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If you are wondering whether, or when, you should sell your business, a sensible first step is to form an outline plan for its disposal.
The sale of a successful trading company will generate a Capital Gain. This would normally be taxed at 20% after deduction of your annual exemption (£12,000 for 2019/20).
Entrepreneurs’ Relief can reduce your tax rate to 10% on a gain of up to £10m, but this relief is under threat from a preelection promise to review and reform it. If you want to be sure of benefiting from this relief, take advice and be prepared to act quickly.
To be eligible to use Entrepreneurs’ Relief you must meet these conditions for at least 24 months ending with the date of the sale:
• be an employee, director or company secretary of the company or of another company in the same trading group
• hold at least 5% of the ordinary share capital of the company
• hold at least 5% of the voting rights of the company
• be entitled to at least 5% of the distributable profits available to the equity holders
• be entitled to at least 5% of the profits and assets available for distribution to equity holders on the winding up or
• be entitled to receive at least 5% of the total proceeds on the sale of the entire company
If you plan to sell your company and carry on the business on a smaller scale as an individual or partnership, or start up the same business again within two years, you can be caught by anti-avoidance legislation which will tax the gain as income.

Rishi Sunak has promised to "protect, support and create jobs" and get pubs and restaurants "bustling again" as he unveiled a package to boost the economy’s recovery.

The Chancellor announced a VAT cut, stamp duty holiday, restaurant vouchers and a suite of measures to boost hiring as part of his mini-Budget.

Key announcements:

Help for hospitality
• Huge VAT cut for the hospitality sector and a landmark 50% discount for customers
• VAT on food, accommodation and attractions has been cut from 20% to 5% a £4bn boost for the industry
• Every Briton will be given an "eat out to help out" discount. Meals eaten at any participating business Monday to Wednesday in the month of August will be 50% off at up to £10 per head

Housing market
• Emergency stamp duty holiday to help revive the property market. Homebuyers will be temporarily exempt from paying the tax for the first £500,000 of any property price, saving them an average of £4,500. The increase in the threshold from £125,000 to £500,000 is effective immediately and will run until the end of March 2021.

Jobs and training
• £30bn set aside for boosting the jobs market.
• £1,000 job retention bonus for every furloughed worker that is brought back and employed until the end of January 2021. If every furloughed worker returns to work, the policy would cost £9bn. Workers must have been continuously employed and earn an average of more than £520 per month in November, December and January.
• New £2bn Kickstart Scheme as a key plank of his “Plan for Jobs”. The fund will create government-subsidised jobs for unemployed young people and employers will be able to offer a six-month placement for people aged between 16-24. The Treasury will cover 100% of the National Minimum Wage for each young employee for up to 25 hours a week with firms able to top up the worker’s pay.
• £111m will be invested to triple the number of traineeships with businesses offered a £1,000 per trainee payment. The grant will be capped at 10 jobs per firm.
• For the next six months, the Government will pay businesses up to £2,000 for every new apprentice under 25. It will also pay £1,500 for every new apprentice above 25 hired.
• An extra £1bn will be invested in the Department for Work and Pensions to help people get back to work.

Greening the recovery
• £3bn package of green investment to help create thousands of jobs. Some £1bn has been set aside to help make public sector buildings greener.
• Homeowners can benefit from £2bn of grants to pay for “green” upgrades to make their houses more energy efficient. Vouchers worth up to £5,000 will be issued while poorer households could get up to £10,000 to make the upgrades, such as loft and wall insulation.

There are clear changes in the position with regard to Coronavirus restrictive measures now, which will be very obvious to everyone. Retail stores have been able to open again, which has been a specific recent change of significance. In addition, though, the Government have announced today that they have moved the COID-19 alert level to 3. This would appear to be a clear sign that the Government are not expecting any major shifts in the data on the spread of the virus, and means the Government under the alert measures can continue to increase the gradual relaxation of restrictions. Other information coming out today would also suggest the within the UK, there could be an opening up of certain types of holiday accommodation over the next few weeks as well.

All of this has got to be good news for the business community and the economy, as long as there is no full second wave of the virus. The Government suggests they think there may be localised outbreaks, and suggested they think these are likely.

