2021 Budget

The Chancellor announced a range of measures in his 2021 Budget on 3 March 2021 with upcoming changes to corporation tax a key feature.

The Chancellor has pledged to do ‘whatever it takes’ during the pandemic to support business and key announcements in the 2021 Budget, delivered on 3 March 2021, were as follows:

An extension to the furlough scheme until the end of September 2021;

An extension to the SEISS scheme to support the self-employed;

The reduced 5% VAT rate for the hospitality sector will remain in place until September 2021 with a transition rate of 12.5% from then until March 2022;

Corporation Tax rates will rise to 25% from April 2023, though a Small Profits Rate of 19% will be retained for companies reporting smaller profits;

A super-deduction, available from 1 April 2021 to 31 March 2023, for tax purposes of 130% on qualifying capital expenditure;

The Personal Allowance threshold will be frozen for five years once it increases in April 2021.

For further details, please click below to read our 2021 Budget Summary:

2021 Budget Summary

Covid Restrictions highlight benefits of Cloud Accounting

Restrictions on movement in 2020 and reliance on digital world has drawn more businesses to the Cloud

At Alexander Sloan we have long championed the benefits of using cloud accounting and this will become even more relevant as business owners and organisations react to the easing of lockdown restrictions and begin focusing on the future. However, as the uncertainty of future lockdowns continues, we would encourage you to make the move to cloud accounting software now and ensure you are taking the necessary steps to look after your business financially.

Your sole objective may be to recover and rebuild your business and in doing so you should consider the advantages of implementing cloud accounting to monitor your business finances. It is no secret that many businesses struggled with accessing government support during the summer of 2020. This was primarily due to the lack of up to date accounting information and restricted access to their accounting records due to remote working, which led to increased stress and business uncertainty.

As we now look towards the ‘new normal’, naturally we will try to hold on to the processes and procedures that we are well acquainted with. However, in doing so, are we missing the chance to make positive changes to our businesses by not ensuring we are well prepared for the risk of further lockdowns?

Why is this important?

For many years we have encouraged a move to cloud accounting to comply with HMRC’s Making Tax Digital requirements, or simply to embrace new technologies. However, this year, our message has been shaped by the business effects due to COVID-19.

We want to ensure you have complete visibility of your business finances by being able to access this anytime and anywhere, in real-time. As the pandemic led to offices being closed and a move to home working, many businesses had paperwork such as bank statements, invoices, and bills in their offices which were not accessible to finance teams. By implementing cloud accounting, the need for paperwork and desktop applications would be eliminated with the use of bank feeds and automatic invoicing.

COVID-19 is forcing businesses of all types to change the way they operate due to social distancing. Inefficiencies with the use of legacy processes that were once ignored have now been extremely exposed. These legacy processes also relate to manual accounting procedures which were paper focused but are now being adapted to ensure a more ‘access anytime, anywhere’ approach.

As the uncertainty of how long the pandemic will go on for increases to rise, we would encourage taking steps now to ensure you have complete access to your financials in the event of further lockdowns. By making a move to cloud-based accounting software now, you would be taking the necessary steps to ensure your business finances are fully accessible and eliminate the risk of key financial information being left behind in offices if further restrictions are imposed. As businesses continue to work from home, you will have peace of mind in knowing exactly where your business is financially and allow you to have real-time reporting accessible to you at any time.

Transitioning to remote working, the new norm?

The COVID-19 outbreak forced millions to embrace working from home and to undertake flexible working to a heightened level. This led to different means of working and forced the business into alternative methods of communicating with and managing their employees. This may have been through the implementation of Zoom or Microsoft Teams, however, if we think of your finance function – this would work in the same way. Cloud accounting has paved the way for remote working and ensuring complete visibility and access to your business finances.

Whilst your finance team is working from home, they can be accessing your accounting software remotely and able to ensure your accounting records are kept up to date. Not only does this ensure your staff can continue working, but it also ensures you have complete real-time information and can make better-informed business decisions.

