COVID Financial Updates
There are some big economic and financial changes happening right now in the UK. The Job Retention Scheme (JRS) is being wound down and will be completely gone in a few months’ time. When the JRS ends it will impact businesses of all sizes relying on financial aid for their employees. However, the Pay As You Grow (PAYG) scheme addresses these concerns and is an efficient alternative to furlough loans. Find out more in our latest blog on the August 2021 Financial Updates.
Latest COVID-19 UK Financial Updates – August 2021
Everything you need to know about furlough, loans and taxes
- The UK’s Job Retention Scheme is undergoing significant changes as the government tries to wind down the furlough scheme.
- The key changes refer to a decrease in the amount of government contribution to employee wages.
- This essentially means that in August and September, employers will be expected to contribute 20% towards the wages of furloughed workers for hours their staff do not work (Beard 2021).
- However, employees will continue to receive 80% of their current salary capped at £2,500 per month until the scheme ends (Beard 2021).
- For more information, visit the UK government website here.
PAYG for BBLS Repayment
PAYG (Pay As You Grow)
- Provides alternative repayment options for businesses that took out a BBLS (Bounce Back Loan Scheme) loan.
- Extend your loan term from 6 years to 10 (the interest rate remains fixed at 2.5%)
- Reduce repayment costs by taking a 6-month interest-only payment period
- Take a break and a have 6 months free of payments
- Check your eligibility for PAYG here, however, your lender will inform you regarding PAYG directly
- Using PAYG will not affect your business’s credit rating, but it may affect lenders’ future creditworthiness assessments (British Business Bank 2021). If you’re having trouble repaying business debts, contact your lender first.
Corporation Tax Increase
- The main rate of Corporation Tax is set to increase to 25% for the Financial Year 2023.
- A small profits rate is also to be introduced which will be set at 19%.
- This will apply to profits below the lower limit of £50,000 and profits exceeding the upper limit of £250,000 will be charged at the main rate (UK Government 2021). Margin relief will apply for businesses between with profits between £50,000 and £250,000.
How can your business stay on top of things?
With furlough ending, loan repayment picking up, and another wave looming over us, here are some things you can do to ensure your business is prepared for the unknown.
- With loans starting to be repaid, furlough ending, and no further grants being issued at the moment, cash will be tight for businesses, and you’ll need to get a grip of cashflow.
- One solution is the usage of cashflow management applications such as Float. Float helps users visualise day-to-day incomes and outgoings of your accounts, gives detailed budget information, as well as providing scenario-planning and cashflow forecasting features.
- Be prepared for positive COVID cases and be flexible with your staff schedules. On the occasion that someone gets sick, you will need to deal with isolations and lack of staff.
- Rotaready is a cloud-based rota software that allocates shifts automatically based on sales and impediments such as isolation and staff shortages.
Stock and Visibility on Short Life Products
- In the same vein, the isolation of staff and the discontinuation of business even temporarily leads short life products to become waste.
- The use of stock management applications such as DEAR Systems allows your business to prepare in advance for these random discontinuations. DEAR Systems gives you up-to-date information on stock adjustments, unlimited bin locations, product reordering, inventory aging and more.
- Improving systems in such a way lots of the mundane time-consuming tasks are automated, lowering your costs and allowing you to focus on growing your business the way you want.
Better Management Information
- Having real-time business information at your fingertips is a real game changer, find out very quickly what’s working and what isn’t, adjust fast to quickly plug the leaks and ramp up the most profitable parts of the business.
- Plan the financial and business impact of decisions before they happen, make the unknowns known before taking the leap.
Book a free discovery call with Sllick now for more information on how you can future-proof your business for the changes ahead. We arm you with the knowledge to get things right, from the start!