Month: April 2021

Costs are defined as something that has to be paid or spent to acquire something. Costs include the acquisition of:

• An object, say material required to convert into saleable goods.
• A service, for example, sub-contact labour or
• A right, the rates you pay to occupy business premises.

In your accounts, these costs would appear as expenses or costs of the sales in your profit and loss account. All of these costs have something in common, their usefulness tends to be restricted to the time at which they were purchased.

But what about costs – say the purchase of a computer – that should have a working life of say five years? This type of expenditure will not appear as a deduction from your profits as an expense, instead, it will appear as a fixed asset on your balance sheet and will be written off – over five years in the case of our computer – by depreciation.

We need a new word to describe this type of expenditure and the one we use is “investment”.

The distinction between a cost and an investment is significant. Generally speaking, a cost has value for a limited time period whereas an investment has the ability to impact current and future trading prospects.

As we emerge from lockdown, do not underestimate the recovery value of an investment for your business. And the government has offered company investors a timely tax incentive to invest.

In his recent budget, Rishi Sunak announced that qualifying investment in equipment would attract a 130% deduction for tax purposes (applies to companies from 1 April 2021 to 31 March 2023). It’s worth considering this distinction. Costs will sustain your current trading performance, but investment expenditure will have the potential to create new opportunities in future years.

There is a poignant similarity between the effects of COVID on us personally and our business. Thankfully, the possible dire consequences of catching the Coronavirus bug are being countered by a variety of vaccines. Fingers crossed that these will ease the pressure on the NHS and minimise the distress that this dreadful virus has inflicted on us since it reared its head over a year ago.

But what about our businesses? How can we vaccinate businesses that have been adversely affected?

In our experience, firms that have invested time and resources in planning have been more successful at riding out the disruption than firms who have not.

Every business is different. Certain business sectors have been more severely affected than others and organisations who entered 2020 with significant reserves of capital and cash will have had the financial resources to ride out the disruption to their incomes.

It is never too late to sit back and plan for your business. Please call if you need help to consider your options as we start the tentative emergence from lockdown.

By providing information about COVID-19 vaccination and establishing supportive policies and practices, employers can help increase vaccine uptake among essential workers.

Self-employed individuals (including partnerships) who have overclaimed the Self Employed Income Support Scheme (SEISS) must pay back the overpayment to HMRC. The rules for repaying HMRC state that you must tell HMRC if you were not eligible to have claimed the grant.

For example:

• for the first or second grant, your business was not adversely affected
• for the third or fourth grant, your business had not been impacted by reduced activity, capacity or demand or inability to trade in the relevant periods
• you did not intend to continue to trade
• you’ve incorporated your business since 5 April 2018

You must also tell HMRC if you:

• received more than we said you were entitled to
• amended your tax return on or after 3 March 2021 in a way which means you’re entitled to a lower grant than you received

If you have overclaimed you must tell HRMC within 90 days of receiving the grant or face additional penalties. If the amount in question is £100 or less then there is no requirement to notify HMRC or pay back any grant received.

All qualifying self-employed businesses can continue to claim SEISS grants until 30 September 2021, if they continue to be adversely affected by the coronavirus pandemic. A fourth grant covers the period from 1 February 2021 to 30 April 2021 and a fifth and final grant will cover the period from May onwards.

The fourth grant will provide support covering 80% of average trading profits, up to a maximum of £7,500 for those who meet the eligibility requirements. The fifth and final grant will see those whose turnover has fallen by 30% or more continuing to receive the full 80% grant whilst those whose turnover has fallen by less than 30% will receive a 30% grant.