Moving your accounting processes to the cloud will allow you to save everything you require online so that it can be accessed from anywhere, at any time. This will also make it easy for your teams to collaborate regardless of where they are working. Cloud accounting will allow you to save documents online rather than filing paperwork in offices. This will drastically reduce the amount of paperwork, printing costs, and manual input, whilst also speeding up the invoice payment process, leading to an overall more efficient way of working.

How can we help

Please contact us to find out more about cloud accounting, and how we can help your business. We offer services such as a complete migration to cloud software as well as training and consultancy services, to ensure you are ready for any eventuality. We continue to encourage the use of cloud accounting and would urge you to speak with us if you have any concerns regarding your current finance function and what to do next. We want to ensure you have complete visibility and real-time access to your accounting records as the uncertainly of further lockdowns again poses risks in you not being able to access your business finances when you most require them.

Furlough Scheme extended to March 2020, SEISS support increased

Government agrees to extend furlough to March

Key Points from the surprise announcement today:

  • The Job Retention Scheme has been extended to 31 March 2021
  • Employees made redundant after 23 September 2020 can be re-employed and furloughed.
  • Usual Wage calculated by reference to salary at 30 October 2020 but only for newly employed employees.
  • The Job Support Scheme is postponed.
  • The Job Retention Bonus (due to be paid in February 2021) has been cancelled.
  • Self Employed Income Support Scheme (SEISS) 3rd grant increased to 80% of trading profits for 3 months.

The furlough scheme (or Job Retention Scheme) has now been extended to the end of March 2021, it was announced at lunchtime today (5 November), and will apply throughout the UK.    The scheme will pay up to 80% of an employee’s wages up to a cap of £2,500 a month.  The extension of the scheme into November was confirmed last Friday,  but this extends the scheme for a further four months and at the same rates and conditions.  The Government will issue full guidance on 10 November.


As noted when the extension into November was confirmed last week, the furlough scheme will operate in a similar way to the JRS in August 2020 (ie, employer can claim for 80% of usual wages for hours not worked but must contribute fully towards employer’s national insurance and employer’s pension contributions).

The Government has also confirmed that anyone made  redundant after 23 September 2020 (when the replacement Job Support Scheme was first announced) could be re-hired, at the employer’s discretion, and be furloughed.  This was a similar situation to what happened when the JRS was originally announced back in March.

The guidance states that the basis of the claim (the ‘usual wages’) for employees that were employed on or before 19 March 2020 remains their pay at that date.   For new employees hired between 20 March and 30 October , the calculations of their furlough rate will be based on thei pay period immediately prior to 30 October or, for staff on variable hours, average earnings from start of employment to start date of furlough.

The government has also confirmed that the Job Support Scheme has been further postponed and that the Job Retention Bonus (JRB) will now not be paid in February 2021 and has been cancelled.

The Self-Employed Income Support Scheme (SEISS) will also be increased and the claim for November 2020 to January 2021 will now cover 80% of prior average trading profits.  This level of support is similar to the first grant claim that was claimable in June 2020.  This had been increased last Friday to cover the equivalent of 55% of three months trading profits but, in line with the extension of the furlough scheme, this has now increased to a full 80%.   This is expected to be claimable from early December.



Alexander Sloan



Job Support Scheme – Expansion

The government’s replacement for furlough – Job Support Scheme – has been expanded

The Government announced today (9 October 2020) an expansion to the Job Support Scheme, which was itself only announced two weeks ago.

UPDATE – the Job Support Scheme has been postponed and is NOT available until at least April 2021

The Job Support Scheme, which will commence on 1 November, is open to employers who will be able to claim a grant from HMRC in respect of their employees who are working reduced hours, though a key condition is that the employee works at least 33% of their usual hours.   Following recent announcements in Scotland and parts of England and in anticipation of more businesses being forced to close due to government restrictions, the Chancellor today announced an expansion of the Job Support Scheme specifically for these businesses.   According to the initial information, this Expansion applies only to businesses legally required to close as a result of coronavirus restrictions.

