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Updates to financial support schemes

Welcome to the New Year! What will 2021 bring? We’re still in very uncertain times, and at the time of writing this, the Government have just announced much tighter restrictions, particularly in the new tier 4 areas. I would not be surprised if the restrictions are extended into the new year.

Some businesses that come out of the other side may be meaner and leaner, and may be able to bounce back and hopefully recover to pre COVID-19 levels quickly. Inevitably, however, I think we shall all be suffering the consequences, both personal and business-wise, for a few years to come.

At MHA Larking Gowen, we’ve been very busy over the last nine months, supporting our clients in many ways. We created a COVID-19 Hub and a Brexit Hub on our website to support and advise, not just clients, but anyone who cares to take a look.

There’s some great content on the COVID-19 Hub for a range of sectors, some of which I’m sure you will find helpful. Some of the latest government updates are summarised below.

Furlough

Something that has caused much interest is the financial support that is available. The Job Retention Scheme or ‘Furlough’ is a prime example. The rules are complex and not always easy to interpret, and they have changed numerous times. Originally set to finish on 31 October 2020, the scheme is currently extended to 30 April 2021, although that is likely to be reviewed in the New Year. With that extension, the new Job Support Scheme was postponed, and the Job Retention Bonus was deferred and may not be reinstated.

We’re expecting a very high percentage of HMRC enquiries into furlough claims, as there’s likely to be a high level of incorrect claims, so watch this space.

Self-Employment Income Support Scheme

Support for the self-employed, the Self-Employment Income Support Scheme (SEISS), has also been extended and is available to cover six months’ worth of profits for the period 1 November 2019 to 30 April 2021. The support is limited to those that are self-employed and includes those that are in a partnership. You do not have to have claimed previously to be eligible.

The individual will need to confirm that they are currently actively trading and intend to continue to trade but are facing reduced demand due to COVID-19. The initial lump sum will cover three months of profits, from 1 November 2020, which was originally to be calculated as 40% of average monthly trading profits, paid out in a single instalment of up to £3,750. This has now been increased to 80%, giving a maximum grant of £7,500.

The claim window has also been brought forward from 14 December to 30 November and is open for applications until 29 January 2021.

The additional second grant will still be available from 1 February 2021 to 30 April 2021, but the level of this second grant has not yet been set by the Government and will be subject to review.

As with the initial grants paid under SEISS, these further grants will be subject to both income tax and National Insurance.

Brexit

The other matter occupying our minds at the moment is Brexit!

The talks are continuing as I write, which can only give us hope that a deal will be struck, but who knows? Interestingly, I attended an online seminar recently, hosted by Handelsbanken; one of their speakers who had worked within Downing Street was quite enlightening.

He said that the detail is only known to a very small band of people and he was not surprised that it was going down to the wire, as that is the way that the EU operates. He felt there might well be a compromise whereby certain things were agreed but with scope for further negotiation post 1 January. By the time you read this, it may all be sorted!

Finally, I would just like to wish you a Happy New Year in the hope that we all get vaccinated as soon as possible and things start to get back to normal. You can contact me on 01473 833411 or peter.glading@larking-gowen.co.uk.

Peter is the Guild’s accountant.

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