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Different types of LPA

There are two types of LPA:

  • health and welfare
  • property and financial affairs

You can choose to make one or both. You can appoint the same or different Attorneys for each, to ensure that decisions are always made in your best interest. You should choose people you trust and who will be comfortable to make the right decisions on your behalf.

Who can be your attorney?

An attorney must be over 18 and could be:

  • your husband, wife or partner
  • a child
  • a relative
  • a friend
  • a professional

VAT payments deferred

The VAT deferment applies automatically to all businesses and will benefit around two million taxpayers. VAT returns still need to be submitted on time and repayment claims will still be processed as normal.

For more information and a Q&A from our VAT experts visit COVID-19: Deferment of VAT Q&A

Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme (JRS) was launched on Friday 20 March as part of a wider range of measures to help all UK employers.

The JRS represents  an unprecedented step in helping employers retain their workforce during the Covid-19 crisis with the intention being that the economy will be quicker to recover if there are not widespread redundancies. The JRS relief is being backdated to 1 March 2020 and is being introduced for an initial three-month period to 31 May 2020.

Where employees are designated as “furloughed employees’, an employer can pay 80% of such employees pay (up to a cap of £2,500) and claim this back from the Government. Employers can top-up salaries if they choose to.

For a detailed breakdown of the scheme visit our page here Coronavirus Job Retention Scheme

Rates Relief

For the year 2020 to 2021, it was announced that the business rates retail discount will be increased to 100% for all properties with a rateable value of less than £51,000, and for all businesses in the hospitality and leisure sector, such as museums, theatres, gyms and pubs. 

What should you do if an employee needs time off work to look after someone?

Employees are entitled to unpaid time off work to help someone who depends on them. For example;

  • if they have children that need to be looked after because their school has closed; or
  • they need to stay at home to help their child or another dependent if they’re sick or need to go into isolation or hospital.

There’s no statutory right to receive payment for this time off, but you should refer to your policy as some employers have offered to pay staff in such cases.

Are employees entitled to sick pay if they are off due to the coronavirus?

Usual sick leave and pay entitlements apply if someone has coronavirus. Employers with under 250 employees will get a 100% refund on statutory sick pay for up to 14 days per employee.

Employees who have been advised to self-isolate by their GP or NHS 111 will be eligible to receive statutory sick pay, which is currently paid at a rate of £94.25 per week. Until further notice this sick pay will be paid from the first day.

If somebody chooses to self-isolate without being advised, they will not be entitled to statutory sick pay.

Small business grant funding

The government recognises that many small businesses pay little or no business rates because of Small Business Rate Relief (SBRR). To support those businesses, the government will provide £2.2 billion of funding for Local authorities in England. This will provide £10,000 to around 700,000 business currently eligible for SBRR or Rural Rate Relief, to help meet their ongoing business costs. For a property with a rateable value of £12,000, this is one quarter of their rateable value, or comparable to 3 months of rent. Most properties that are eligible for SBRR will have a lower rateable value, and so this will represent an even greater proportion of their annual rent.

In addition to a 2020/21 business rates holiday, a £25,000 grant will also be provided to retail, hospitality and leisure businesses operating from premises with a rateable value between £15,000 and £51,000. There is no need to apply for this grant which will be paid by the local authorities.

HMRC – Time to Pay

HMRC has been instructed to show increased leniency regarding time to pay arrangements for taxation payments and a dedicated helpline has been set up for any businesses concerned about their ability to make future payments (0800 015 9559). This allows businesses a time-limited deferral period on HMRC liabilities that are owed and a pre-agreed time period to pay these sums back. These tailored arrangements will give a business the time it needs to pay HMRC to support their recovery while operating through any temporary financial challenges that occur. To ensure ongoing support, HMRC have made a further 2,000 experienced call handlers available to support firms in difficulty. HMRC will also waive late payment penalties and late payment interest where businesses experience difficulties contacting HMRC or paying taxes due to COVID-19.

Coronavirus Business Interruption Loan Scheme

The government will launch a new, temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, to support businesses with easier access to bank lending and overdrafts. The government will pay the first 12 months of interest and will provide lenders with a guarantee of 80% on each loan (subject to a per lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value. This new guarantee will initially support up to £1 billion of lending on top of current support offered through the British Business Bank.

Furthermore large businesses will also be supported through this time by the Bank of England, with the total loan package expected to be up to £330bn. 

More info can be found here: COVID-19: Coronavirus Business Interruption Loan Scheme

How will farm diversification affect my tax position?

It all depends on what the business is diversifying into…

If the business is diversifying into other farming activities, for example, from arable farming to poultry farming, there will be little change to the tax position. All income from farming is assessed as one trade for tax purposes and there will be no change in the VAT position, Inheritance Tax reliefs or Capital Gains reliefs.

If the business is diversifying into investment activities, for example, property rental, there can be a substantial change in the tax position. For income tax purposes, the rental profits will be a separate trade which can carry their own tax rules. Generally speaking, rent is exempt from VAT which can lead to a restriction of input VAT reclaimed on overheads. Agricultural and Business Property Relief may not be available at all if the business is not “wholly or mainly trading” and so if the rental business will be larger than the farming business, you should consider restructuring to protect valuable reliefs against the farming assets.

Diversifying into renewable energy can be attractive from a tax perspective as some projects qualify for capital allowances at rates of 6%, 18% or 100% of expenditure. If the energy is used in the farming business, the Inheritance Tax and Capital Gains position won’t change. If the energy is sold, it may be considered an investment activity, which, as mentioned above, can lead to restrictions in reliefs available.

Setting up a trading business will still see changes to the tax position of your business. For income tax purposes, the profits will be a separate trade which can lead to restrictions if one of the trades is making losses or with farmers’ averaging claims. For Inheritance Tax purposes, Business Property Relief will be available on the new trading assets without any tainting of Agricultural Property Relief on the farming assets.

Changing risk profiles for diversification means that you should consider diversifying in a separate entity with limited liability to safeguard the existing business against any claims.

There’s a lot to consider with diversification from a tax and accounting perspective so it’s important to talk ideas through with a specialist to ensure you don’t encounter into any pitfalls.

How does the latest Budget affect agricultural businesses?

On 29 October 2018, the Government announced, the self-called “budget to support new housing, high street and local services”. Despite the title, the budget did have various changes that will affect agricultural businesses.

Changes to capital allowances included an increase in the Annual Investment Allowance (AIA) from £200,000 to £1,000,000 for expenditure from 1 January 2019. The AIA allows businesses to receive 100% tax relief for plant and equipment in the year of purchase up to £1,000,000 which should be ample for typical farming businesses.

Other changes to capital allowances includes the introduction of the new Structures and Buildings Allowance. This allows tax relief against profits for commercial structures and buildings at 2% a year; assets which previously attracted no income tax relief.

In terms of income tax, the personal allowance was set at £12,500 for the 2019/20 tax year and the higher rate threshold was set at £50,000. No changes were announced for corporation tax aside from confirmation that the rates will fall from 19% to 17% from 1 April 2020.

The Government relaxed caps of borrowing to Local Authorities for them to build houses. This may generate opportunities for those who have land with the potential for residential development.

Fuel duty was frozen and vehicle tax saw an increase based on the Retail Price Index.

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