DECEMBER E-NEWSLETTER 2020
May we take this opportunity to wish all our clients, intermediaries and friends a Merry Christmas and a Happy New Year.
2020 has been a very tough year for most and a very busy year for Harbour Key with new employees, new clients and challenges in the testing pandemic conditions.
Human contact may not have been in abundance this year, at least not in person but, hopefully with the vaccines becoming available, 2021 may be a much better year.
We usually advise that the Christmas break is an opportunity to take a step back and look at your business, review how the business is working (review how you work in the business!), what your goals/ambitions are and take a look at some common problems/issues. This year we think it is fair enough for those who are able, to take a well-earned break and recharge for 2021.
The early part of the year will still be tough for many businesses as we wait for the vaccine programme to roll out through to the summer months.
WE ARE CLOSED FOR THE FESTIVE PERIOD.
Harbour Key's office and telephone line we will close at noon on Christmas Eve and will not re-open until Monday 4th January 2021.
CHRISTMAS PARTIES AND GIFTS
This year a work Christmas party is not going to be an option for most due to the coronavirus restrictions. HMRC have however confirmed that the annual parties’ exemption (£150 rule) will apply to the costs associated with virtual parties in the same way that it would for traditionally held parties. Therefore, subject to the normal conditions of the exemption being met, the expenses of hosting a virtual event, including providing entertainment, equipment and refreshments principally for enjoyment or consumption by your employees during the event, will be exempt. Details on the exemption, and for gifts to employees and customers, can be found HERE.
ANNUAL INVESTMENT ALLOWANCE
As an early Christmas gift and a further support measure for the COVID-19 pandemic to encourage investment in UK manufacturing, the Government has announced an extension to the £1 million annual investment allowance (“AIA”). The AIA had been set at a temporary level of £1 million since 1 January 2018, but was due to drop back to £200,000 from 1 January 2021. The allowance enables a business to deduct 100% of the cost of qualifying assets from your business’s profit when working out how much tax is due on that profit.
HMRC PREFERRED CREDITOR STATUS
From 1st December, HMRC regained its status as a preferential creditor for insolvencies in relation to taxes paid by employees and customers that are held by a business on its behalf, such as PAYE, VAT, employee NICs and Construction Industry Scheme deductions. (HMRC will remain an unsecured creditor for corporation tax and any other taxes owed directly by a company). The change means that HMRC’s gain is the other creditors’ loss. If HMRC recover more, then less is available for floating charge lenders, trade creditors, employees and pension funds. Companies who find themselves as creditors of an insolvent business will be less likely to receive a return on their debt.
The change is also likely to mean an increased risk to lenders which could potentially impact the cost and availability of finance, as the protection offered by a floating charge in an insolvency situation will reduce significantly. It also increases the financial risks run by directors as the lenders are likely to place a greater reliance on personal guarantees. As lenders are likely to recoup less from a company in an insolvency, where they hold personal guarantees that liability will be passed on to directors. Directors will have to be as mindful as ever of the financial position of their company and, if a Company begins to fall behind with its tax payments, are encouraged to act promptly. Directors who are asked to sign a personal guarantee should review the company’s financial position and, if they are uncomfortable, should seek independent advice.
LEAVING THE EU
The check can help you identify the specific steps you need to take to be ready. You can also sign up to receive regular Business Readiness Transition Bulletins providing information on major announcements and recently published guidance.
Take a look at our Leaving the EU VAT update and available grants.
Our latest Covid update can be found below. the key points from the update are:
- The third Covid support grant for the self-employed went live on 30 November, with some changes to the eligibility criteria.
- The Government-backed business support loans are currently due to close on 31 January.
- Grants are available for those businesses that have had to close under lockdown 2 and tier 3 areas.
|Business Forward Covid Support page|
It's vital that everyone follows the guidelines & remember:
#Hands #Face #Space