Cwmbran-based Green & Co Accountants and Tax Advisors, is advising cautious optimism following Rishi Sunak announcing a raft of incentives to shake the economy back into life following the effects of Covid-19. But, they warn, business owners must plan meticulously when it comes to the financial viability of their operations in the future.
With the support provided through the furlough scheme gradually decreasing over the coming months, the Government foresee unemployment rates growing and the main priority on the agenda is how the Chancellor will seek to protect, support and create jobs.
With this in mind, the Government announced a £1,000 Job Retention bonus for businesses who retain furloughed staff until at least January 2021, with each employee having to earn a minimum of £520 per month to qualify.
Mr Gooderham, Partner at Green & Co, warned those who employ personnel to be aware of the caveats of bringing staff back from furlough:
“The bonus of £1,000 per employee is likely to be paid following the January 2021 payroll, and whilst this is a positive contribution, it should not be relied on. Business owners need to speak to their advisors now so they can plan ahead of employees returning from furlough to the benefit of all concerned.”
The Chancellor also announced a kickstart Job Creation scheme for young people, paying their wages for six months.
“The kickstart scheme is positive, again, but given how many of the roles will be junior, business owners need to assess the long-term viability of increasing their staffing levels beyond six months. They need to work with their professional advisors to discuss what happens after the scheme ends following the six month subsidy period.”
Businesses who take on apprentices between August 2020 and January 2021 will receive a bonus of up to £2,000 per apprenticeship. Those under 25 will realise a bonus of £2,000 and those over 25 of £1,500.
Offering a much-needed boost to the hospitality and tourism industries, and effective immediately, the VAT rate on food, accommodation and attractions will be reduced from 20% to 5%. This will be in place until 12 January 2021.
Summarising, Mr Gooderham said:
“These are positive announcements and very much welcome at a time when significant help is needed across all sectors. However, we advise all business owners to seriously scrutinise their plans and not rely on schemes to keep them afloat as we attempt to return to normality. We are happy to speak to any business owner who needs help and clarity at this time.”
Green & Co Accountants and Tax Advisors specialise in business growth and tax minimisation for businesses across Wales and the South West of England.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.