The Chancellor yesterday evening announced further measures to help businesses with their cashflow to bridge the gap during this extended period of reduced income. Now the gym is closed make sure you 'work out' which the best ones for you.

Income Tax and VAT Deferrals

The self employed July 2020 income tax payment on account for the 2019/20 tax year, will be automatically deferred until January 2021 with no interest or penalties accruing. This appears to be for sole traders and partnerships only, and not include directors or employees also due to make payments on account. [EDIT: This has been amended and now seems to include anyone making payments on account under self assessment including directors or employee].

Similarly, VAT due between 20 March and 30 June 2020 won't be collected by HMRC. [EDIT: HMRC have amended their guidance and now state that if you pay by Direct Debit you need to cancel it in good time and reinstate it later]. You will have until 5 April 2021 to catch up with this deferral. VAT refunds will be made as usual. If you're on an annual VAT scheme to end of March, any VAT due will be deferred and if you're due a refund, that will be paid. You're still required to prepare your VAT return so you'll receive a refund as normal if one is due. 

Here’s a quick summary of the sort of practical help notified this afternoon by the Chancellor. Together with a reminder of some useful tax rules which may also help with your cashflow.

Business Rates:

• No rates payable for 12 months for any business in the retail, hospitality or leisure sectors.
• In those sectors, if your rateable value is less than £51k, you'll also receive a cash grant of up to £25,000.
• Any business which gets small business rates relief, will receive a cash grant of £10,000 (increased from £3,000 announced in the Budget).

Government Backed Loans:

There is much to be happy about in today's Budget, where the magic money trees are well and truly thriving!

Businesses will benefit from many announcements, particularly those who trade from a property, have one or two employees, and need a new car!

Business rates are abolished for a year for rateable values of less than £51k and these same businesses will receive a £3k grant, as a response to the Coronavirus but it's also part of the overall picture of dealing with competition from Amazon and other online retailers.

With the spring Budget less than two weeks away, it's easy to forget some major changes due to come in this spring unlikely to be changed by the Chancellor. 

Property Interest Tax Relief - Full restriction

Four years ago this seemed a long way off, but we're now here. From April, there will be no tax deduction for interest on your buy-to-let mortgage. You'll get a calculated tax credit at 20% offset against your tax bill, but your taxable income is reduced only by repairs, professional fees, void period costs, etc.

This means you're more likely to find yourself in the higher rate tax band than before or having to pay back child benefit. Or even at the £100k threshold where your tax free personal allowance starts to get taken away.