Boost to UK tourism

In a boost to UK tourism, the government has launched a new Tourism Recovery Plan to help the sector bounce back from the pandemic. The plan is to recover domestic tourism to pre-pandemic levels by the end of 2022 and international visitor numbers and spend by the end of 2023. If achieved, this would be at least a year faster than independent forecasts predict.

Specifically, the aim is to:

  • Ensure that the sector’s recovery benefits every nation and region, with visitors staying longer, growing accommodation occupancy rates in the off-season and high levels of investment in tourism products and transport infrastructure.
  • Build back better with a more innovative and resilient industry, maximising the potential for technology and data to enhance the visitor experience and employing more UK nationals in year-round quality jobs.
  • Ensure the tourism sector contributes to the enhancement and conservation of the country’s cultural, natural and historic heritage, minimises damage to the environment and is inclusive and accessible to all.
  • Return the UK swiftly to its pre-pandemic position as a leading European destination for hosting business events. 

The National Lottery will also launch a £10 million voucher scheme to encourage people to take holidays outside of the peak summer season. The scheme will provide National Lottery players the chance to claim vouchers to redeem at tourist attractions across the UK between September 2021 and March 2022. A rail “staycationers” pass for domestic tourists will also be launched later this year.

The plan seeks to capitalise on a year of celebration and renewal in 2022 with major events including Her Majesty The Queen’s Platinum Jubilee, the Festival UK 2022 and the Birmingham Commonwealth Games.

Temporary trade credit insurance scheme to end

Trade credit insurance is a contract bought by suppliers to make sure they get paid even if their customers default and cannot pay the bills. This gives businesses the confidence to trade with one another.

Early in the pandemic, the government introduced a temporary Trade Credit Reinsurance scheme, which was agreed following extensive discussions with the insurance sector. This scheme ensured that the vast majority of Trade Credit Insurance coverage was maintained throughout the pandemic with the government providing financial guarantees.

The government and the Association of British Insurers (ABI) have now confirmed that the scheme will end on 30 June 2021 as planned.

The scheme has directly benefitted over half a million businesses, providing certainty to firms across the UK and safeguarding jobs. It protected more than £575 billion of business turnover by providing approximately £210 billion in cover.

Insurers working under the temporary scheme have confirmed to government that the scheme is no longer required and that they wish to revert to full underwriting control. The government and participating insurers will continue to work together to ensure there is a smooth transition to the private sector resuming its normal role of providing cover.

Once the scheme has ceased, the government will conduct a review of the Trade Credit Insurance market to ensure continued support for businesses in future.

No time for head in the sand tactics

Companies that are still claiming the Coronavirus Job Retention Scheme grants, now known as the furlough scheme, will have hard choices to make come the end of September when the present scheme ends.

Unless business activity picks up between now and September a significant number of those on furlough may find themselves unemployed.

Reaching a decision on who to retain or who to let go will be a difficult process for many employers. They will face breaking up teams that have worked tirelessly for employers for many years. And yet these hard choices need to be made.

Time to consider your options is now.

Affected business owners should sharpen their pencils, open Excel and start planning. They need to produce a forecast until, at minimum, the end of 2022, that sets out:

  • Sales
  • Direct costs
  • Other overheads including owners drawings
  • Repayments of loans
  • Any capital acquisitions that cannot be deferred, new plant or computer equipment for example.

These forecasts can be arranged to display profitability, solvency and cash-flow and are the only reliable way to measure and decide on actions – like laying off staff – that will need to be made.

If you are concerned that staff retention may become an issue for your business, pick up the phone. We can help you crunch the numbers and consider your options. Now is not the time to bury your head in the sand. The clock is ticking.

Holiday update

As lockdown is being eased and opportunity to holiday opens, we felt it might be useful to set out bank holiday dates for the UK regions for the rest of this year.

England and Wales – 2021

Date Day Holiday
31 May Monday Spring bank holiday
30 August Monday Summer bank holiday
27 December Monday Christmas Day (substitute day)
28 December Tuesday Boxing Day (substitute day)

Scotland – 2021

 

Date Day Holiday
31 May Monday Spring bank holiday
2 August Monday Summer bank holiday
30 November Tuesday St Andrew’s Day
27 December Monday Christmas Day (substitute day)
28 December Tuesday Boxing Day (substitute day)

Northern Ireland – 2021

 

Date Day Holiday
31 May Monday Spring bank holiday
12 July Monday Battle of the Boyne (Orangemen’s Day)
30 August Monday Summer bank holiday
27 December Monday Christmas Day (substitute day)
28 December Tuesday  Boxing Day (substitute day)

Let us hope control of COVID continues to progress in a positive direction so we can all enjoy some well-earned time away with our families and friends in what remains of 2021.

Taxing your car

The instructions to tax your car on the GOV.UK website is reproduced below:

To tax your car, motorcycle or other vehicle you will need to use a reference number from:

  • a recent reminder (V11) or ‘last chance’ warning letter from DVLA
  • your vehicle logbook (V5C) – it must be in your name
  • the green ‘new keeper’ slip from a logbook if you have just bought it

If you do not have any of these documents, you will need to apply for a new logbook.

You must tax your vehicle even if you do not have to pay anything, for example if you are exempt because you are disabled. This last point is important as exempt vehicles now include electric vehicles. 

A late licensing penalty (LLP) letter is issued automatically. LLP is set at £80 reduced to £40 if paid within 33 days.

If the penalty is not paid, the case will be referred to a debt collection agency.

If you pay by Direct Debit and fail to make the payment, DVLA may stop you from using this payment method in the future.

