July 29. 2020
There is no doubting that the last few months have been extremely
tough, and as we move through the restart and recovery there will be more changes
to come. Hopefully, you are back in the passenger seat, raring to go and let’s
hope we move through the rest of 2020 in a more positive way.
The lockdown saw the driver training industry come to a halt and home-schooling
became a reality for many, as did the growth in Tik Tok challenges and baking
banana bread! Many took to keeping themselves busy and it was also great to
hear about driving instructors putting their skills to great use, I mean there
is no one better than a driving instructor to take on a driving role for a supermarket,
courier or the NHS.
With the mix of getting back to your day job and making
lessons as safe as possible, we know you will have a lot to think about
now. We wanted to make sure you have not missed any support that is available
to you, especially as things are ever-changing. We do know a lot of
self-employed fell through the cracks of the Government support and the mini
Budget on the 8th July was the last chance saloon for some freelance
sectors. There has been a lot to take in over recent months so here are a few
areas to recap:
SEISS SECOND GRANT
- Based on 70% of your trading profits
- Your business must have been adversely affected from 14th July
- Applications for the second and final grant are due to go live on
the 17th August
- If parents and those who adopted, took time out of trading to care
for children within the first 12 months of birth or 12 months of an adoption
placement they will now be able to use either their 2017/2018 or both 2016/2017
and 2017/2018 self-assessments for the basis of their SEISS eligibility. All
other eligibility criteria remain the same.
DEFER TAX PAYMENTS
- HMRC automatically deferred the July payments that were due
- You must pay by the 31st Jan 2021 if you deferred your July tax
payment
- Remember your tax bill for the 2019/2020 tax year is also due 31st
Jan 2021
BOUNCE BACK LOAN
- Provides access to borrowing that is between £2,000 and up to 25%
of your turnover (up to a maximum of £50,000).
- No repayments for 12 months
- Make sure you have your 2019/2020 tax return done so the latest
figures are included
- Always seek financial advice prior to borrowing
TAX TIPS
You might not have done your 19/20 tax return just yet (don’t
worry, you have until the 31st Jan 21 to file online) but we wanted to
highlight a few things ahead of your 20/21 return and to help you give your
business that self-care that it needs.
Making Tax Digital (MTD) is still on
the horizon, MTD is HMRCs plan to mandate digital record keeping. COVID-19 and
the support provided by HMRC has been priority over recent months, but we are
monitoring Making Tax Digital updates. Small changes now will mean it is an
easier transition when the time comes. If you are not used to keeping digital
records or operating through software it is best to get comfortable ahead of
the change. A bookkeeping routine is important, yes you will likely prefer to
watch the latest Netflix release, but it will help you to understand your
businesses cashflow. It is one of the most important financial management tasks
so that you know the income and outgoings of your business. This way you know
if you have any cash reserves, vitally important when you see a period of
reduced income. The best way to put it:
Both SEISS grants are taxable and need
to be recorded as income on the 20/21 tax return, make sure you record the
amounts you received on the dates you received them.
Do not forget to include all PPE
expenses, that relate to your business, in your tax returns. You are unlikely
to have ever purchased such items for your business before, but the costs of
such items will quickly add up.
We always advise clients to have
separate business and personal bank accounts, it will make your life easier in
the long run. Especially when looking for transactions or if an HMRC
investigation ever pops up. You might also want another account to set aside
your savings for your tax liabilities, out of sight and out of mind hopefully
means it is easier to keep that pot of funds available.
There is no one size fits all approach
to this recovery, do what is best for you and your business. Reach out for help
when you need it, stay safe, be aware of scams and most importantly try not to
panic.