Thursday 2 April 2020


GRANTS AVAILABLE NOW, DON'T MISS OUT. - East Devon District Council are now contacting eligible businesses.

Further to the Budget on 11 March, the Chancellor's statement on 17 March and the Coronavirus outbreak, two grant funding schemes are being administered by local authorities. 


Scheme 1: Small Business Grant Fund

Businesses that qualified on 11 March 2020 for small business rate relief (SBRR), including those receiving a percentage reduction, or rural rate relief, will be eligible for a grant payment of £10,000.

Properties that are occupied for personal use (for e.g. private stables, beach huts, car parking spaces and personal storage) will not qualify. Properties for which liability is calculated using the small business multiplier (this is shown on the business rates bill) will not qualify.

Scheme 2: Retail, Hospitality and Leisure Business Grant Fund

Properties that would have qualified for the retail discount on 11th March 2020 will either be entitled to:

£10,000 where the rateable value (RV) of the premises is £15,000 or less or;
£25,000 where the RV is greater than £15,000 but less than £51,000
Premises with an RV above £51,000 are not eligible for this grant

Government guidance for local authorities administering these grants is available at: 

Thursday 26 March 2020

Covid-19 support for the self employed

26th March 2020:

As ever we will wait to see the detail but these are the key points to take away from the chancellor's latest announcements;

Self employed individuals will be able to claim 80% of their average monthly profits up to £2,500 - this is based on figures for the last three years (2016/17, 2017/18 and 2018/19).

Individuals can continue to work whilst making this claim.

It is available for at least three months and open to those with profits under £50k (presumably this is taxable profits as those are the figures HMRC would normally use.

It is only available to those who completed a 2018/19 tax return who had the majority of their income through self employment.

Payments will be available from the beginning of June - HMRC will contact you.

Monday 23 March 2020

Covid-19 Update

23rd March 2020

There are a number of reliefs, grants and loans available to business and individuals following the latest round of announcements.  This is a summary of where we are and what can be done to utilise them.

  1. Coronavirus Job Retention Scheme.
  2. Deferring VAT and Income Tax payments.
  3. Statutory Sick Pay relief package for small and medium sized businesses (SMEs).
  4. 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England.
  5. Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief.
  6. Grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000.
  7. Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank.
  8. HMRC Time to Pay Scheme.

1. The Coronavirus Job Retention Scheme
All UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

Designate affected employees as ‘furloughed workers,’ and notify your employees of this change - changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.

Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.  They expect this to be up and running by the end of April but claims can be backdated to the date the employee was furloughed going back as far as 1st March.

HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

2. Deferring VAT and Income Tax payments
VAT will be deferred for periods from 20 March 2020 until 30 June 2020, this deferral will happen automatically, no application is required. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

VAT returns still need to be completed and submitted on time.

Income Tax Self-Assessment payments due on the 31 July 2020 will be automatically deferred until the 31 January 2021.

3. Paying sick pay to employees
Small-and medium-sized businesses and employers can reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19 covering 2 weeks’ SSP per eligible employee.

The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.

4. Business rates holiday
A business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.

Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.

This will be applied automatically to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.

5. £10k grant fund
For businesses in the retail, hospitality and leisure sectors with a rateable value of under £15k there is a £10k grant available.  Your local authority should write to you if you qualify and they are the ones to contact if you need to check your eligibility.

6. £25k grant fund
For businesses in the retail, hospitality and leisure sectors with a rateable value of £15k to £51k there is a £25k grant available.  Your local authority should write to you if you qualify and they are the ones to contact if you need to check your eligibility.

7. Coronavirus Business Interruption Loan Scheme
The new Coronavirus Business Interruption Loan Scheme supports SMEs with access to working capital (including loans, overdrafts, invoice finance and asset finance) of up to £5 million in value and for up to 6 years.

The government will pay to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will not face any upfront costs and will benefit from lower initial repayments.

The government 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 scheme is now open for applications. To apply, you should talk to your bank or finance provider.

All major banks are offering this scheme. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.

8. Time to Pay service
All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time to Pay service.

These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.

If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559.

