How Have Business Tax Policies Changed Since COVID-19?
The Economic Impact From The COVID-19 Outbreak
At the beginning of the COVID-19 outbreak, it was predicted that there would be a large drop in business output, but for just a short period of time. This is because the government predicted that the pandemic would be under control and businesses would be up and running quickly after. However, it is clear that COVID-19’s effects have created a much larger and longer impact than expected.
Even though some areas have not been affected as badly as others, the end of Coronavirus is highly uncertain, meaning measures such as social distancing may have to stay in place for a much longer period, affecting business operations. Therefore, retail, leisure, tourism and hospitality are going to be hit hard in the long term, reducing profitability due to ongoing restrictions from COVID-19. This is also evident in the fact that the government has made the decision to extend the furlough scheme to October.
Business Tax Policy Changes Since COVID-19
As well as the extension of the furlough scheme, the government has also put in place a series of economic measures in order to support businesses struggling from the COVID-19 outbreak. This includes measures to help businesses with the payment of their business tax liabilities.
Business VAT Tax Payments Deferred By 3 Months
One of the tax policies put in place due to the COVID-19 outbreak by the government is that the payment of business VAT tax has now been deferred by 3 months (until 30th June 2020). This business tax policy means that the VAT liabilities that would normally be due during this period have now been extended.
This COVID-19 tax policy automatically accounts for all UK businesses and reclaims and refunds during this period will still be processed as normal. The business tax policy is a great source of cash flow saving but businesses should still bear in mind that they will still need to retain the correct level of resources by the time they need to pay these liabilities.
Deferral Of Liabilities In Place Of Income Tax For Self-employed
Another COVID-19 business tax policy put in place by the government is similar to deferral of liabilities, but for the self-employed. The same as for any UK business, those self-employed would also usually be due their business VAT tax payments at the same time but they now have until 31st January 2021. Luckily for the self-employed, this business tax policy is also automatically assigned to the business, avoiding any stressful paperwork.
Business Rates Retail Relief For Some Businesses
As mentioned previously, the most hard hit businesses during COVID-19 have been retail, leisure and hospitality due to them having no choice but to close on 23rd March and have only just started re-opening gradually in the past few days as lockdown measures slowly lift. Therefore, the government has introduced a business tax policy called the Business Rates Retail Holiday for all businesses in the UK that fit under the retail umbrella.
The Business Rates Retail Holiday is automatically available for both the 2020 and 2021 tax year and should have been applied from April when you received that month’s bill by local authorities. For those larger businesses with multiple sites, you may want to enquire that the Business Rates Retail Holiday is applied to the entire site.
Do you want to check if your business is eligible and has been receiving the Business Rates Retail Holiday or you don’t think you are receiving the correct amount of relief you are entitled to? Then you can click here for more information.
Time To Pay Scheme
The final business tax policy change that has been in place during the COVID-19 outbreak is the Time To Pay scheme which has actually been available for a while. This business tax policy is for those businesses and self-employed people that find themselves under financial stress and have outstanding tax liabilities. The Time To Pay Scheme involves HMRC helping each business one-to-one with their tax affairs, giving the right support depending on the circumstances and liabilities.
Even though this business tax policy isn’t new for the COVID-19 outbreak, it will especially come in handy now for those businesses that have been hit hard by the pandemic. If you are a SME struggling to pay HMRC your tax bill on time, then click here for more information on how you can access the Time To Pay Scheme.
Do You Need Financial & Tax Support Due To Covid-19?
As well as the business tax support schemes mentioned above, the government has also introduced many other general financial support schemes for SMEs struggling during the COVID-19 outbreak, including The Coronavirus Business Interruption Loan Scheme which you can read more about here. Or, to find out more about general SME support, including finance, click here.
VAT Tax Preparation
At Stonehouse Accountants, we are also here to help if you are in a financial crisis due to COVID-19 and need help preparing VAT tax payments. To get in contact with one of our financial advisers, call us on 01733 265888.