Finding any ‘good news’ for most of the past 12 months has been the triumph of hope over expectation.
But at least the Chancellor’s Spending Review in late November had one little crumb for beleaguered retailers: the ‘business rate multiplier’ in England (officially either ’The Non-Domestic Rate Multiplier’ or ’The Small Business Non-Domestic Rate Multiplier’ – depending on the rateable value of your property) has been frozen for 2021-2022.
Consequently, when the current business rate - ‘Covid relief’ for retail, leisure and hospitality business - ends in March, at least retailers here won’t see any further hike in business rates from April. As usual these days in the dis-United Kingdom, Wales, Scotland and Northern Ireland all have their own, different bases for calculating Business Rates and at the time of writing it’s not immediately clear whether they will follow the English freeze.
Having said that, the end of March is still some way ahead, so there may yet be a plethora of further announcements in the meantime. Given what we have seen happen to the High Street in recent months – arguably just a dramatic acceleration of a process that had already been going on for years – it does rather beg the question of what Business Rates will mean in future, insofar as physical retailing industries are concerned, but that’s a topic for another time.
Many businesses took advantage of the Bounce Back Loan scheme during 2020 (and indeed that scheme is still open to applicants until the end of January). Those loans were intended to be repaid over a six-year term, and it’s probably stating the obvious that few borrowers have thought about them since taking them out.
So it’s obvious that the government is being urged to consider extending the repayment terms to 10 years. Or even more radically, at least one accounting body (the Association of Accounting Technicians) has openly suggested that the government should simply face up to the expectation that at least two thirds of the £42 billion lent will not be recovered anyway, and just write-off the balances now. That may sound odd, but the reckoning is that such a write-off would save the government £1bn in interest payments to the banks, as well as avoiding the inevitable hassle of banks trying to recover loans from people who won’t – or just as likely – can’t repay them.
As we get into January, we accountants will all be busy as usual helping clients with Self-assessment tax returns (unfortunately the government has not extended the submission and payment deadline of January 31), and for many self-employed business owners and operators, this year’s exercise is likely to be even more fraught and stressful than usual. The simple reason being that they’re completing returns for 2019/20 – ie the Tax Year that ended on April 5, 2020. That, in case you need reminding, is the period just up to the first Covid lockdown; consequently, some tax-payers will find themselves liable for tax on a ‘normal’ year’s profits which may actually exceed anything that they’ve earned in the following 10 months.
Now there’ll be someone who stands up and says that these people should have put away 30-40% of their earnings every year and they wouldn’t have a problem now. Fair enough – that’s just the sort of prudent advice that we accountants like to give to people who are about to start their own businesses. In reality that advice is rarely taken literally, so there will be people panicking at the moment.
In fairness, HMRC did give an option during 2020 for the self-employed to defer the payment on account last July, and to use the “Time to Pay” instalment option for tax bills due in January 2021. The latter option is still available, although it does come at a price: the interest rate is 0.5% per month. If you are worried, as always speak to your accountant – preferably well before January 31!.
Many fuel retailers might be less concerned about the issues of loan repayments and tax deadlines than they are by the possibility of fuel shortages and price hikes in the New Year as a direct result of Brexit. The few remaining refineries in the UK are capable of meeting demand for petrol, but not diesel. Any delays in imports of the latter are likely to lead to both panic-buying and a further rise in pump prices (which have been rising slowly but steadily since December anyway).
Given what the industry has already suffered in the past 12 months, a shortage of product to sell is just about the last thing it needs to face during the coming year. The same sentiment would be shared by the haulage industry. In addition to facing severe delays at all major points of entry and exit in and out of the UK, the prospect of a shortage of derv, or simply of a large hike in prices, could be enough to force some long-established hauliers out of business – and that itself would be a blow to the fuel retailing industry.
And while we’re on the subject of fuel sales, according to the ONS, total fuel volumes across the country during 2020 unsurprisingly stayed below pre-Covid levels even during the relatively ‘free’ period of August through October (ie before the second round of restrictions and lock-downs in late Autumn). The best that they managed was to hover around 10% below February 2020’s volumes during each of August, September and October.
While the figures currently available don’t include November and December, the likelihood is that those may turn out to be closer to what happened back in April (60% below February), and May (42% below February).
Unfortunately, as we head into the New Year with the now usual confusion of different states of ‘restriction’ and/or ‘lockdown’ affecting different parts of Great Britain (really, it is past the time of referring to the ’UK’ anymore) the prospects for any return to pre-Covid ‘normality’ in the next couple of months look remote – even without any added problems from Brexit.