Staying in touch
Please feel free to contact your usual Easterbrook Eaton contact(s) via email or by calling the office on 01395 516658 (Sidmouth) or 01404 815646 (OSM).

Thursday 19 March 2020

Coronavirus and Easterbrook Eaton

Wednesday 4 October 2017

October 2017

Small Business Tax & Finance


The current regime for taxing dividends has been in place since 6 April 2016. Under the rules, all taxpayers, regardless of the rate at which they pay tax, are eligible for a ‘dividend allowance’. Although termed an ‘allowance’, in reality the dividend allowance is a nil rate band and dividends sheltered by the allowance are taxable at a zero rate. The allowance is set at £5,000 for 2016/17 and 2017/18, enabling all taxpayers to receive dividend income of £5,000 tax-free (on top of any dividends that are covered by the personal allowance). Once the dividend allowance (and the personal allowance) have been used up, dividends are taxed at 7.5% to the extent that they fall within the basic rate band, 32.5% to the extent that they fall within the higher rate band and 38.1% to the extent that they fall within the additional rate band.

The dividend allowance is to fall to £2,000 from 6 April 2018. This will impact on anyone who receives dividends, either from investments or as part of a profit extraction strategy from a personal or family company.

Dividends are a popular and tax-efficient method of extracting profits from a personal or family company. Where profits are extracted in this way, it is sensible to plan ahead to ensure that the higher dividend allowance available for 2017/18 is not wasted. Where shareholders in personal or family companies have taken dividends of less than £5,000 in 2017/18, and where retained profits are sufficient, consideration should be given to paying a dividend before 6 April 2018 in order to mop up any unused dividend allowance for 2017/18. For 2018/19 onwards, the allowance is only £2,000.

Paying a dividend after 6 April 2018 rather than before may mean (depending on the size of the dividend) that it is taxable where previously it was tax-free. Assuming that dividends of at least £5,000 continue to be paid in 2018/19 (and the personal allowance is utilised elsewhere), the reduction in the dividend allowance will increase the tax payable by a basic rate taxpayer by £225, a higher rate taxpayer by £975 and an additional rate taxpayer by £1,143.

Talk to us about tax-efficient profit extraction policies and the benefits of planning ahead.


The rules on the tax and National Insurance treatment of termination payments is changing from 6 April 2018.

Payments made on the termination of an employment are treated differently depending on whether the payment is a payment of earnings, such as normal wages and salary, or a compensation payment, such as damages for loss of office. Payments taxed as compensation payments benefit from a £30,000 tax-free exemption and are only taxable to the extent that they exceed £30,000. The £30,000 exemption does not apply to payments taxed as earnings.

It is not always easy to determine whether a payment is one of earnings or a compensation payment benefitting from the £30,000 exemption. In particular, payments referred to as ‘payments in lieu of notice’ cause difficulty in practice, not least because the term is used to describe payments that differ in nature. Under the current rules, payments in lieu which the employee is contractually entitled to receive, or which the employee has an expectation of receiving (for example, where there is a long standing company practice of making payments in lieu of notice), are taxed as earnings and do not benefit from the £30,000 exemption. By contrast, payments for which there is no contractual entitlement or expectation and which take the form of damages for the failure to give proper notice, benefit from the £30,000 exemption.

The treatment of payments in lieu of notice is to change from 6 April 2018 onwards. From that date, the payment is compared to the pay that the employee would have received had the employment continued throughout the notice period. Where the termination payment is not more than the pay that the employee would have received in the notice period had the employment not been terminated, it is taxable in full. Any excess over what would have been payable had the employment continued is treated as a compensation payment and will benefit from the £30,000 exemption. Essentially, any earnings payable until the end of the notice period are taxed in full as earnings from the employment.

The way in which compensation payments are treated for National Insurance purposes is also changing from 6 April 2018. Prior to that date, no National Insurance is payable on termination payments treated as compensation payments rather than as earnings. However, from 6 April 2018, employer National Insurance contributions will be payable on compensation payments made on the termination of employment to the extent that they exceed the £30,000 tax-free threshold – although the payments will remain free of employee’s National Insurance. The employee will pay tax on compensation payments in excess of £30,000 (as now) and the employer will pay employer’s National Insurance.