The JSS Expansion will also start from 1 November and run for six months, though a review will take place in January.  This means that those businesses temporarily shutting from this evening will remain eligible only for the Job Retention Scheme (the ‘furlough’ scheme), and of course be bound by the rules specific to that scheme.  Namely, that eligible employees will have to be have been furloughed previously and that the employee had to have been on the payroll on or before 19 March 2020.

With the new JSS and JSS Expansion, eligibility will be based on the employee being on the payroll as at 23 September 2020 and that employee need not have been previously furlioughed.

Under the JSS Expansion – so for those businesses legally forced to close due to coronavirus restrictions –  employees may receive up to 2/3rd of their usual wages up to a maximum of £2,100 per month.    Employers are responsible for paying the employees but can then reclaim this via a grant from HMRC from early December.    There is no obligation on employers to make additional top-up payments, though all employer’s national insurance contributions and employer’s pension contributions must be covered by the employer and will not be reimbursed by HMRC.

There is currently no official Government web page giving specific details of the Expansion but this will be forthcoming in the next few days, but a search for ‘Job Support Scheme’ on HMRC’s website will show updates when they appear.

Credit Unions – preparing for the 2020 year end

Audit in the shadow of covid-19 – how to prepare

This year end is likely to be different from any other due to Covid-19. We therefore thought it would be useful to update last year’s blog on preparing for your year end.


The FCA have stated that they do not plan to take actions where AGMs have been postponed as a result of following government guidelines on Covid-19. They do highlight that members would still be able to take action in such circumstances. The FCA also state organisations will want to consider alternative arrangements for AGMs such as video conferencing.

The Corporate Insolvency and Governance Act 2020 allowed registered societies (including Credit Unions) to hold Annual General Meetings electronically and for members to vote electronically. The rule was introduced as most organisation’s rules do not specifically allow meetings to be held electronically. A traditional AGM in the current climate, however, poses a high risk to members, staff and directors. Originally this rule only applied until 30 September but it was extended until 31 December 2020. This date may be reviewed in the future depending on the position with the pandemic.

We would recommend that you do review your rulebook as soon as possible and consider implementing rules to allow member meetings to be held electronically in the future. This legislation will only last for a limited period of time and there is an increased risk of future pandemics and lockdowns.

Arrangements for the Audit

The increased risk of staff illness and potential access issues to Credit Union offices, where there are local lockdowns, offers the potential to cause audit delays. Many audits will be done remotely to help reduce the impact of these risks as well as complying with social distancing measures. Good communication throughout the audit will be even more important to ensure audits go as smoothly as possible.

Auditors should provide you with a list of the information that they require. If you don’t receive one it’s worth speaking to them to ensure you have all the information they require. We would recommend pulling together this information as soon as possible in case of illness or local lockdown restrictions.

Focus of the Audit

A Credit Union prepares financial statements on a going concern basis, when, under the going concern assumption, the Credit Union is viewed as continuing in business for 12 months from the date of signing of the accounts. Going concern is always an audit risk but will have even more focus due to Covid-19. With most Credit Unions facing increasing bad debt costs and rising share balances, their capital ratios will be under pressure.

The directors of a Credit Union have a legal duty to consider whether the Credit Union is a going concern and to apply this basis to the financial statements. When preparing their auditors report the Credit Union’s auditors will consider the appropriateness of the credit unions’ assessment. Both the Credit Union and the Auditors will need to take into account the impact of Covid-19. As part of their audit work, your auditor will normally be looking to review your financial projections and scenarios which consider the impact of Covid-19.

Holiday Pay Accrual

With staff holidays being impacted due to Covid-19 we have received a number of questions about whether there has been any changes to the accounting rules on holiday pay accruals (for HR or legal aspects please contact your HR consultant or lawyer). While many members of staff will have more accrued holidays the accounting rules remain the same. The reason is that staff have earned these holidays and this will be a future cost to the Credit Union when staff do look to take this time off. The only difference is where staff holidays can be used over 12 months then that element technically would be discounted, although for most the difference between discounting and not is unlikely to be material.

