Welcome to our round up of the latest business and Covid-19 news for clients. Please contact us if you want to talk about how these updates affect your business. We are here to support you through these tough times.
The focus is on recovery from Covid
Following the Welsh election results, in which the Labour party is set to form the new government alone, Mark Drakeford is expected to be reappointed as First Minister. Mr Drakeford has stated his priority is the pandemic and cooperation amongst all parties for recovery.
The UK Prime Minister, Boris Johnson, has called for a Covid recovery summit. In letters sent to regional leaders the Prime Minister highlighted the Covid vaccine rollout as an example of “Team UK in action”, with the UK procuring doses at scale, and he urged them to continue the “cooperative spirit”.
This week, we learnt that more than 35million people in the UK have had at least one jab and a quarter of people in Wales have now had both Covid vaccines. Nearly 75% of over 40’s have had their first dose.
There is more unease over the India Covid variant in the UK which has been made a variant of concern. Scientists also believe it is at least as transmissible as the variant detected in Kent last year. The current vaccines used in the UK are thought to offer some protection against variants but can never completely stop all infections, particularly among the vulnerable or elderly. News of a booster jab, probably from September, for the over 50’s is awaited.
Bank of England latest Monetary Policy Report
The latest Bank of England (BOE) monetary policy report published last week set out their economic analysis and inflation projections. Their initial analysis that Covid has hit spending, incomes and jobs in the UK, stating the Pandemic has put a big strain on UK businesses’ cash flow and is threatening the livelihoods of many people. This analysis is not unsurprising because all regions of the UK are still in some form of lockdown and have been for some time. The BOE then confirm vaccines are now helping the UK economy recover rapidly as more people are vaccinated, restrictions to control the spread of the virus are being lifted. They also comment that inflation is 0.7%, but they expect it to rise to around the 2 % target this year as people may also become more confident about spending and as the high street opens back up. Interest rates remain at 0.1% to help keep inflation within target.
The good news in the BOE report!
The good news is the BOE predicts the economy to expand by 7.25% this year, with Government spending helping to limit job losses. There is also the good news that fewer jobs are being lost and earlier predictions of 7.75% unemployment will not happen, and they predict around 5.5% later this year.
The Office for National Statistics (ONS) business impacts and insights report
The ONS latest figures show the percentage of businesses currently trading has increased from 77% in early April to 83% in late April 2021. This is now at a similar level to that seen in mid-December 2020 (Business Insights and Conditions Survey (BICS)).
In the period ending 3 May 2021, the proportion of working adults that had travelled to work (both exclusively and in combination with working from home) in the last seven days was 60%. This proportion has been gradually increasing since mid-February (44% in the period 10 to 14 February 2021).
Estimates for UK seated dinner reservations on Saturday 1 May 2021 were at 71% of the level seen on the same Saturday of 2019, up 9 percentage points from the equivalent figure in the previous week. This follows the reopening of restaurants, cafés and bars in Scotland and Wales on 26 April 2021, and Northern Ireland on 30 April 2021.
Are you ready for the “Bounce back”?
All of us must agree that the “Bounce back” in the economy is good news and many of our clients are reporting increased activity as the lockdown eases and economy returns to somewhere near normal over the next few months. Of course there are uncertainties about new virus variants, but all the indicators are pointing to a summer recovery, with the economy being repaired by the end of this year.
BREXIT – HMRC Guidance on moving goods between GB and the EU
HMRC have recently sent letters to VAT-registered businesses in Great Britain trading with the EU, or the EU and the rest of the world.
They explain what businesses need to do to comply with the new rules and processes for moving goods between Great Britain and the EU, including:
- making sure they have a UK Economic Operator Registration and Identification (EORI) number
- ensuring they are ready to make customs declarations
- checking if their goods are eligible for the preferential zero duty rates
- preparing for the end of staged import controls on 1 January 2022
Making Tax Digital (MTD) for VAT – end of “soft landing”
MTD for VAT currently applies to VAT registered businesses with taxable turnover in excess of £85,000, the current VAT registration threshold. From 1 April 2022, MTD for VAT is being extended to all VAT registered businesses.
HMRC have updated their guidance in VAT Notice 700/22 regarding MTD for VAT:
This publication is essential reading for all VAT registered business as some of the content has the force of law.