Please contact us to discuss the structuring of tax-efficient termination packages.


A PAYE Settlement Agreement (PSA) is an agreement that an employer makes with HMRC under which the employer agrees to pay the tax and National Insurance on certain benefits and expenses provided to employees. The tax and National Insurance due under the PSA is paid in a single payment by 22 October after the end of the tax year to which it relates where payment is made electronically. An earlier date of
19 October applies to payments that are made by cheque.

A PSA can be useful to save work and also to preserve employee goodwill. Benefits and expenses included in the PSA do not need to be notified to HMRC on form P11D.

However, not all benefits are suitable for inclusion within a PSA – a PSA can only be used for payments that are made irregularly, payments which are minor (although this category is largely irrelevant following the introduction of the exemption for trivial benefits costing £50 or less) or where it would be impracticable to operate PAYE. For 2017/18 and earlier years it is necessary to agree a PSA with an officer of HMRC before 6 July following the end of the tax year to which it relates. However, HMRC are simplifying the PSA process and as part of this, it will no longer be necessary to agree the terms of the PSA in this way. Further reforms are planned. The current PSA process largely relies on paper forms but HMRC are to develop an automated PSA process as part of their digital strategy.

Please contact us to discuss whether a PSA would be suitable for your employees and whether it would save work for you at the year end.


Under the cash basis, accounts are prepared simply by reference to money received and money paid out. By contrast, under Generally Accepted Accounting Practice (GAAP) profits must be worked out using the accruals basis (sometimes referred to as the ‘earnings basis’) which recognises income earned in a period and expenditure incurred in a period, regardless of when the income is received or the payment made.

From 6 April 2017 onwards, the cash basis will be the default basis for most unincorporated landlords where rental income is less than £150,000 a year. However, if the landlord wishes to continue to prepare accounts on the accruals basis, he or she will need to elect to do so. By contrast, property letting companies will need to continue to use the accruals basis to prepare accounts.

The rules for the treatment of capital expenditure under the cash basis have also been reformed from 6 April 2017 onwards. The new rules allow landlords using cash basis accounting to deduct most capital items from rental income when computing profits. However, a deduction is not available in this way for all capital expenditure – notable exceptions include land and cars.

Contact us to discuss what cash basis accounting means for your property rental business.


The VAT Flat Rate Scheme for small businesses is a simplified scheme which allows eligible traders to calculate the VAT that they pay over to HMRC by reference to a fixed percentage applied to gross
(i.e. VAT-inclusive) turnover. Businesses with VAT taxable turnover of £150,000 a year or less can join the scheme.

Prior to 1 April 2017 the flat-rate percentage was determined solely by reference to the trade sector in which the business operated. From 1 April onwards, it is also necessary to consider whether the business meets the definition of a ‘limited cost trader’. Where a company is a ‘limited cost trader’ the VAT that must be paid over to HMRC is at worked out using a higher rate percentage of 16.5% of gross (VAT-inclusive) turnover for the period, rather than the percentage for the relevant business sector.

A limited cost trader is one that spends less than 2% of its VAT-inclusive turnover on ‘relevant goods’ or one which spends more than 2% of its turnover but less than £1,000 a year on relevant goods. The 2% test must be applied for each VAT quarter. The test is a harsh one as it only takes account of expenditure on goods, not on services. Consequently, if a business spends a lot on VATable services but not much on goods, it may be classed as a limited cost business and may lose out in terms of recovering the VAT incurred on services.

If you use the flat rate scheme, contact us to arrange a review as to whether this is still beneficial.


Despite rising tax bills, company cars remain a popular benefit. The rules for taxing company cars reward employees driving cheaper low emission models with a lower tax bill.

Until 5 April 2015, it was possible to drive an electric company car tax-free. However, after that date, electric cars have been taxed according to the appropriate percentage for the 0 to 50g/km emissions band (9% for 2017/18, rising to 13% for 2018/19).

