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‘Breathing Space’ Scheme Launched to Support People in Debt

New scheme to give people in problem debt breathing space launched

Hundreds of thousands of people struggling with debt problems will be supported through a new debt respite scheme that was announced 4 May 2021. Around 700,000 people struggling with problem debt to benefit from Breathing Space this year as the scheme will give those facing financial difficulties 60 days to get finances back on track – without debts piling up, worrying letters or enforcement action.

People will also have access to professional debt advice, with stronger protections for people in mental health crisis treatment.  

Under the scheme, people will be given legal protections from their creditors for 60 days, with most interest and penalty charges frozen, and enforcement action halted. They will also receive professional debt advice to design a plan which helps to get their finances back on track.

Recognising the link between problem debt and mental health issues, these protections will be available for people in mental health crisis treatment – for the full duration of their crisis treatment plus another 30 days.

People across England and Wales who are struggling to repay their debts could be eligible, and the Government expects 700,000 people to benefit in the first year of the scheme.

See: New scheme to give people in problem debt breathing space launched – GOV.UK (www.gov.uk)

Credit Cards

HMRC have issued guidance on the three year carry back of losses

In his Spring Budget the Chancellor announced a temporary 3 year carry back of trading losses for limited companies and unincorporated traders instead of the normal one year carry back. This will potentially allow loss making businesses to obtain a refund of tax paid in those years.

The latest Finance Bill includes the legislation to implement these changes and HMRC have recently issued guidance on how the rules operate.

For unincorporated businesses, the extension applies to a maximum £2,000,000 of unused trading losses made in each of the tax years 2020/21 and 2021/22.

For corporation tax the new rules apply to accounting periods ending between 1 April 2020 and 31 March 2021. The £2,000,000 maximum applies separately to unused trading losses made by companies, after carry-back to the preceding year.

The £2,000,000 cap is subject to a group-level limit, requiring groups with companies that have capacity to carry back losses in excess of £200,000 to apportion the cap between member companies.

See: Extended Loss Carry Back for Businesses – GOV.UK (www.gov.uk)

Restrictions update

The next stage of the relaxation of the restrictions in England is set for 17 May, with cafes, restaurants and pubs able to serve people indoors. Currently in Scotland, pubs and restaurants are already allowed to open indoors until 8pm without alcohol which can only be served to those seated outside. It is likely venues in Wales will be able to open indoors on 17 May and Northern Ireland hospitality could reopen on 24 May.

The importance of cash flow planning

As the economy opens up there are many cases where the government support, loans and business rates holiday have kept businesses afloat but there are also significant concerns about their future viability once these end. There have been calls for the business rates holiday to be extended and we will keep you up to date over the next few months if supports change or new help becomes available. 

What is important now is to remain safe and game your cash flows for a range of different scenarios for the rest of the year. This will allow you to know where you stand and what (if any) actions are needed so your business can recover and flourish as the economy grows.

Please contact us if you need help, we are here to support you and your business.

Beware Bogus HMRC Phishing Scams

HMRC is aware of a phishing campaign telling customers they can claim for the fourth Self-Employment Income Support Scheme (SEISS) grant as support during the coronavirus pandemic.

Do not reply to the email and do not open any links in the message. The email has been issued in various formats like the one below: 

See here for an examples of the scams: Examples of HMRC related phishing emails, suspicious phone calls and texts – GOV.UK (www.gov.uk)

There are also text scams:

‘Due to the new lockdown support plan’ SMS 

HMRC is aware of coronavirus text scams telling customers they are entitled to funding due to the new lockdown support plan. Do not reply to the text and do not open any links in the message.

‘COVID-19 refund’ SMS 

Report suspicious HMRC emails, text messages and phone calls here: Report suspicious HMRC emails, text messages and phone calls – GOV.UK (www.gov.uk)

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