COVID-19: Practical guidance for our rural and farming clients #24

The Autumn Budget has been cancelled because of the coronavirus pandemic with the Treasury stating, ‘now is not the right time to outline long-term plans’.

A delay until Spring 2021 has been welcomed and gives farmers and rural businesses further time to prepare for what tax reforms may come, in order for the government to recoup their substantial outlays over the last months.

Whatever happens, we advise you to use this interval to review your current tax planning arrangements and get in touch with your Old Mill adviser to prepare for reforms within the next Budget.

Extension of 5% VAT for hospitality and tourism

Out of our farming and rural business clients, it’s those who have diversified within hospitality or tourism that are seeing continuous disruption by COVID-19.

The government have acknowledged this and the VAT rate which was previously cut to 5% for businesses within the hospitality industry will now be extended until 31 March 2021.  This applies to all food and non-alcoholic drinks, accommodation, and tourist attractions across the UK.

Deferral of VAT payments due to coronavirus

Farming and rural businesses who deferred their VAT bill will no longer be required to pay a lump sum on 31 March 2021 as previously requested by HMRC.

Instead, businesses now have the option to make, over the 2021/22 financial year, 11 smaller payments interest free.

Businesses wishing to utilise this payment plan will need to opt-in to the scheme.  HMRC will provide more information for this in the coming months.

In the meantime, we are available if you would like to discuss your options.

Self-Employment Income Support Scheme (SEISS) extended

The SEISS has been extended to provide two more grants lasting for six months from November 2020 to April 2021.

• The third grant will cover the first three months (November to January) and will be calculated as 20% of average monthly trading profits up to a maximum of £1,875 in total
• The fourth grant will cover February to end of April. HMRC are currently reviewing the level of grant to be provided with more details to be given in due course.

As with grants one and two, you must be self-employed or a member of a partnership and can demonstrate you have been adversely affected by COVID-19.  The new grants aren’t yet ready for claimants but full details on applying will be provided by HMRC when ready.

There is no confirmation yet on when these lump sum payments will be made but, in line with all government grants, they will be subject to income tax and national insurance.

Job Retention Scheme replaced by Job Support Scheme

The Coronavirus Job Retention Scheme (CJRS) will be replaced by a Job Support Scheme from 1 November.  For the six months from November, the Job Support Scheme details are as follows:

• To be eligible, employees work a minimum of 33% of their hours
• For remaining hours not worked, the government and employer pay 1/3 wages each
• So, employees working 33% of their hours will receive at least 77% of their pay
• The government contribution is capped at £697.92 per month.

Loan Schemes – Pay as You Grow

The application deadline for all loan schemes has been extended to 30 November.  This includes the Bounce Back Loan (BBL), Coronavirus Business Interruption Loan Scheme (CBILS) and Coronavirus Large Business Interruption Loan Scheme (CLBIS).

The effects that ‘Pay as You Grow’ has on the Bounce Back Loan Scheme announced on 24 September 2020:

• Businesses will have the option to repay their loan over a period of 10 years instead of the six years previously
• There is an option to move to interest only payments for a period of six months (this option can be used three times).

The Coronavirus Business Interruption Loan Scheme (CIBLS) can now be utilised for up to 10 years instead of the original six years.

Rural Virtual Breakfast | Friday 2 October | 9am

Join us this week for the Old Mill rural ‘Virtual Breakfast’ Q&A focusing on all things financial for farming and rural businesses during COVID-19.  This week we welcome Rural Tax Adviser Catherine Vickery and Rural Accountant Neil Cox.

Book your place here… 

As usual, please submit any questions beforehand to marketing@om.uk or alternatively you can ask them live during the breakfast.

Milk Cost of Production Report 2020

We are delighted to announce this year’s Old Mill Dairy Cost of Production Report will be launched on Wednesday 7 October.  All clients will be able to download a copy at om.uk/dairy on this date.

You are also invited to join us at 12 noon on Monday 12 October for a live Zoom meeting and Q&A on the report with the authors Dan Heal (Old Mill) and Gerard Finnan (The Farm Consultancy Group).

(L-R: Gerard Finnan & Dan Heal)

Book your place here…

West Country Dairy Awards – Winner announced

Old Mill is proud to support the West Country Dairy Awards which provides grants to people studying courses related to the dairy industry. In previous years, those winners included sons and daughters of farmers and farm employees and students demonstrating commitment to the industry.

This year’s winner is 21-year-old Freya Lance from Newton Abbott who is in her final year studying agriculture at Newcastle University where she is a student ambassador promoting agriculture and the dairy industry.

For more information, or if you have any questions about any of the above, please contact your Old Mill adviser or click here…