Technological advances mean that electric cars are becoming a more viable alternative to petrol and diesel options. In recognition of this, new appropriate percentage bands are to be introduced from 2020/21 onwards for electric and other ultra-low emission vehicles. Under the new structure, the percentage applying to cars with emissions of 1 to 50g/km will depend on both the level of the car’s CO2 emissions and also its electric range, which is the distance that the vehicle can travel in pure electric mode. For vehicles with CO2 emissions of 51g/km and above, the appropriate percentage depends solely on the level of CO2 emissions.

The bands for ultra-low emission cars for 2020/21 onwards are as follows:

CO2 emissions
Electric range
Appropriate percentage
130 miles or more
70 to 129 miles
40 to 69 miles
30 to 39 miles
Less than 30 miles

Thus, a lower tax charge will apply to electric cars with a greater electric range.

When planning ahead for company car changes, it is important to consider the tax implications of any policy and of the models chosen for the car fleet. Please contact us for more information.

This newsletter deals with a number of topics which, it is hoped, will be of general interest to clients. However, in the space available it is impossible to mention all the points which may be relevant in individual cases, so please contact us for personal advice on your own affairs.

Thursday 15 December 2016

Money, money, money

Securing funding for your business

The government have recently launched a new scheme to allow those small businesses who are unable to access finance to be matched with alternative finance options. Here we outline the key points of the new service, and we also suggest other types of funding to consider when searching for finance for your business.

The new matchmaking service for small businesses

The government's new programme will require nine of the UK's largest banks to automatically pass on the details of small businesses they have rejected for finance to three finance platforms: Funding Xchange, Business Finance Compared and Funding Options.
These platforms will then share the details with alternative finance providers and help to 'facilitate a conversation' between the business and any provider who expresses an interest in them. RBS, Lloyds, HSBC, Barclays, Santander, Clydesdale and Yorkshire Bank, Bank of Ireland, Danske Bank and First Trust Bank are all required to offer access to these finance platforms - although small businesses must give permission before their details are shared.

Alternative sources of finance

Raising funds for a business remains a significant challenge for many. Whether you are looking to start a new business or require capital to expand, there are many factors to consider, in addition to whether you'd like to utilise the government's new funding initiative. You may want to consider some alternative ways of securing finance.

Make use of an overdraft

Overdrafts are credit facilities that have a set amount of money, agreed between you and your bank. Using an overdraft may provide a flexible means for covering short-term outgoings and any potential unforeseen or unexpected business expenses. Overdrafts, however, should not be used as a long-term source of finance, and continued use may prompt your bank to question whether you are in financial difficulty.

Apply for a grant or government support

A grant is typically supplied by the government, charities or local councils. For those that qualify, grants can be a useful source of inexpensive financing. Grants are typically non-repayable: however, strong competition for such a source of finance persists. Additionally, grants are usually only offered to specific sectors for specific projects that are in their proposal stages.
In some instances, you may be asked to cover part of the cost of your project or to match the funds awarded to you.  
The British Business Bank is a government owned company which aims to make finance markets work better for small businesses and works with over 80 partners such as banks, leasing companies and venture capital funds. Further information can be found here:

Sell business shares to an investor

Making use of this option involves selling part of your stake in the business to an investor. If you choose to sell to an investor, any profit (or loss) the business makes will be shared with them. However, by using this type of finance you will not need to make monthly repayments and you will not be charged interest.  
This source of finance only applies to limited companies, so sole traders and partnerships would have to make use of other funding options available to them.

Asset finance

Leasing equipment means you can avoid spending a large amount of money in one lump sum. This is often beneficial from a cash flow perspective, although it should be noted that in some cases the monthly leasing instalments can be more expensive than buying the asset outright. Leasing will also give you access to a high standard of equipment, and assets can be upgraded easily when contracts end.
Hire purchase agreements are another option for those who want to acquire business assets without having to pay for the whole item up-front, and contracts usually include an option to purchase at the end of an initial period.
And don't forget, the cost of qualifying business equipment is usually tax deductible - talk to us for further details.
It is worth considering a range of options when sourcing finance for your business. We can advise on the most suitable type of finance to suit your needs - please contact us for further information.