Government measures to help small businesses
Company Director, Michael Chadwick, gives helpful information about the Government’s new VAT and income tax deferral schemes.
I am sure we have all been watching the news lately and observing with a mixture of fear and amazement at the virus and how it is going to affect families and small businesses.
Here is a brief outline of two Government measures, as they stand currently, to help small businesses in the wake of the lock-down and a decrease in their operations.
The VAT deferral comes into effect immediately and all VAT registered traders are eligible. There is no need to apply for the for the deferral, however businesses still need to file their returns on time.
This means that if you have a VAT quarter ended February, March or April, you will still need to get your books and records organised on time to file your return.
One of the most important steps that businesses must take to achieve this is to get in contact with their bank and cancel their direct debit to HMRC. This is the only way the transaction will be delayed. Businesses will also need to reinstate the direct debit once the deferral has ended.
This deferred payment will need to be made by the end of the 2020/21 tax year on 5 April 2021.
VAT refunds and reclaims due for the quarter will be processed by HMRC as normal.
Income Tax Deferral
The second payment on account for income tax self assessment was due for 31 July 2020. However, this has again been delayed by HMRC in an attempt to ease the cash flow concerns of many businesses and entrepreneurs.
After some initial confusion, HMRC has confirmed that the deferral applies to all tax payers, regardless of how the liability arises.
Again, the most important factor is to cancel any direct debits to HMRC in relation to the income tax due at 31 July 2020.
Self assessment tax returns for the tax year 2019/20 are still due for completion on 31 January 2021 and it may be advantageous to file your returns soon as possible after 5 April 2020 in order to properly understand your tax position
In order to avoid a larger tax payment in January 2021, it is still possible to make the July payment as usual if you prefer.
If you have any queries about any of these matters, please do not hesitate to email us at firstname.lastname@example.org.