Here are a few important reminders which may be relevant to you this month.
VAT deferral
If you deferred a VAT payment that was due between 20 March 2020 and 30 June 2020, this will need to be settled in full by 31 March 2021. If you cannot afford to do this, you can opt to join the VAT deferral new payment scheme to spread the payments in equal monthly instalments, interest free.
You can apply to join the scheme online between 23 February 21 and 21 June 2021. Follow this link, either to settle any outstanding VAT or to apply for the deferral scheme: HMRC VAT payments.
Loss relief
In the Budget on 3 March the Government announced an extension to loss relief for businesses, in recognition of the fact that many businesses will have made losses over the past year. Currently a business can only carry a loss back to set against the profits of the previous year. The additional relief allows a business to carry a loss back to the profits of the previous three years.
For companies, the losses the extension applies to are those arising in the accounting periods ending between 1 April 2020 to 31 March 2022. After utilising the profits of the prior year, a maximum of £2 million of unused losses can be carried back and set against the profits of the earlier two years.
For unincorporated businesses, the losses are those that arise in the tax years 2020/21 and 2021/22. The maximum extended loss that may be carried back from each of the tax years 2020/21 and 2021/22 is £2m.
Over the next month we will be reviewing tax returns with losses that have already been submitted for accounting periods ending between 1 April 2020 and 31 December 2020. However, we would encourage you to check your latest tax return, and if the company made a loss that was not fully carried back please contact us to review.
Bounce back loan
Applications for these loans must be made by 31 March 2021 when the scheme closes. The scheme has been very successful with many businesses securing the funds relatively easily and quickly. The loan term is six years and the amount available is from £2,000 up to 25% of a business’ turnover, with the maximum being £50,000. No interest is payable in the first 12 months and thereafter at 2.5%.
The government will provide a 100% guarantee to the lender against the outstanding balance, although the borrower remains liable to repay the full amount.
If you originally borrowed less than the maximum amount available to you, you may wish to claim for a top-up before 31 March 2021.
Salary and dividends in 2020/21
Have you utilised the dividend allowance of £2,000? If not, you may wish to consider paying yourself a dividend by 5 April 2021.
Have you utilised the whole of the basic rate band of £50,000 in 2020/21? If not, you may wish to pay yourself further dividends to be taxed at only 7.5%.
Have you paid yourself any salary yet in 2020/21? Salary of up to £8,788 can be received without incurring any national insurance. Please check with your personal tax advisor if this would be tax efficient for you.
Job Retention Scheme (furlough)
If you have not previously claimed furlough you may wish to check your eligibility for the Job Retention Scheme. This scheme was originally made available to those who had been paid salary in 2019/20 by 19 March 2020. However, for those joining the scheme from 1 November 2020 onwards, salary needs to have been paid between 20 March 2020 and 30 October 2020.
For new claims from 1 May 2021, salary must have been paid between 20 March 2020 and 2 March 2021. Therefore, anyone who had not paid themselves until after 30 October 2020 may now be eligible from May onwards.
The scheme will now run until 30 September 2021. The furlough grant pays 80% of your usual salary up to a maximum of £2,500 per month, lowering to 70% or £2,187.50 in July and 60% or £1,875.00 in August and September.