 Information for the Auditor

For credit unions carry who do not prepare daily bank reconciliations it is important these are carried out reconciling the year end nominal to the year end statement balance. If you don’t have a reconciliation at the year end it will lead to additional work and possibly cost from your auditor. Year end cash counts are particularly important as well.

It is vital that your transactions on your system are up to date before your year end process. Bad debts to be written off should be done so before the year end and before running year end arrears reports to avoid double counting. It is also useful to chase up suppliers in September to ensure you have invoices for services/goods incurred before the year end.

Certain reports can only be run at the year end. Reports involving interest are the main example of this with reports including the year end accrued interest, delinquency reports and interest earned reports usually not being able to be reproduced if not run at the year end. It is therefore important these reports are produced at the end of day on your year end.

A year end back up is critical for a number of reasons.  If any reports are missed they could be reproduced from the backup. It also means that if there is mispostings or corruption after the year end then you have a set of records that still can be audited.

Systems such as Curtains let you post nominal and member transactions on different days. This can lead to records not matching especially at the year end if the member posting is done in one year and the nominal posting in another. This should be avoided where possible or a record taken of these transactions to aid reconciliation of the year end balances.

Winter Economy Plan Support for Jobs and Businesses

Chancellor announces support for businesses during winter

The Chancellor, Rishi Sunak, announced his Winter Economy Plan to support businesses and jobs on 24 September 2020.


Job Support Scheme

The new Job Support Scheme will begin on 1 November and replace the “furlough” scheme.  To be eligible for the scheme employees must work a minimum of 33% of their hours. The government and the employer will then each pay a 1/3rd of the hours not worked. So an employee working 33% of their hours would receive 77% of their pay with the government contributing 22% of their pay and their employer the remaining 55%.

It should be noted that 22% is the maximum amount that the government will pay and the percentage will depend on the percentage of an employees hours that are worked.  For example if the employee works 50% of their hours then the level of government support is reduced to only 17%.  The level of Government contribution is capped at £697.92 a month.

It should also be noted that the Government contribution will also not cover class 1 employer’s national insurance or employer’s pension contribution but these amounts will continue to be payable by the employer.

Employees will be able to “cycle on and off” the scheme and they do not need to work the same pattern each month. Any short time working arrangement, however, must cover a period of at least 7 days.

The new scheme will run for 6 months but the government have said that they will review in 3 months time the threshold of 33% of hours. The grants like the “furlough” grants will be paid in arrears.

There are a number of criteria to the scheme. To be eligible for the scheme, employers must have a UK bank account and operate a UK PAYE scheme. Larger businesses will also need to meet a financial assessment test. The scheme is designed for viable jobs and therefore employees can not be made redundant or put on redundancy notice during the period within which the employer is claiming the grant for that employee.

Similar to the furlough scheme, employers using this scheme should agree short-time working arrangements with staff, make any contract changes by agreement and notify the employee in writing. HMRC have said that they will carry out checks on claims and agreements with staff will require to be available to HMRC on request.


Self Employed

To assist the self employed, the Self Employment Income Support Scheme Grant (SEISS) will also be extended for 6 months. A grant will be payable, in arrears, for the period 1 November 2020 to 31 January 2021 for those currently eligible for SEISS and who are continuing to trade but face reduced demand due to Covid-19.

This grant will cover 20% of the average monthly profits of the individual but will be capped at £1,875. There will be a second grant for the period February to April but the level of this grant still has to be announced. As with the previous scheme, the grants will be subject to tax and national insurance.

Self assessed taxpayers will also be given more time to pay, with deferred payments from July 2020 and those due in January 2021, not now being due until January 2022.


The Chancellor announced that he will be extending applications for the Government’s Coronavirus Business Interruption Loan scheme, the Coronavirus Large Business Interruption Loan scheme, the Bounce Back Loan scheme and the Future Fund.

