What financial support is available to the Conveyancing sector?
It’s safe to say 2020 has been a year like no other, and no amount of new year’s resolutions could have prepared us for what was to come.
It’s safe to say that the legal sector has come up with its own challenges. The conveyancing and private client sectors have been inundated with enquiries and instructions. Whilst other areas of the legal landscape have fallen quieter than normal.
Throughout this year, the government have regularly made announcements regarding financial support packages that can be made available to businesses. Now coupled with the three tiered system which can ultimately result in local lockdowns, sharing the financial options to firms who may need a little bit of help and guidance seems to be a good idea.
What financial support is available?
Job Support Scheme
The introduction of the furlough scheme back at the start of the year, was a welcome relief to many businesses, who were able to furlough staff as opposed to making redundancies. Now, on 31 October, the furlough scheme will end.
On 1 November the Job Support Scheme (JSS) will begin and run for six months. This is the government’s way of helping firms keep their business and their employees. The JSS is available to all firms (even those who didn’t utilise the furlough scheme) and enables employees to work a minimum of 33% of their hours. The employer picks up this cost, whilst a further third of the wage paid by the government. The cap for this wage will be £697.92 per month.
Cash flow support
The Winter Economy Plan provided some temporary cash flow relief for firms that have taken out bounce back (BBLS) or coronavirus business interruption loans (CBILS). Those utilising the BBLS will be given the option of extending their loan’s length from six to 10 years, which will result in monthly payments being reduced by nearly half. Firms will also be able to access interest-only periods of up to six months and payment holidays as a result of the new ‘Pay as You Grow’ flexible repayment scheme.
CBILS lenders can now offer borrowers more time to make their repayments, and the Self-Employed Income Support Scheme (SEISS) will cover 20% of average monthly trading profits via a government grant.
Despite the BBLS and CBILS offering greater flexibility, it’s worth bearing in mind that these schemes have been an equal blessing and a curse, as some lenders are focusing on these exclusively. As a result, some have withdrawn other financial products from sale and are struggling to cope with the influx of last-minute enquiries, leaving applicants waiting for decisions and with a reduced range of choices for their finance needs.
Spreading the cost of mandatory fees
Firms that had deferred their VAT payment earlier in the year will no longer have to pay it in a lump sum at the end of March 2021. Instead, they are being offered the opportunity to split this payment into smaller, interest-free payments over the course of 11 months.
Previously, self-employed professionals who pay tax by payment on account were allowed to defer their July 2020 payment to 31 January 2021, but were then expected to settle their account in full. However, under the Winter Economy Plan, those who pay tax by self-assessment can defer the payment due on their 2019-20 tax return for 12 months from January 2021. Whilst deferring your tax bill may seem an easy decision, there could be financial implications, as you could ultimately be faced with a larger bill.