make entertainment more affordable for readers who are rightly staying at home during the coronavirus crisis – and are more reliant on e-publications as a result.

The price of an e-book will now be VAT-free. The e-book of Hilary Mantel’s The Mirror and The Light could be over £2 cheaper while the average tax annual saving on a typical e-newspaper or e-magazine subscription could be £25 or £20, respectively.

Readers, who rely on large print sizes or find physical books difficult to hold, are expected to particularly benefit from digital reading being more financially accessible.

Coronavirus – Business update 4 May 2020

Monday, May 4th, 2020

Low interest rates announced for Bounce-Back Loan Scheme (BBLS)

This new scheme announced last week, was the subject of a letter from the Chancellor (1 May 2020) to the accredited lenders who have been instructed to facilitate the scheme since 4 May 2020.

In his letter he said:

In my statement to the House of Commons on Monday I announced the government’s intention to launch a new scheme, the Bounce Back Loans Scheme (BBLS). I am writing to clarify the approach I am taking to a number of matters relevant to the design and operation of BBLS before its launch on Monday.

He followed with the following clarification on pricing:

As a 100% guaranteed loan scheme, the price of BBLS is critical to its success: together, we need to ensure that these loans are affordable and accessible. As such, and incorporating a range of data, I have come to the decision that the rate should be set at 2.5%.

Readers who have been contemplating the value of this scheme to their business will be further encouraged by this announcement on interest rates. 2.5% interest cost together with the government’s 100% guarantee, no interest cost or fees and no loan repayments in the first year, make this an attractive proposition.

However, business owners contemplating this, or any other form of loan funding should undertake a basic risk assessment to ensure this is the most effective way to fund your business during this difficult time.

We can help if you need assistance with preparing cash-flow forecasts or other projections.

 

 

Scotland announces lifeline support schemes for businesses

£100m of additional grants for smaller businesses in Scotland was announced last week, 30 April 2020.

In a published news update posted online 30 April 2020, three schemes were announced:

  • £34 million Newly Self-Employed Hardship Fund, managed by Local Authorities, will be allocated to the newly self-employed who are ineligible for UK support (as they became self-employed since April 2019) – but are facing hardship – with £2,000 grants
  • £20 million Creative, Tourism & Hospitality Enterprises Hardship Fund, managed by the Enterprise Agencies with support from Creative Scotland and VisitScotland for small and micro creative, tourism and hospitality companies not in receipt of business rates relief with grants of up to £25K.
  • £45 million Pivotal Enterprise Resilience Fund managed by the Enterprise Agencies providing bespoke grants and wrap around business support to viable but vulnerable SMEs who are vital to the local or national economic foundations of Scotland.

The Scottish Government is also providing £1 million to top up Creative Scotland’s Bridging Bursaries in the not-for-profit sector.

These are welcome additions to the other UK grants on offer to counter COVID-19 disruption in Scotland. Perhaps the Chancellor in London will take note of the Newly Self-Employed Hardship Fund as this is equally relevant to the other sectors of the UK.

Corno

Monday, May 4th, 2020