COVID support grants that are taxable

We would like to remind readers that existing legislation is in place to ensure that COVID support grants are treated as taxable income in the same way as other taxable receipts. The grants are treated as income where the business is within the scope of either Income Tax or Corporation Tax.

This treatment extends to the Self-Employment Income Support Scheme (SEISS), the Coronavirus Job Retention Scheme (CJRS), the Coronavirus Statutory Sick Pay Rebate Scheme, any coronavirus business support grant scheme and any other support scheme payments.

HMRC’s guidance is clear that whether any tax is paid will depend on the business profits of the grant recipient (taking into consideration the grant and other business income and expenditure under normal tax rules), any other taxable income and personal and other allowances to which they are entitled.

The taxing of the COVID support payments is based on the fact that these payments are designed to substitute various income streams for businesses and individuals affected by the pandemic and hence should follow the same tax treatment.

HMRC also has the power to recover payments and charge penalties where claimants have made support grant claims to which they were not entitled.

Recovery Loan Scheme

The new Recovery Loan Scheme was launched on 6 April 2021. The new scheme allows businesses of any size to access loans and other kinds of finance between £25,000 and £10 million. The scheme will remain open until 31 December 2021 (subject to review).

The scheme is intended to provide further support to businesses to help them recover and grow following the disruption of the pandemic and the end of the transition period. The new scheme can be used as an additional loan on top of previous support received from other schemes such as the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme

Under the scheme, the government will provide lenders with a guarantee of 80% on eligible loans provided to UK businesses. The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.

The following finance options are available:

  • Term loans and overdrafts are available between £25,001 and £10 million per business.
  • Invoice finance and asset finance are available between £1,000 and £10 million per business.

Finance terms are for up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years. No personal guarantees will be taken on facilities up to £250,000, and a borrower’s principal private residence cannot be taken as security. 26 lenders have already been accredited for the scheme and more are expected shortly.

Treasury directive re fourth SEISS grant

HM Treasury has published a further Treasury Direction made under the Coronavirus Act 2020, ss. 71 and 76, which modifies and extends the effect of the Self-Employment Income Support Scheme (SEISS). The new Direction mainly deals with the expansion of the SEISS from 1 February 2021 to 30 April 2021, officially referred to as the SEISS Grant Extension 4 (SEISS 4). The online portal for making a claim will open in late April and HMRC is notifying taxpayers of the earliest date they can apply on a staggered basis. The final date for making a claim for the SEISS 4 will be 1 June 2021. 

The self-employed will receive 80% of average trading profits for February, March and April 2021. This will mean a maximum grant for the three months of £7,500 made available to those who meet the eligibility requirements. The SEISS 4 grant is available to the newly self-employed who filed a 2019-20 tax return by midnight, 2 March 2021. 

To be eligible for an SEISS 4 payment, self-employed individuals, including members of partnerships, must meet the following criteria:

(a) carry on a trade the business of which has been adversely affected by reason of circumstances arising as a result of coronavirus or coronavirus disease,
(b) have delivered a tax return for a relevant tax year on or before 2 March 2021,
(c) have carried on a trade in the tax years 2019-20 and 2020-21,
(d) intend to continue to carry on a trade in the tax year 2021-22,
(e) if that person is a non-UK resident or has made a claim under section 809B of ITA 2007 (claim for remittance basis to apply), certify that the person’s trading profits are equal to or more than the person’s relevant income for any relevant tax year or years,
(f) be an individual, and
(g) meet the stated profits condition.

A fifth and final grant covering the period from 1 May – 30 September 2021 will see those whose turnover has fallen by 30% or more continuing to receive the full 80% grant whilst those whose turnover has fallen by less than 30% will receive a 30% grant.

Vaccine for your business

There is a poignant similarity between the effects of COVID on us personally and our businesses.

Thankfully, the possible dire consequences of catching the Coronavirus bug are being countered by a variety of vaccines. Fingers crossed that these will ease the pressure on the NHS and minimise the distress that this dreadful virus has inflicted on us since it reared its head over a year ago.

But what about our businesses? How can we vaccinate businesses that have been adversely affected?

In our experience, firms that have invested time and resources in planning have been more successful at riding out the disruption than firms who have not.

Every business is different. Certain business sectors have been more severely affected than others and organisations who entered 2020 with significant reserves of capital and cash will have had the financial resources to ride out the disruption to their incomes.

It is never too late to sit back and plan for your business. Please call if you need help to consider your options as we start the tentative emergence from lockdown.

A reminder that not all costs are costs…

Costs are defined as something that has to be paid or spent to acquire something. Costs include the acquisition of:

  • An object, say material required to convert into saleable goods.
  • A service, for example, sub-contact labour or 
  • A right, the rates you pay to occupy business premises. 

In your accounts, these costs would appear as expenses or cost of sales in your profit and loss account. All of these costs have something in common, their usefulness tends to be restricted to the time at which they were purchased.

But what about costs – say the purchase of computer – that should have a working life of say five years? This type of expenditure will not appear as a deduction from your profits as an expense, instead, it will appear as a fixed asset on your balance sheet and will be written off – over five years in the case of our computer – by depreciation.

We need a new word to describe this type of expenditure and the one we use is “investment”.

The distinction between a cost and an investment is significant. Generally speaking, a cost has value for a limited time period whereas an investment has the ability to impact current and future trading prospects.

As we emerge from lockdown, do not underestimate the recovery value of investment for your business. And government has offered company investors a timely tax incentive to invest.

In his recent budget, Rishi Sunak announced that qualifying investment in equipment would attract a 130% deduction for tax purposes (applies to companies from 1 April 2021 to 31 March 2023). It’s worth considering this distinction. Costs will sustain your current trading performance, but investment expenditure will have the potential to create new opportunities in future years.