There will be a number of measures implemented to reduce the pressure on business finances: 

VAT Deferral

Businesses who deferred their VAT will no longer have to pay a lump sum at the end of March next year. They will have the option of splitting it into smaller, interest free payments over the course of 11 months in the financial year 2021-2022 - benefitting up to half a million businesses. Over half a million businesses deferred VAT payments, a cash injection of £30 billion into the UK economy when it needed it most. All businesses which took advantage of the VAT deferral can use the New Payment Scheme. Businesses will need to opt in, but all are eligible. HMRC will put in place an opt-in process in early 2021.

Enhanced Time to Pay for Self-Assessment taxpayers

The government will give the self-employed and other taxpayers more time to pay taxes due in January 2021, building on the Self-Assessment deferral provided in July 2020. Taxpayers with up to £30,000 of Self-Assessment liabilities due will be able to use HMRC's self-service Time to Pay facility to secure a plan to pay over an additional 12 months. This means that Self-Assessment liabilities due in July 2020 will not need to be paid in full until January 2022. Any Self-Assessment taxpayer not able to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC's Time to Pay Self-Assessment helpline to agree a payment plan.

Extending the temporary VAT reduced rate for hospitality and tourism

To continue supporting over 150,000 businesses and protect 2.4 million jobs, the Government has extended the 15 per cent VAT cut for the tourism and hospitality sectors to the end of March next year, allowing them to continue paying only 5%. This will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, supplies of accommodation and admission to attractions across the UK.

For more information on all of the measures in place to help businesses, please refer to the Government's Winter Economy Plan by clicking here

If you need any guidance, please do not hesitate to contact us. 

About the Author: Kevin Johns

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