In the summer, it looked like the Pandemic was abating. The sun shone and the high street finally re-opened its doors. Businesses started to nurture the green shoots of resumed trading and potential economic revival. However, suddenly infection rates have increased once more, and winter is coming…
Related Articles
In response, the Government has introduced further support for businesses to help them through the dark months ahead.
Bounce Back Loan Extension
The closing date to apply for Bounce Back loans has been extended to the end of November. These loans are a chance to re-ignite your franchise, using funds for marketing or business investment to return to profitability.
It has also been announced that repayment terms for Bounce Back loans have been extended from six to 10 years, this will effectively cut monthly repayments in half. The extension means organisations can realise the return on any investment and ensure it becomes profitable before the loans need to be repaid in full. We expect a further announcement that this will soon encompass CBILS as well.
Interest-only periods of up to six months and Payment holidays will also be available to businesses. Any business where a Bounce Back or CBILS loan has already been taken out, can re-negotiate the terms with their lender.
New Job Support Scheme
A new Job Support Scheme starting on 1 November 2020 has now replaced the Job retention (“furlough”) scheme which ends 31 October 2020.
Eligible employees will need to be working a minimum of 33% of their normal hours. For the remaining hours not worked, the Government and employer will each pay one third of wages remaining. This means employers will continue to pay the wages of staff for the hours they work, but for the hours not worked, the government and the employer will each pay one-third of their equivalent salary.
The level of grant will be calculated based on the employee’s usual salary, capped at £697.92 per month. The new Government scheme will last for six months ending on 30 April 2021.
| Self-Employed Income Support Scheme The self-employed grant (SEISS) designed to claim for loss of earnings has been extended on the same basis as the job support scheme. An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875. An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April. |
Deferral of VAT Bills
Due to the Pandemic, the Government announced that VAT payments and Personal Tax Payments could be deferred. As a result, up to half a million businesses deferred their VAT bills. The Government recognised paying a lump sum in full in March next year could be an issue for many of these businesses. Therefore, the New Payment Scheme, offers the option to pay back in 11 smaller interest-free payments during the 2021-22 financial year.
The key point here is that VAT and any personal tax payments still need to be paid back in the future! Therefore, we are advising our partners that if they can afford to pay their VAT or personal tax payments now, then they should do so. This will avoid needing to pay back the debt in the future on top of any future VAT payments which need to be paid for that period.
As the winter draws in, one of the best ways to ensure business survival in this harsh climate is to create a cashflow forecast and maintain accurate up to date financial records to track actuals vs projected. If this highlights a shortfall that could prove detrimental, the Government support is on hand to provide the crutch. That said, it’s important to know the rules and stay within them. If you have any questions or need any help planning a bounce back strategy, then please get in-touch with one of our experienced, friendly advisors who can help ensure your franchise is ready to take advantage of the green shoots of the economy as soon as the spring season comes.