It will be interesting to see over the coming months and into next year how the working practices of business change. Some statistics recently released from the latest Business Impact of Coronavirus (COVID-19) Survey (BICS), show 30% of the workforce were on furlough, and 42% of businesses were topping up workers’ pay. Also, according to the latest Opinions and Lifestyle Survey (OPN), nearly half of all working adults (49%) had worked from home between 11 and 14 June 2020, an increase from 41% the previous week; this supplemented results from BICS, which showed that 5% of the workforce had returned from furlough leave between 18 May and 14 June 2020.

Other updates to be aware of are as follows:

Coronavirus Job Retention Scheme (CJRS)

As per my previous update on this area, the CJRS is changing from 1 July 2020. Given the we are moving closer to this date, businesses should be considering how the changes will impact them, and what that means in terms of the working times employees may be needed for. There are also some practical points leading up to the transition and crossing over the 1 July point, and so it seems useful to summarise the main points for pre and post 1 July 2020 below.

Working time for Employees

Prior to 1 July 2020, employees on furlough cannot undertake any work for you other than training. From 1 July, you will be able to:
• only be able to claim for employees who have previously been furloughed for at least 3 consecutive weeks taking place any time between 1 March and 30 June 2020
• be able to flexibly furlough employees – this means you can bring your employees back to work for any amount of time, and any work pattern
• still be able to claim the furlough grant for the hours your flexibly furloughed employees do not work, compared to the hours they would normally have worked in that period.

If you flexibly furlough employees, you’ll need to agree this with the employee (or reach collective agreement with a trade union) and keep a new written agreement that confirms the new furlough arrangement. You’ll need to:
• make sure that the agreement is consistent with employment, equality and discrimination laws
• keep a written record of the agreement for 5 years
• keep records of how many hours your employees work and the number of hours they are furloughed (i.e. not working).

You do not need to place all your employees on furlough and you can continue to fully furlough employees if you wish. Employees cannot undertake any work for you during time that you record them as being on furlough.

Using minimum furlough periods

Until 1 July 2020, any employees you place on furlough must be furloughed for a minimum of 3 consecutive weeks. When they return to work, they must be taken off furlough. Employees can be furloughed more than once, but they must be furloughed for a minimum of 3 consecutive weeks each time they are furloughed.

From 1 July, agreed flexible furlough agreements can last any amount of time. Employees can enter into a flexible furlough agreement more than once.

Where a previously furloughed employee starts a new furlough period before 1 July this furlough period must be for a minimum of 3 consecutive weeks. This is the case regardless of whether the 3 consecutive week minimum period ends before or after 1 July.
For example, a previously furloughed employee can start a new furlough period on 22 June which would have to continue for at least 3 consecutive weeks ending on or after 12 July. After this the employee can then be flexibly furloughed for any period.

In relation to the claims, after 1 July, employers cannot make claims that cross calendar months, so the employer will need to make a separate claim for the period up to 30 June. This is an important practical point in that given 1 July falls on a Wednesday, weekly paid staff will straddle the month end, and so the furlough claim calculation will need to be split.

Although flexible furlough agreements can last any amount of time, unless otherwise specified the period that you claim for must be for a minimum claim period of 7 calendar days.

When your employees are on furlough

The rules in this area have not changed. However, as a reminder, during hours which you record your employee as being on furlough, you cannot ask them to do any work for you that:
• makes money for your organisation or any organisation linked or associated with your organisation
• provides services for your organisation or any organisation linked or associated with your organisation

Your employee can:

• take part in training
• volunteer for another employer or organisation
• work for another employer (if contractually allowed)

Paying employee taxes and pension contributions

Again, there is no change in the position on taxes and pension contributions. Employees will still pay the taxes they normally pay out of their wages. Until 31 July you can continue to claim for these costs for the hours the employee is on furlough. From 1 August, as previously reported, employers will be required to pay all employer NICs and pension contributions.

