While 2020 has been a year like no other, through all the difficulties there have been some positives. The pandemic forced businesses to adapt in ways which many had previously thought not possible.
Remote working and a greater use of technology has paved the way for a determination to succeed in the face of adversity. We have found new ways to work and some have proved that success can be achieved whatever the circumstances.
As we head into 2021, with the vaccine promising a brighter future, we take a look at the financial milestones businesses have faced during 2020:
SMEs began the year with an optimistic outlook following progress with Brexit. Some concerns were raised over the ability to raise finance but alternative finance providers including Business Finance V4B continued to provide support for the thousands of businesses who needed it.
Statistics from The Office for National Statistics (ONS) showed the UK economy failed to grow in the previous quarter. Growth in manufacturing was hardest hit while the service sector slowed during the election.
Just as small businesses were beginning to feel optimistic after months of Brexit negotiations, the Coronavirus pandemic began. Stock markets plummeted and industries such as travel and tourism, manufacturing and retail felt the impact of the virus first.
V4B Business Finance’s office staff began working remotely and continued to inject businesses with vital funds. We provided free advice for businesses on issues such as unsecured business loans, VAT funding, asset finance, corporation tax, short-term loans, and debtor finance.
Coronavirus Business Interruption Loan Scheme (CBILS)
We announced that we were officially accredited providers of the CBILS, an initiative created by the government for small and medium businesses to provide support for those which had lost revenue or had cash flow disrupted due to the COVD-19 outbreak.
Businesses began preparations to re-open as the government outlined plans to ease lockdown measures. UK VAT-registered businesses were given the option to defer VAT payments. Those who had payments due between 20th March and 30th June were given the option to defer payments until 31st March 2021. Business Finance V4B continued to offer business loans to cover VAT payments as we felt deferring VAT payments until 2021 could lead to further cash flow problems for some companies.
Chancellor Rishi Sunak announced a package of support for businesses affected by the pandemic. It included a VAT cut from 20% to 5% for the hospitality industry, a Kickstart scheme aimed at 16-24 years olds, training grants for small businesses, the ‘eat out to help out’ scheme and a furlough bonus scheme which gave small and medium-sized businesses a £1,000 grant for every furloughed employee they agreed to take back and keep in employment until January 2021.
New financial packages
In August, the chancellor announced further measures, in the form of a £30 billion package to help secure jobs and to help British businesses bounce back. Small and medium-sized businesses were given access to a small business technology grant to spend on new equipment, IT and professional advice.
Professional Indemnity Insurance
There was an increase in the number of solicitors requesting payment in instalments for the October deadline. Concerns were raised by legal experts over cancellation requests due to unpaid policies and the Law Gazette urged firms to speak to brokers, such as V4B Business Finance, as they faced an increase in costs since they last renewed.
Asset finance and capital gains
The pandemic meant many businesses were forced to look at ways to adapt by diversifying into alternative or new areas of the market. We saw an increase in the number of requests for asset finance as businesses looked to access the resources, they needed without having to provide the capital up front.
Rishi Sunak-commissioned a review of capital gains tax. The report investigated the possibility of reducing the yearly allowance and aligning the rates more closely with income tax in a bid to raise revenue.
Brexit and tax
The uncertainty over a ‘no deal’ agreement as the UK leaves Europe on January 31st continued and more than half of businesses claimed they were unprepared for the transition period.
HMRC published its consultation on Making Tax Digital for corporation tax (MTD for CT), confirming its plans for rolling out MTD. It hopes to begin the voluntary pilot in April 2024 but will not be compulsory for companies until at least 2026. Businesses will be required to maintain their VAT records digitally on a transactional basis, using compatible software. The VAT returns will then be submitted directly to HMRC using the same software.
As payment deadlines approach, HMRC has said that where a tax return filing date has not yet passed and a company is having difficulty filing its return on time, it can request deferral of a late filing penalty. Business Finance V4B is continuing to offer alternative finance to cover corporation tax bills.
For alternative finance queries contact Business Finance V4B for a FREE consultation:
Call 01978 668939