January 2021 News Update – featuring additional news developments from our newsletter series
Welcome to Prestige Business Management’s monthly news roundup. We will help keep you informed of the latest financial news and developments.
Budget day is usually highly anticipated with much speculation in the weeks leading up to it. This year however we are witnessing an absolute clamour for information from a Treasury under pressure for a sustained, rapid response, to continually unfolding events. Obviously there is one overarching focus while the pandemic continues, so support packages will remain a hot topic, in spite of the fact that last year‘s budget was dubbed ‘the coronavirus budget’, which took place just under a year previously on 11 March 2020. It seems like so much history has been made since this time last year, when surprisingly to us now, Rishi Sunak was not a household name. He replaced Sajid Javid as Chancellor in a last minute shuffle just weeks before the 2020 budget. One year on with the pandemic still hampering business and financial affairs, the question of how HM Treasury will manage the soaring deficit has remained prominent after record borrowing to fund coronavirus support packages for failing businesses and furloughed workers and those falling into unemployment as a result of the virus. Following a decision to extend the self-assessment deadline until 28 February, announced as late as 25 January after lobbying from ACCA and consulting businesses in the first ever meeting of the Build Back Better Council, we have come to expect ever more plot twists. We will keep you informed with emerging information as we receive it.
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What You Missed From Our Blog – Summary
Economy Cannot Wait Until Budget Day
The Confederation of British industry (CBI) has called upon the Chancellor for an emergency £7.6 billion injection from the Treasury, because the economy cannot wait until budget day, due to the latest lockdown in the UK. The CBI which is the U.K.’s leading employers organisation has warned Rishi Sunak that businesses cannot afford to wait for the next several weeks until budget day on three March, to secure more financial help from the government. Tony danke, the director-general of the CBI insists that businesses are running short of cash and resilience and require immediate help to survive the current lockdown, which is due to be reviewed on 22 February. In its budget submission to the Chancellor, the CBI called for an immediate £7.6 billion injection from the Treasury as part of a £17.9 billion package designed to see the economy through lockdown, stimulate investment over the coming year and prepare the UK for the challenges of the coming decade. Click here to read the article :
HMRC Extends Self Assessment Deadline
On 25 January HMRC announced that self-assessment customers will not receive a penalty for the late online tax return if they file it by 28 February. A CCA urged HMRC to reconsider and extend self-assessment until the end of the tax year, in April in order to provide relief for struggling businesses. Glenn Collins, ACC a head of technical advisory and policy says that the current ramping up of pressures comes at the end of what has been an unprecedented year for accountants, as they have to support clients with a wide range of entirely new measures including the coronavirus job retention scheme (CJRS), self-employed income support scheme (SEISS) and local restrictions support grant (LRSG), as well as advise those who have received no government support and try to manage the impact of the pandemic on their own staff and businesses.
National Minimum Wage Increase
The government has announced the national living wage (NLW) and national minimum wage (NMW) rates which will come into force from April 2021. It accepted in full, recommendations made by the low pay commission at the end of October. The LPC says there is no easy recommendation to make this year, in response to the economic shock of the effects of the pandemic. It recognises: ‘both workers and employees have been hit by the economic crisis and there are powerful arguments both that workers need a pay rise, and that employers are facing an exceptionally tough situation that raises the threat of unemployment. Added to this, the speed of economic change and level of uncertainty over the future is unprecedented. The lag between advice in October and the rate applying (April 2021) takes on far greater significance this year, and a wide range of economic scenarios are possible up to April 2021.’ Taken into consideration in the NLW and NMW adjustment recommendations for April 2021 the LPC quotes the strain on low – paid workers and businesses who are struggling to survive. Many low – paid workers are key workers, particularly in retail and social care, difficulties in continuing to work through the depth of the pandemic. For others, furloughed workers’ lost income, forced life changes, job uncertainty are cause for great concern. Another less visible but in Demick difficulty, or examples of work is feeling forced into poorer terms and conditions, with their employers blaming the crisis. Employers are quoted to be struggling with deep uncertainty since March, particularly smaller businesses. The structural shifts facing retailers have accelerated as well as forced closure for the hospitality sector during what should be the most profitable period of the year. And the intensity of the funding crisis in many publicly funded sectors from social care to child care, as well as leisure and the arts.
January Top Tips
All eyes are on HM Treasury in anticipation of the 2021 budget. Suffering increased pressure from lockdown restrictions and following the abandoned Autumn budget the government has been unable to enact their agenda for ‘levelling up’ that they promoted during their campaign. We expect further measures and adjustments to existing support schemes. Here’s what to look out for.
- Possible extension to the furlough scheme (CJRS)
- Fourth SEISS grant conditions delayed until 3 March
- A rise in the National Minimum Wage
- The Construction Industry VAT Reverse Charge
- IR35 to come into force in April
- Making Tax Digital compliance from April
- Follow our social media channels for up to date briefings
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