Coronavirus – Finances
*Our accountant Iain Dove is providing clients with useful updates around tax and personal finances and we wanted to share this with you*
We are entering an unprecedented period of time when many of the accepted social norms will not apply and usual financial advice may need to be reviewed. The situation is very fluid so advice can change, almost daily.
On Friday the Government announced that under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis, backdated to 01.03.2020. The Government will pay 80% of the salary up to £2,500 per month.
For the self-employed, the 31 July 2020 payment on account has been deferred to 31 January 2021 and more help for the self-employed is expected soon.
VAT payments are being deferred until 30 June 2020 at the earliest, to help cash flow. This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020/21 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.
Below are some details which may be of assistance whether you are an employer or employee, tenant or landlord, self-employed, employed or retired. Everyone will be affected but some much more than others.
Social Security Benefits:-
Statutory Sick Pay (SSP) – https://www.gov.uk/statutory-sick-pay
Universal Credit – https://www.gov.uk/universal-credit
Employment & Support Allowance – https://www.gov.uk/guidance/new-style-employment-and-support-allowance
Citizen’s Advice – https://www.citizensadvice.org.uk/health/coronavirus-what-it-means-for-you/
Federation of Small Businesses – https://www.fsb.org.uk/campaign/covid19.html
Cash flow is vital so see if you qualify for a business rates holiday.
Check insurance policies for business interruption cover.
HMRC are offering assistance with tax payments under Time to Pay and it may be worth reviewing your 2019/20 payments on account (POAs) to see if the 31 January 2020 payment (already made) and the 31 July 2020 payment can be reduced. As noted above, the 31 July 2020 payment has been deferred but it may be possible to claim a refund on the 31 January 2020 payment. Do let us know if you would like to review the position. There may be merit doing your 2019/20 tax return early to find out your tax liabilities or obtain any tax refund that may be due.
In the broadest of terms, as we cannot provide investment advice, it may be better to use cash in the next few months rather than sell investments while the stock markets are all so low.
To help cash flow, ensure you collect debts or agree to a delay where a customer is in a worse position.
Conversely, seek to delay payment of your own liabilities or renegotiate terms where possible.
There may be scope to reduce or stop pension contributions and review all other outgoings that can be stopped or delayed for at least the next twelve weeks.
Look to move any credit card debt to 0% cards to obtain interest free credit for a period of time.
Review energy providers to save money on utility costs.
There is the option to take a three-month mortgage holiday. Please contact your lender for more details.
Ideally delay taking full pension while market is down, but the funds can be accessed if you are over 55. Please do seek specialist advice.
Consider reducing the pay for some employees to keep jobs open or “borrowing” the employee’s pay cut to repay at a later date.
Please do be aware that unfortunately there are scams out there trying to cash in on the coronavirus disruption.
Written by Iain Dove
Iain is the owner of IGD Accounting Services Limited – Chartered Certified Accountants a general accounts and taxation services firm
We have published this article on our blog as we feel it may be of interest to our clients and contacts. This Third Party Content is not created by GRL Legal. The provision of Third Party Content is for general informational purposes only and does not constitute a recommendation or solicitation to purchase or sell any product or insurance or make any other type of purchase or decision.