Manufacturers are calling for an emergency, pre-recess package of business support measures including extension of temporary tax reliefs to support companies from escalating costs
The call comes on the back of the Make UK/BDO Q2 Manufacturing Outlook survey which shows growth and orders slowing significantly, exports almost at a standstill and, investment falling as companies cut or postpone their plans in order to maintain cashflow.
According to Make UK, the seriousness of the situation and, the prospects for the next six months, means that industry cannot wait for the promised help in the autumn which the Chancellor made in the Spring Statement. It is calling for urgent actions before MPs go on their summer break.
Make UK has made a number of recommendations for measures government can introduce now to address rising business costs including the following:
- waive or reduce business rates for the next 12 months;
- implement VAT deferrals for larger businesses and waive completely for SMEs;
- temporarily freeze the Climate Change Levy and, if energy costs continue to rise, remove it completely;
- Review the efficacy of the business interruption loan schemes introduced during the pandemic and deploy a successor scheme by Q3;
- Extend the 130% super-deduction tax break, due to end in March 2023; and
- make the increase in the Annual Investment Allowance permanent.
In addition to immediate measures, Make UK also stressed that the government must move away from short-term, gesture politics. Instead, it must focus on demonstrating to business and, foreign investors, that it has the capacity to operate in a serious manner with a long-term strategy.
Stephen Phipson, chief executive of Make UK, said: ‘Whilst industry has recovered strongly over the last year we are clearly heading for very stormy waters in the face of eyewatering costs and a difficult international environment.
‘Clearly some of the factors impacting companies are global and cannot be contained by the UK government alone. However, given the rate at which companies are burning through their balance sheets just to survive, it must take immediate measures to help shield companies from the worst impact of escalating costs and help protect jobs.’
Richard Austin, head of manufacturing at BDO, added: ‘Manufacturers have shown their ability to overcome a wave of challenges over the last couple of years to remain competitive. The question is when fatigue will overcome resilience. The tipping point where the shorter term need to retain cash outweighs investment is starting to be reached and could have significant implications for future growth.
‘Rapidly rising input costs, ballooning energy bills and in some cases inflation-busting pay settlements have hit margins and frozen investment plans. There is now a strong case for government action to help UK manufacturers weather the immediate storm and incentivise investment for long-term growth.’
According to the survey, investment intentions dropped sharply from +27% in Q1 to just +5% as companies cut or postpone their plans in response to rapidly escalating costs.
Two thirds of companies (67.8%) said rising energy costs were causing major disruption, almost three quarters (71.9%) cited increased raw material costs posing a similar threat and, two thirds (66.8%) cited rising transport costs.
Manufacturers expect to continue to increase their UK and export prices substantially in the next quarter to +69% and 63% respectively, with both these figures dwarfing previous record levels in the survey’s 30-year history.
Businesses across the country are being encouraged to apply for remaining grant funding from local authorities to help them through the pandemic
Hospitality, leisure and accommodation businesses can still apply for one-off cash grants of up to £6,000 through the Omicron Hospitality and Leisure Grant scheme.
The funding is made up of £556m available through the £635m Omicron Hospitality and Leisure Grant (OHLG) scheme, which launched in January 2022, and a further £294m through the Additional Restrictions Grant (ARG) scheme which has been paying out funding since November 2020.
The Omicron scheme provides businesses in the hospitality, leisure and accommodation sectors with one-off grants of up to £6,000 per premise.
The one-off grants of up to £6,000 for eligible businesses in the hospitality and leisure sectors, depend on rateable value:
- businesses with a rateable value of £51,000 or above: £6,000
- businesses with a rateable value between £15,000 and £51,000: £4,000
- businesses with a rateable value of £15,000 or below: £2,667
To provide further support to other businesses, the ARG scheme provides councils with funding they can allocate at their discretion to businesses most in need, such as personal care businesses and supply firms.
Small business minister Paul Scully said: ‘We’re working to get our economy running on all cylinders again so we can focus on making the UK the best place in the world to work and do business, creating jobs along the way.
‘Eligible businesses should apply as soon as possible for the grants available to help them put the pandemic behind them and get on a sounder footing.’
Chancellor Rishi Sunak sets out the three new Covid support measures available for businesses
Omicron-hit hospitality businesses will be able to claim up to £6,000 cash grants and companies can receive compensation for employees’ sick pay, as part of a new support package, the chancellor has announced.
Rishi Sunak has announced three new “generous” measures to help the arts and hospitality industries get through what should be their busiest period, as restaurants’ bookings plummet and theatres are forced to close amid a sharp increase in Covid cases.
From Tuesday, small and medium-sized companies – those with less than 250 employees – can be reimbursed by the government for the cost of statutory sick pay for Covid-related absences of up to two weeks per employee, said the chancellor.
