COVID-19: Practical guidance for our rural and farming clients #18
The government are continuing to announce measures to help businesses with the impact of COVID-19 and we saw a demonstration of this in Chancellor Rishi Sunak’s Summer Statement this week. Some of Sunak’s measure will affect farmers and rural businesses and we have detailed the highlights in this update as well as a more thorough summary in our insight here, as always, as more detail is released we will share that with you.
In this update, we also discuss the importance of 31 July in the tax calendar whereby farmers and agri-businesses are currently required to pay in advance part of their self-assessment tax return and what options you have for its payment or deferral.
Alongside this, we take the opportunity to remind you of the other extensions and upcoming deadline dates you will need to be aware of as a rural business operating within the COVID-19 environment, this includes company account filing extension, Basic Payment Scheme and the Dairy Response Fund.
And, if you operate a tourism diversification on the farm then you may have the opportunity to claim some funding with the government’s newly announced Kick-Starting Tourism Package, see below for more details.
Finally, join us on Friday 10 July at 9am where we welcome Paul Neate, Director and Rural Adviser and Catherine Vickery, Rural Tax Adviser, to the rural ‘Virtual Breakfast’ for a COVID-19 and Tax dedicated Q&A session.
9th July 2020
Andrew Vickery See profile
During his address on Wednesday 8 July, Chancellor Rishi Sunak announced a range of emergency package measures to protect the economy. The highlights in interest to our clients being:
- VAT in restaurants, accommodation and attractions will be reduced drastically from 20% to 5% for six months starting next Wednesday (15 July)
- From 8 July 2020 until 31 March 2021, buyers will pay no Stamp Duty Land Tax on the first £500,000 when they move home, this value was previously set at £125,000
- The furlough scheme will be phased out by the end of October as originally planned
- £1,000 Job Retention Bonus per employee for businesses who bring back furloughed workers and who remain employed until at least January 2021.
We will assess fully these measures in future correspondence, and if you would like to join us on Friday, we will also be discussing the financial aspects and implications in our webinar.
For more detail on his annoucements, click here.
Most farmers and agri-businesses are required to pay advance payments on account towards their next self-assessment tax bill. These payments are calculated based on the amount of tax that was paid the previous year.
Once calculated, the annual amount an individual pays for their self-assessment is split by HMRC into two payments and two dates. The 2019/20 tax year first payment on account was due by midnight 31 January 2020 and the second is due by midnight on 31 July 2020.
If you are having difficulties because of the impact of COVID-19, it’s this second payment that HMRC says can now be deferred, with no interest charged during the deferral period, to be paid back by the 31 January 2021.
Self-assessment tax returns should still be filed by their due date but no application to defer is required as it’s mandated automatically if no payment is received.
A further advantage of deferring the July payment on account is that it should allow all tax payers to know the exact level of tax they need to pay because their tax return will need to be submitted by that same date of 31 January 2021. This should reduce the chance of any tax overpayments being made at a time when cash will be tight for many businesses, notably those that were impacted by the early stages of the COVID-19 crisis.
It’s important to remember that if you chose to defer, this would only be a postponement and you will be expected to pay the full deferred amount on or before 31 January 2021 along with:
- Any balancing payment due for the 2019 to 2020 tax year which will be shown on your tax calculation when you prepare your self-assessment for 2019/20
- The first payment on account due for the tax year 2020/2021 as usual.
Should you not plan for this within your cash flow then this could potentially be a cash debilitating date for your business.
Instead of a large, one off tax bill in January, there are other options you may wish to consider:
- Pay it now – pay your tax bill on 31 July 2020 or in full at any time leading up to 31 January 2021
- Pay by instalments – arrange an instalment plan with HMRC
- Arrange for a HMRC Time to Pay initiative – available for businesses unable to pay because of the impact of COVID-19.
Deferring your payment on account will not stop you from being entitled to other coronavirus support that HMRC provide. We advise, in all cases, please speak to us first to understand your position and the best options available to you.
If you’re a farming or agri-business that has been affected by the impact of COVID-19 and you operate through a company structure then HMRC has given you the option to extend the filing date of your annual accounts:
- If your filing deadline falls between 26 March 2020 and 29 September 2020, HMRC will extend your deadline to the earlier of:
- 30 September 2020
- 12 months from the end of your accounting period
- If your filing deadline fell between 26 March 2020 and 26 June 2020, HMRC will extend your deadline retrospectively.
Again, we would urge you to discuss this with your adviser to review the options available for you before deciding to extend.
Many of our rural clients and farmers operate diversified businesses to take advantage of the tourist hotspot they live in and could benefit from the government’s latest announcement of a Kick-starting Tourism Package to help the tourism industry get back on its feet.
If you are a farmer who has a B&B or holiday let, or a rural business with a hospitality diversification then you could potentially have access to a grant of up to £5,000 to help your business to adapt post the COVID-19 pandemic.
Funding will be accessed through Local Growth Hubs offering small grants (£1,000 to £5,000) to:
- Help businesses access specialist professional advice e.g. human resources, accountants, legal, financial, IT/digital
- Purchase minor equipment to adapt or adopt new technology to continue to deliver business activity or diversify.
We will provide more details and how to apply once more information has been announced.
Basic Payment Scheme – deadline for application of 30 June has passed. Final BPS application deadline, with penalties, is midnight 10 July 2020.
Countryside Stewardship Mid Tier – Deadline for applications midnight 31 July. If you think you won’t be able to meet the deadline date due to the impact of COVID-19 you can email firstname.lastname@example.org using ‘CS 2020 Mid-Tier application exception’ as the subject title or ring the helpline on 03000 200301.
Join us this Friday live at 9am as we welcome Director and Rural Adviser, Paul Neate along with Rural Tax Adviser, Catherine Vickery for a Q&A session. We will be discussing new announcements regarding COVID-19, including Chancellor Rishi Sunak’s Summer Statement, and the business implications and opportunities for farmers and rural businesses.
Paul and Catherine also specialise in tax mitigation for farmers and rural businesses and will be providing their advice on how to manage tax within the current and future COVID-19 environment.
You are welcome to submit questions during the event using the question box on the right of your screen or beforehand to email@example.com.
If you have any problems accessing the event, please let us know by contacting firstname.lastname@example.org.