2020 was a challenging year for business owners. You might have made use of the government’s Covid-19 Business Support packages to help you through – deferring certain payments, taking rent holidays, or receiving grants.

You might be heading into 2021 temporarily cash-rich. It’s a great position to be in after a turbulent year but it is crucial you log the help you have received, and that you understand and budget for your future liabilities.

Here’s your guide to some of the support available, when repayments are due, and how we can help you factor the business support you receive into your future plans.

• Deferral of VAT payments

You might have deferred your business’ VAT liabilities for payments due between 20 March and 30 June 2020. These are now payable by 31 March 2021.

If you haven’t factored this payment into your budgeting, or the amount due is unaffordable, the Chancellor’s Winter Economy Plan included a provision for these payments to be made in interest-free instalments throughout the 2021/22 tax year.

You’ll need to create a Government Gateway account if you don’t already have one and submit outstanding VAT returns from the last four years before opting into the scheme, once it becomes available.

You can find more information on the government’s Covid Business Support site.

• Deferred Self-Assessment

You might have delayed paying other liabilities. If you did not make a Self-Assessment payment in July 2020, your payment deadline has been extended to 31 January 2021.

If you are unable to pay your tax bill in full, but you owe less than £30,000, you might be able to set up a payment plan online. As well as owing less than £30,000, you must also be up to date with your tax returns and have no other debts or payment plans currently in place.

If you don’t think you will be able to pay the tax you owe and the amount exceeds £30,000, you will need to contact HMRC to put in place a ‘time to pay’ arrangement. This will allow you to spread the cost of your tax bill by paying in instalments.

You’ll need to contact HMRC and supply information such as the amount you owe, how much you can pay, and what methods you have used to try to raise the owed amount. You will need to supply income and expenditure details too.

If HMRC deems that you can make your full tax payment given extra time, an arrangement will be set up. Note though, that interest will be due on late payments (after 1 February 2021) and this will need to be factored into your planning.

• Bounce Back Loans

As the owner of a small or medium-sized business, you might have applied for the government’s Bounce Back Loan Scheme (BBLS). The scheme allows you to borrow between £2,000 and up to 25% of your turnover (up to a maximum of £50,000).

If you have yet to apply, you have until 31 March 2021 to do so. You can also request a top-up if you have previously applied and borrowed less than your full entitlement.

The government guarantees 100% of the loan. There are also no fees or interest to pay for the first twelve months, with interest due at 2.5% after a year.

The loan is for six years with no payment due in the first year. You also have the option – before making your first payment – of extending the loan term, up to a maximum of ten years. You might also consider a move to interest-only repayments (you can do this three times) or a one-off pause in payments for six months.

You’ll need to approach a participating lender yourself to arrange this.

Get in touch

Uncertain times made managing your business’s finances increasingly difficult during 2020. Whether your business is struggling due to the impact of the coronavirus pandemic, or you find yourself temporarily cash-rich but wary of future liabilities, we can help.

With lockdowns and restrictions set to be in place for months to come, getting on top of your finances now means giving your business the best chance of a stable and prosperous 2021.

If you’d like to get in touch to discuss any aspect of your business’s financial position, please contact us today.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation which is subject to change.