UK Enters Second Stage Of Rishi Sunak’s Economic Support. What Does This Mean For Small Businesses?18 Oct 2020
Small business owners have had a lot on their plates during the last few months. It’s been a juggling act keeping up with what government measures to address the COVID-19 pandemic meant. We have all been impacted in some form or another. Staying up to date with developments has been an essential part of survival during turbulent, unprecedented times. The first phase of the chancellor’s plan is now over, and this week, he announced the second part of the response. We will have to wait until Autumn to find out what the third phase brings.
For now, Sunak’s “Plan for Jobs” is designed to protect and create roles that will help Britain recover from the economic effects of COVID-19. While the measures aren’t as wide-reaching as announcements made in phase one, many will see them as a welcome boost during difficult circumstances.
The plan for jobs – supporting and creating opportunities
There’s to be further help for companies that furloughed employees. Assistance will arrive in the form of a new Job Retention Bonus. Employers will receive a one-off bonus of £1,000 for each furloughed employee who remains employed on 31st January 2021.
In terms of new jobs, Sunak announced that the Kickstart Scheme, worth a total £2 billion, is designed to create jobs for 16-24-year-olds currently receiving Universal Credit. That should equate to hundreds of thousands entirely subsidised new roles taking the form of six-month job placements. The subsidy is intended to pay up to 25 hours of UK Minimum Wage each week, but employers will have the option to top this up.
More funds for training and apprenticeships
Not surprisingly, a significant element of the government’s approach to phase two of the Coronavirus measures gets based on helping younger people get back into employment. The chancellor announced £1.6 billion of funding to bolster existing support schemes for the unemployed, as well as making more training and apprenticeship opportunities available. Small businesses can access £2,000 for every apprenticeship they make available to workers under the age of 25. That support comes on top of the measures that already apply for apprentices aged 16-18.
The chancellor announced further investment in the future of our workforce, with a strong commitment to strengthening the existing systems around training. An additional focus is on making even more traineeship and placement positions available to those out of work:
£111 million in funds designed to increase traineeships over the next couple of years with the intention of making training more accessible to young jobseekers
A £17 million commitment to increase work placements three-fold in 2020-21
Almost £900 million in funds will be made available to create work more employment coaches
The National Careers Service also gets a boost, with £32 million being put in place to help thousands of additional young people find jobs
Job creation measures
As part of a package aimed at increasing employer confidence, work on £8.8 billion of new infrastructure projects will be brought forward. Construction and maintenance opportunities will be fast-tracked to the tune of:
£1.5 billion in funds allocated to upgrade and repair hospitals
£100 million to be spent on the country’s roads network
More than £1 billion in building funds announced for schools in England, concentrated on those having the most need.
An additional £760 million in 2020 earmarked for essential maintenance work at schools and further education colleges
£1 billion investment in selected local projects designed to speed up regional economic recovery where the need is urgent
Roughly one-third of the economic investment will create 140,000 new jobs in green industries. In the private sector, that will see more roles with companies helping homeowners and private landlords upgrade properties to reduce carbon emissions. On top of that, there are funds for public building decarbonisation too. The chancellor has earmarked £1 billion for work on schools and hospitals.
Planning for 2021 is important
Planning for 2021 is important are extremely busy times for a lot of small business owners. Many of us are still very much dealing with the general fallout from lockdown. However, it’s essential to continue planning for the future, even if you have a lot to cope with in the present. While 2021 might still seem a fair way off, small business owners have to make sure they think about VAT and income tax right now. Putting that off any longer could result in a short, sharp shock to your cash flow early in the new year. That’s because deferred VAT becomes due on 31st March 2021 - and any self-assessment income tax payments deferred since the end of July are due at the close of January too.
The VAT vacation has ended – What you need to do right now
The VAT payments deferral scheme – which allowed many businesses to defer VAT due for the period beginning 20th March 2020 – ended on 30th June. That means:
If you’re registered for VAT, and you deferred a payment, you’ll need to reinstate a direct debit for HMRC right now.
You’ll also need to keep submitting returns as you usually would.
You must make any VAT payments that are due after the 30th June 2020 on time.
Don’t just default to tax deferral – The threat of a pinch in 2021 is real
Next year will be with us sooner than we’d probably like to think. It’s crucial to manage any deferred VAT wisely, so you don’t feel the pinch in the new year. If you can afford to make payments towards that now, you really should do so. Likewise, only defer your July self assessment obligations if it’s unavoidable. Pay what you can right now, and you’ll have less to cope with between the start of February and the end of March 2021.
If your business is still struggling - or if you could just use some help - we have experienced and knowledgeable London accountants, Brighton accountants and Manchester accountants who can help. Contact us or contact HMRC as soon as you can.
At Accounts & Legal, we can help you with all aspects of forecasting, tax, and getting back on top of any financial issues caused by COVID-19. We also have a team of experienced solicitors who can help with legal services such as corporate law, employment law, and commercial law such as contractor agreements and commercial leases.
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