July has been a busy month with new initiatives including the launch of the Eat Out to Help Out scheme. We would like to draw your attention to the very latest updates:
COVID-19 grants ARE taxable
We are delighted that many of our clients have been able to successfully access government funded financial support for their businesses including the Small Business Support Grant (SBSG), Retail, Hospitality, Leisure Support Grant and the Self-Employment Income Support Scheme and more.
You may be remiss for thinking that these grants are tax exempt which unfortunately is not the case. As the grants received are to replace what would have ordinarily been taxable income this income needs to be declared. Our advice would be to ensure you have a sufficient enough reserve to contribute to those taxes so that you don’t have any unwelcome future surprises.
VAT deferment scheme
The deferral of VAT payments due to coronavirus has now come to an end (as of 30 June 2020). The VAT payment deferral meant that all UK VAT-registered businesses had the option to defer VAT payments due between 20 March and 30 June 2020 until 31 March 2021.
We would like to take this opportunity to remind you that while 31 March 2021 is still some time away it will come round sooner rather than later and therefore you should start to consider the necessary arrangements to pay the deferred VAT. Should you require access to finance to help fund your VAT we are able to help connect you with relevant contacts.
The government made an announcement on 8 July allowing VAT registered businesses to apply a temporary 5% reduced rate of VAT to certain supplies pertaining to: Hospitality, Hotel and holiday accommodation and admissions to certain attractions. This temporary reduced rate applies to supplies that are made between 15 July 2020 and 12 January 2021. Our Senior Tax Manager Alastair Johnston details the changes in a dedicated news post. Do talk to Alastair and our expert team if you have any concerns about how these changes apply to your business.
Job Retention Scheme
From 1st July “Flexible Furlough” was introduced and the calculations and time recording of full-time, part-time and fully furloughed employees has become more complicated. If you have any queries regarding your claim do talk to us, we are happy to help.
Coronavirus Business Interruption Loan Scheme
We would also like to remind clients about the CBILS as introduced to provide finance to small and medium sized businesses impacted by coronavirus. The scheme covers different finance products and are covered by an 80% government guarantee. While you may not have considered this when initially announced in March, as the road ahead out of lockdown becomes clearer and you are continuing to lose revenue and are seeing your cashflow disrupted as a result of the outbreak, there is still an opportunity to access support should you find it necessary. The scheme was to run for 6 months in duration therefore we expect applications to close as of 24th September.
Having supported many clients with their business plans and applications for support over the last four months, it has been great to hear about their ambition for going forward and to see the reopening of many more businesses across Ayrshire and beyond.