Bounce Back Loan Scheme (BBLS)
The Bounce Back Loan Scheme will be open for applications for another 2 weeks until 31 March 2021. The scheme allows small and medium sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000. The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.
You can apply for a loan if your business:
> is based in the UK;
> was established before 1 March 2020; and
> has been adversely impacted by the coronavirus.
If you already have a Bounce Back Loan but borrowed less than you were entitled to, you can top up your existing loan to your maximum amount. You must request the top-up by 31 March 2021.
The length of the loan is 6 years, with no repayments due in the first 12 months. It can be repaid early without paying a fee. Before your first repayment is due, your lender will contact you about further options to:
> extend the term of your loan to 10 years;
> move to interest-only repayments for a period of 6 months (you can use this option up to 3 times); and
> pause your repayments for a period of 6 months (you can use this option once).
From 6 April 2021, the Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million, to give them confidence in continuing to provide finance to UK businesses. The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes. We will let you know when we get more information on this.
Super-deduction
Between 1 April 2021 and 31 March 2023, companies investing in qualifying new plant and machinery will benefit from new first year capital allowances. Under this measure a company will be allowed to claim:
> a super-deduction providing allowances of 130% on most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances
> a first year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances.
This relief is not available for unincorporated businesses.
Corporation tax rates
The main rate of corporation tax is currently 19% and it will remain at that rate until 1 April 2023, when the rate will increase to 25% for companies with profits over £250,000. The 19% rate will become a small profits rate payable by companies with profits of £50,000 or less. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief, providing a gradual increase in the effective corporation tax rate.
VAT
Although many businesses have been using MTD for VAT for a while, from 1 April 2021, HMRC is tightening up on MTD for VAT. If you use more than one piece of software in the preparation and submission of your VAT return, there must be digital links between software products. Please contact us to discuss, if you’re not sure you have the necessary digital links set up.