“Eligible” hospitality and leisure businesses “impacted by Omicron” will be able to apply for a one-off cash grant of up to £6,000, said Mr Sunak. However, it is not yet clear how employers will be asked to prove how they have been affected.
Businesses in the arts will also receive further funding with £30 million allocated to the Culture Recovery Fund to help support the likes of theatres and museums.
What exactly does the new Omicron financial bailout include?
- “Eligible” hospitality and leisure companies can claim one-off cash grants worth up to £6,000 per premises. It is understood that all hospitality and leisure businesses can apply, as long as they can prove they have been “impacted by Omicron”. It is not yet clear how businesses will be asked to prove how they have been impacted.
- Small and medium-sized companies – those with less than 250 employees – can be reimbursed by the government for the cost of statutory sick pay for Covid-related absences for up to two weeks per employee. Firms are eligible for the Statutory Sick Pay Rebate Scheme (SSPRS) from today and will be able to make claims retrospectively from mid-January.
- A £30 million boost to the Culture Recovery Fund to support organisations in the arts, such as theatres, museums and orchestras through the winter until March 2022.
- Local authorities in England will also received a more than £100 million boost via the Additional Restrictions Grant (ARG) . Each local authority will have discretion to allocate this funding to businesses most in need.
HMRC is reminding self assessment customers to declare any Covid-19 grant payments on their 2020/21 tax return, including SEISS claims which are taxable
More than 2.7 million customers claimed at least one Self-Employment Income Support Scheme (SEISS) payment up to 5 April 2021. These grants are taxable and taxpayers must declare them on their 2020/21 tax return before the deadline on 31 January 2022.
The SEISS application and payment windows during the 2020/21 tax year were:
- SEISS 1: 13 May 2020 to 13 July 2020
- SEISS 2: 17 August 2020 to 19 October 2020
- SEISS 3: 29 November 2020 to 29 January 2021
If taxpayers received other support payments during the pandemic, including Coronavirus Job Retention Scheme (CJRS) grants, they may need to report this on their tax return if they are self-employed; in a partnership; or a business.
Information on which support payments need to be reported to HMRC and any that do not is available on the gov.uk website.
It is important that taxpayers check and make any changes to their tax return to make sure any SEISS or other Covid-19 support payments have been reported correctly in their self assessment.
Myrtle Lloyd, HMRC’s director general for customer services, said: ‘We want to help customers get their tax returns right, first time. We have videos, guidance and helpsheets available online to support you with your self assessment. Search ‘help with self assessment’ on gov.uk to find out more.’
HMRC has created resources to help taxpayers complete their tax return including a playlist on YouTube, webinars, and helpsheets and guidance available on gov.uk.
HMRC recently announced that more than 20,000 customers, who were unable to pay their tax bill in full, had used the self-serve time to pay facility, bringing in an estimated £46m. The online payment plan helps taxpayers who may feel worried or anxious about paying any tax owed by enabling them to spread the amount into manageable monthly instalments, up to the value of £30,000.
If taxpayers owe more than £30,000, or need longer to pay, they should call the self assessment payment helpline on 0300 200 3822.
HMRC urges everyone to be alert if they are contacted out of the blue by someone asking for money or personal information. Taxpayers should always type in the full online address www.gov.uk/hmrc to get the correct link for filing their self assessment return online securely and free of charge. HMRC sees high numbers of fraudsters emailing, calling or texting people claiming to be from the department. If in doubt, HMRC advises not to reply directly to anything suspicious, but to contact them straight away and to search gov.uk for ‘HMRC scams’.
Taxpayers that were employed and received CJRS (furlough) payments during the 2020/21 tax year will need to enter earnings and income tax as stated on their P60. The P60 will include any furlough payments received up to 5 April 2021, so these furlough payments do not need to be included on tax returns.
Chancellor Rishi Sunak has announced a new £4.6 billion package of grants to support businesses through the latest national lockdown.
UK businesses in the retail, hospitality and leisure sectors are to be given one-off grants worth up to £9,000.
The payments are expected to support 600,000 business properties across the UK. A further £594 million will be made available to councils and devolved nations to support businesses not covered by the new grants.
The Chancellor said:
‘The new strain of the virus presents us all with a huge challenge, and whilst the vaccine is being rolled out, we have needed to tighten restrictions further.’
‘Throughout the pandemic we’ve taken swift action to protect lives and livelihoods and… we’re announcing a further cash injection to support businesses and jobs until the spring.’
‘This will help businesses to get through the months ahead – and crucially it will help sustain jobs so workers can be ready to return when they are able to reopen.’
Internet link: GOV.UK news
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