- explains the digital records businesses must keep, and ways to record transactions digitally in certain special circumstances
- explains what counts as compatible software, and when software programs do and do not need to be digitally linked where a combination of programs is used
- gives examples of when digital links are required
Section 4 alerts businesses to the end of the “soft landing” period:
HMRC gave a period of time (known as the soft landing period) during the first 2 years of Making Tax Digital, to help businesses put digital links in place between all parts of their functional compatible software. Businesses were not required to have digital links in place until their first VAT Return period, starting on or after 1 April 2021.
During the soft landing period, if a digital link was not established, HMRC accepted the use of ‘cut and paste’ or ‘copy and paste’ as being digital links.
The soft landing period has now ended.
Latest version of CEST to check employment status of workers
With the extension of the “off-payroll” working rules to large and medium-sized organisations from 6 April 2021, HMRC have updated their Check Employment Status for Tax (CEST) diagnostic tool to assist those organisations in determining whether the new rules apply to workers supplying their services through personal service companies (PSCs).
Note that once the determination has been carried out the end user organisation is required to issue the worker, and the fee payer making payments to the PSC, with a Status Determination Statement.
The housing market
The pandemic has had many unexpected economic effects, but some of the most surprising have been on the property market. Some experts predicted house price falls as a result of Brexit and from the economic fallout of lockdown. In fact, the market boomed up and down the country for much of last year. But when according to lender Nationwide the upward trend faltered in March, falling 0.2% month-on-month the doomsayers were back, and keen to point to the end of the upward trend.
Assessing what is really going on in the housing market is actually a challenge. Figures are subject to delay, there are several ways to interpret them, and most of the sources of information do not cover the entire country. Figures from the Nationwide Building Society do cover the entire UK and seem to be one of the more accurate measures. But the 0.2% month-on-month fall they pointed out in March needs to be compared with a much larger 0.7% rise in February. Regardless of this the actual number of homes sold in the UK hit a record in March as buyers and sellers attempted to complete deals before the end of the stamp duty holiday.
In the March budget, the Chancellor extended the Stamp Duty holiday by six months until the end of September. This will see a tapering of support, gradually lowering the nil-rate band from June. The extension applies to all transactions in England and Northern Ireland, meaning buy-to-let investors and homebuyers will continue to benefit from tax savings.
Many experts suggest prices could continue to grow, at least for the next few months. Recent weeks have seen huge demand from buyers and a serious shortage of homes for sale, and it is likely that prices are still heading upwards.
What’s more, record low interest rates mean very low cost mortgages, helping people move up the housing ladder.
There is also a change in peoples focus. Those trapped inside by months of lockdown and looking at a world where working from home is the norm, rather than the exception, may have reassessed their goals. Extra room for a home office, a bigger garden and an attractive environment may be more important than they once were. The entire market may be buoyant, but larger homes outside the big conurbations may enjoy the most dramatic price growth of all.
Covid 19 Government Support News
Below is our weekly roundup of changes to government support information generally and for businesses, employers and the self-employed.
The Office for National Statistics (ONS) – older workers during the Pandemic report
The ONS have published their report on the demographic and economic characteristics of older workers aged 50 years.
The main points are that while the impact of the pandemic has been greatest for younger workers, older workers aged 50 years and over have been affected to a greater extent than those in the middle age groups.
In December 2020 to February 2021, those employees aged 50 years and over were more likely to report working fewer hours than usual (including none) in the past week because of the pandemic than those aged under 50 years, with those aged 65 years and over the most likely to say they had worked reduced hours.
Over a quarter of furloughed employments are people aged 50 years and over (1.3 million), with 3 in 10 of older workers on furlough thinking there is a 50% chance or higher that they will lose their job when the scheme ends. Older people who become unemployed are more likely to be at risk of long-term unemployment than younger people.
Kickstart Scheme grant – new information for employers
Changes have been made to show that the Department for work and Pensions (DWP) may ask employers for their records to show how funding has been spent. There is new information on how the funding is calculated for each young person. Also an update that employers will receive an email telling them how to inform DWP about start dates or if someone leaves the job early.
Information for Kickstart gateways
Information for Kickstart gateways on how to help employers with the Kickstart Scheme and how to add jobs or employers to the grant agreement has also been updated for the changes noted above.
