Friday, 1 May 2020
Weekly Update 1st May 2020
Below I have summarised all the main tax updates we’ve seen this week from HMRC.
• New 100% government backed loan scheme for small business
• Coronavirus and R&D Tax Credits
• VAT scrapped on E-publications
• HMRC stop sending paper tax returns
• Making Tax Digital Phase 2 postponed to April 2021 due to COVID-19
• Coronavirus grants for young entrepreneurs
As always if you need any support or advice please don’t hesitate to contact me.
Have a great weekend!
New 100% government backed loan scheme for small business
The Chancellor Rishi Sunak told the House of Commons on Monday that small businesses are to get access to 100% taxpayer-backed ‘Bounce Back’ loans after they raised concerns about slow access to existing coronavirus rescue schemes.
The scheme will start next week (4th May), offering firms loans from £2,000 up to £50,000 within days of applying.
The key points to note are:
-businesses will be able to borrow between £2,000 and £50,000 and access the cash within days
-loans will be interest free for the first 12 months, and businesses can apply online through a short and simple form
-Small businesses will benefit from a new fast-track finance scheme providing loans with a 100% government-backed guarantee for lenders.
-The government will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months. No repayments will be due during the first 12 months.
For more information visit: https://www.gov.uk/government/news/small-businesses-boosted-by-bounce-back-loans
Coronavirus and R&D Tax Credits
Research and development (R&D) tax incentives are an effective way for limited companies to get a cash rebate from HMRC. This incentive and cash rebate could be more important than ever if you are struggling with cash flow due to the coronavirus.
Many companies are taking advantage of the lock-down period and time available to file an R&D claim with HMRC. HMRC are processing claims more rapidly at present to better support businesses cash flows, quoting up to 5 weeks rather than the 8-10 weeks previously.
Whilst rebates vary, over the past 6 months the average claim size for our clients has been £18,000!
It is a common misconception that to be engaged in Research and Development activities that a company must be running labs packed full of people in white coats. This is not the case! You simply must have attempted to overcome scientific or technological uncertainties by creating new or enhancing existing products, services, software or processes in order to have a qualifying R&D activity.
You would be surprised at how many companies fulfil these criteria without realising they are eligible for a significant tax benefit.
If you would like to discuss making an R&D claim further, please drop me a line.
VAT scrapped on E-publications
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 yesterday.
Rishi Sunak said the zero rate of VAT will now apply to all e-publications from the 1st 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.
Read more information on the HMRC website here: https://www.gov.uk/government/news/vat-scrapped-on-e-publications
HMRC stop sending paper tax returns
HMRC is to stop automatically sending paper Self-Assessment returns and is encouraging tax payers to submit their tax returns online.
Whilst this change does not prevent a tax payer filing a paper return if they choose to do so, the notice to file will tell taxpayers that HMRCs preference is for a tax payer to file their return digitally.
Making Tax Digital Phase 2 postponed to April 2021 due to COVID-19
HMRC has announced that the second phase of Making Tax Digital for VAT (‘MTD’), originally scheduled for April 2020, has now been delayed by 12 months and will come into effect on the 1st April 2021. This is to help ease against the impact of the COVID-19 crisis.
Phase 2 relates to businesses who are VAT registered but whose sales are under the VAT threshold (currently £85,000).
Read our blog post here: http://blog.hillmans.co.uk/2020/04/making-tax-digital-phase-2-postponed.html
Coronavirus grants for young entrepreneurs
The Prince’s Trust has launched a new grant to assist young business owners during the Coronavirus crisis. The grant is available for business owners aged 18 to 30, who set up their business in the last four years and do not have any other source of income during the Coronavirus crisis.
Grants can be used to maintain core business operations during the crisis, as well as meet any existing financial commitments, such as paying for essential equipment or settling invoices from suppliers. Additionally, grants will also support young people to diversify their business to respond to opportunities created by the crises. In conjunction with grants, the initiative will offer one-to-one support and guidance to any applicants who need it.
You can apply for the grant here: https://www.princes-trust.org.uk/about-the-trust/coronavirus-response/enterprise-relief-fund
If I can be of any assistance please drop me a line.
Stay safe and well.
Steven Hillman ACA
Tel: 01934 444100