Keeping employee rights

Again, there is no change in this area, and employees still have the same rights at work, including:
• Statutory Sick Pay
• annual leave
• maternity and other parental rights
• rights against unfair dismissal
• redundancy payments

The guidance also makes a point of highlighting that grants cannot be used to substitute redundancy payments, and also that HMRC will continue to monitor businesses after the scheme has closed.

Deferral of VAT

There has been the ability to defer VAT payments due between 20th March and 30 June 2020. However The VAT payment deferral period ends on 30 June 2020. This means you will need to:
• set-up cancelled direct debits in enough time for HMRC to take payment
• submit VAT returns as normal, and on time
• pay the VAT in full on payments due after 30 June
Any VAT payments you have deferred between 20 March and 30 June should be paid in full on or before 31 March 2021. You can make additional payments with subsequent returns.

As always, please get in touch with us if you have any queries on the above.

  • 1 July – employees can be furloughed for flexible periods with no minimum.  
  • 1 August – CJRS will not cover the employer’s NIC or pension contributions.
  • 1 September – CJRS will cover 70% of usual wages capped at £2,187.50 per month, but no employer’s NIC or pension contributions.
  • 1 October – CJRS will cover 60% of usual wages capped at £1,875 per month, but no employer’s NIC or pension contributions.
  • 1 November – no further support will be paid for furlough periods after 31 October.

Employers must continue to pay their employees at least 80% of their usual pay for furlough periods. For periods the employee is working they must be paid in line with their agreed employment contract, at rates above or equal to the National Minimum wage or National Living Wage, according to their age.  
 
Employers must not change the terms and conditions of employment contracts to reduce furlough pay to the amount of CJRS grant. 
 
To be included in a CJRS claim for furlough periods from 1 July onwards, the employee must have been furloughed for a period of at least three weeks at some point between 1 March and 30 June 2020, with a few exceptions. Claims for furlough periods to 30 June must reach HMRC by 31 July.  
 
An employer won’t be able to use the CJRS from 1 July if they have not already made CJRS claims for their employees for earlier periods. Also the maximum number of employees the employer can claim for in July and beyond is limited to the maximum number of employees included in claims for periods up to 30 June 2020. 

The Government encourages individuals to make high-risk investments in small trading companies or charities by providing Income Tax relief for investors in the following schemes (limits for 2019/20):
• Social Investment Tax Relief (SITR): 30% relief on up to £1 million
• Enterprise Investment Scheme (EIS): 30% relief on up to £2 million
• Seed Enterprise Investment Scheme (SEIS): 50% relief on up to £100,000
• Venture Capital Trust (VCT): 30% relief on up to £200,000
If you invest above £1 million under the EIS, the additional investment must be in ‘knowledge-intensive’ companies. The amounts invested under EIS, SEIS or SITR can be treated as made in the previous tax year if the investment limit for the earlier year has not been reached.
When you dispose of shares acquired under these schemes, any Capital Gains you realise will be free of Capital Gains Tax (CGT), if you’ve held the investment for at least three years (except VCTs, where there is no minimum period).
Tax due on capital gains made from selling other assets can be deferred by reinvesting under the EIS or SITR within three years of making the gain. Reinvesting the gain in SEIS shares will halve the tax on that gain if the investment limits and conditions are not breached.
These tax reliefs won’t turn a bad investment into a good one, but they will make a good one better and will reduce the risk involved in investing.
Unquoted shares acquired on or after 17 March 2016 can qualify for Investors’ Relief, so CGT is paid at 10% if the shares are held for at least three years and disposed of after 5 April 2019.
If you are thinking of investing in one of these schemes, you may want to do so before 6 April 2020 to maximise the benefit.

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Clarke Nicklin House, Brooks Drive, Cheadle Royal Business Park, Cheadle, Cheshire, SK8 3TD. Registered Number OC309225.
The firm is registered to carry on audit work in the UK & Ireland. Details about our audit registration can be viewed at www.auditregister.org.uk under reference number C001178544. The professional rules applicable are the Audit Regulations and Guidance which can be found at www.icaew.com/regulations, and the International Standards on Auditing (UK and Ireland) which can be found at www.frc.org.uk/apb/publications/isa.cfm.