Coronavirus Job Retention Scheme (CJRS) Update
The Coronavirus Job Retention Scheme has been extended until 30 September 2021. Find out more about how the scheme is changing.
Claims for furlough days in April 2021 must be made by 14 May 2021.
You can no longer submit claims for claim periods ending on or before 31 October 2020.
New HMRC Guidance on CJRS Furlough Scheme
On 6 May 2021, HMRC issued further updates on the Coronavirus Job Retention Scheme (CJRS) which employers need to take account of in preparing grant claims from 1 May 2021 onwards.
For periods starting on or after 1 May 2021, you can claim for employees who were employed on 2 March 2021, as long as you have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee.
Details of eligible employees:
How much you can claim, including examples:
As usual please contact us if you need assistance in making a CJRS Furlough claim or you would like us to check earlier claims.
Paying CJRS Grants Back
If you have claimed too much through the Coronavirus Job Retention Scheme, or you would like to make a voluntary repayment because you do not want or need the grant to pay your employees’ wages, tax and National Insurance and pension contributions, you can either:
- correct it in your next claim (your new claim will be reduced, and you’ll need to keep a record of the adjustment for 6 years)
- get a payment reference number and pay HMRC back within 30 days (only if you’re not correcting it in your next claim)
The latest Coronavirus Job Retention Scheme (CJRS) statistics
This latest release provides analysis of claims for periods up to 31 March 2021. The data used includes claims submitted to HMRC by 14 April 2021.
DVLA Coronavirus (COVID-19) update
The DVLA state online services have not been impacted by the COVID-19 pandemic and are running as normal. DVLA have been busy adding new online services since March 2020 to make it easier for customers.
You can complete most transactions online which means you do not need to post an application or speak to DVLA contact centre. If you apply online, you should receive your driving licence within 5 days (it can take up to 6 weeks if you post your applications to them).
Your V5C log book should be received within 6 weeks.
Here are some of our most popular online services:
- Apply for a driving licence
- Renew a driving licence
- Replace a driving licence
- Tell us you’ve sold a vehicle
- Change your address
- Tax a vehicle
- Keep or assign a private (personalised) registration online
- Apply for a duplicate V5C log book
Guidance for British people travelling abroad during the pandemic, if they are legally permitted to travel under current UK COVID-19 restrictions has been updated.
Regional restrictions are below:
Private providers of coronavirus testing
The lists of, and information about, private providers who have self-declared that they meet the government’s minimum standards for the type of commercial COVID-19 testing service they offer has been updated to include new providers of tests.
Freelancers and Cultural Recovery Fund Phase 2 grant
Applications for the Cultural Recovery Fund Phase 2 are now closed. Funding for freelancers will open at 12 midday on the 17 May and close at 5pm on Tuesday 1 June, this will be delivered by the local authorities in Wales. Please look out for announcements on the opening of the new Freelancer fund here: COVID-19 Support for Business | Business Wales (gov.wales)
Business Support Finder
To help businesses locate the varied range of support available to them to get through this difficult period take a look at the COVID-19 Business Support Finder pages
These packages of support are designed to cover as much of the Welsh Economy as possible and are mainly focused around providing financial support for businesses, however business advisory support is still available online through our Business Wales service to assist you with financial planning and recovery when the outbreak ends, and businesses start to consider their recovery.
Development Bank of Wales
For details of the financial support available from the Development Bank of Wales please visit their website: https://developmentbank.wales/
£100 million Development Bank of Wales loan scheme fully subscribed in first week
The COVID-19 Wales Business Loan Scheme is fully subscribed after more than 1,500 applications were received in just over one week.
The £100 million scheme was launched on Monday 30 March as part of the Welsh Government’s £500 million Economic Resilience Fund to support businesses in dealing with coronavirus outbreak.
The first loans were approved within three days of the fund launch, with the first loans reaching applicants by the end of last week.
Economic Resilience Fund
ERF Phase 3 Business Grant – Due to high demand, the Economic Resilience Fund (ERF) Phase 3 Business Grant is suspended while applications received are processed.
Please monitor the Business Wales Covid-19 Support for Business website and government social media channels for other support and updates.
Welsh Government Economic Resilience Fund Awarded Organisations
A list of Economic Resilience Fund Phase 1 recipients and regional breakdown information can be found here.
A list of Economic Resilience Fund Phase 2 recipients and regional breakdown information can be found here.