Empowering the Freelance Economy

UK SMEs dash for last chance cash schemes

SMEs and their accountants are preparing for an uncertain Q1 of 2021
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Small and medium businesses in the UK are hoping for a major breakthrough to be announced by the Treasury on the Directors Income Support Scheme (DISS) as they grapple with the prospects of an end to cash schemes and wage hikes among other measures set to take hold.

A total of 6,000 SMEs surveyed expect to be unable to access the necessary funds for future trading this quarter. A further 24 per cent still do not know if existing funding will be sufficient. The findings come from a report by the ACCA UK (the Association of Chartered Certified Accountants) and The Corporate Finance Network (CFN).

The report said that SMEs and their accountants are preparing for an uncertain Q1 of 2021, with 56 per cent of SME clients already having accessed additional debt funding – such as CBILs and Bounce Back Loans – during the pandemic.

This uncertainty around access to cash is likely to coincide in the coming months with looming financial pressures that will compound SME concerns, said the report.

Below, the report outlines that SMEs struggling to access cash will also face the end of existing schemes and the introduction of new measures including:

  • BBL, CBILS and CLBILS – businesses have until end of March to apply
  • Deferred VAT to be paid on or before 31 March – online applications can be made for again over 11 months
  • Insolvency – the moratorium on winding-up petitions and statutory demands, and commercial eviction ban all end 31 March
  • IR35 – off-payroll working rules (IR35) start 6 April which will likely dampen the contract market as businesses contracting out work will be responsible for determining the status of contractors. End clients may not have certainty about their determinations and whether a contractor has employee status to be safe
  • Furlough scheme – closes at the end of April, with businesses having until the end of March to apply
  • Business rates – reintroduced in April 2021
  • The Minimum Income Floor (MIF) for self-employed Universal Credit claimants will be brought in again from 1 May
  • Wage costs will increase from 6 April with National Minimum Wage rates rising around two per cent, plus National Living Wage increases by 2.2 per cent and the threshold to pay NLW also reduces from employees aged 25 or older to aged 23 or older.

‘These developments will be an added pressure for SMEs and their accountants, alongside difficulties on the availability of products due to uncertain supply chains as a result of Brexit.” said Claire Bennison, head of ACCA UK.

“We’ll continue to ensure SMEs are aware of such changes, and also continue campaigning for support such as the Director Income Support Scheme (DISS) for those that have slipped through the cracks,” said Bennison.

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