Sunak also announced a “pay as you grow” scheme for business which will allow them to extend their bounce back loans from 6 to 10 years. The extension should significantly cut loan repayments and help cashflow. There will also be interest only periods of up to 6 months and payment holiday measures available for these loans.

The Government guarantee on Coronavirus Business Interruption Loans will also be extended to 10 years. There will also be a new successor loan guarantee programme to be announced in January 2021.


The temporary cut in VAT to 5% for the tourism and hospitality sectors will now remain in place until 31 March 2021. There will also be  a new scheme to allow businesses who deferred their VAT bills until March 2021 to make 11 smaller interest free payments during 2021/22 instead of having to make the full payment in March.

Further Information

More details can be found at https://www.gov.uk/government/news/chancellor-outlines-winter-economy-plan but it should be noted that there are still further details to be announced.

PRA Letter to Credit Unions 2020

The PRA have issued their annual review of the sector letters

The PRA have issued their annual review of the sector letters to category 5 Credit Unions. There are two versions of the letter. One for Credit Unions with less than £15m in assets and fewer than 10,000 members and one for larger category 5 Credit Unions. We would also recommend that category 4 Credit Unions review the letters as a number of the issues will be relevant to them. Some of the key messages with the letters are set out below:

Single Customer View

The importance of Single Customer View was stressed. They reminded Credit Unions of the obligation to inform the regulator when you change the system you use to produce SCV files. It should be noted that the PRA are priortising testing SCV of Credit Unions where they have doubts over the future viability of the Credit Union. Credit Unions can also now test SCV data directly on the FSCS self-verification portal and we would recommend that Credit Unions look to build this into their testing of SCV.

Operational Resilience

Operational Resilience continues to be a key topic with the regulator. Similar to previous letters they have stated the importance of taking a service based approach to operational resilience and setting tolerance levels.

The PRA expect Credit Unions to carry out an operational risk assessment prior to carrying out any new activities or services. They have also stated that Credit Unions should be considering the risks of outsourced activities including the requirements of section 14 of the PRA Credit Union Rulebook

They have highlighted the increasing number of cyber incidents and  the need for Credit Unions to have policies and procedures in place to deal with these risks. You should also notify the regulator where there have been any significant operational or cyber incidents or events that may impact on continuity of the Credit Union’s services.

Credit Risk

The PRA have highlighted the need for scenario planning and monitoring to help identify deterioration in credit quality of loans and so that the Credit Union can take timely action in such cases including where necessary the tightening lending criteria.


For larger Credit Unions with capital ratios under 10% the PRA have highlighted the distribution rules. This is a topic that has caused much confusion with many Credit Unions and was the topic of our recent blog which can be found by clicking here.

For smaller Credit Unions they again emphasised that there will be increased regulatory monitoring for those with a capital ratio between 3 to 5%

In their letter to smaller category 5 Credit Unions they covered the use of revaluation reserves and subordinated loans. They have encountered a number of cases where subordinated loans do not qualify as capital due to the term of the loan or the conditions attached to the loan. They have have offered the Credit Unions the opportunity to discuss with them where they have any debts over whether reserves or loans qualifying as capital.

Succession Planning

Lastly both letters state the importance of succession planning and bringing on directors with relevant skills. The PRA note this can be challenging especially in the current circumstances and if you cant get sufficient Board members then you need to consider the future of the Credit Union.

See below for links to the letters.

Further Information

Data Security Threats during Lockdown

Lockdown is creating opportunities for fraudsters – make sure you are alert to such threats

At the current time everyone is struggling to cope with the Covid-19 pandemic.  There are limited goods, greater anxiety, restrictions on movement and an increase in home working.  Unfortunately, these conditions also present opportunities to criminals and there has been an increase in cyber attacks and frauds.

Cyber Attacks

Many organisations have had to move to home working very quickly and that means there will be instances where usual security protocols may not have been followed. In addition, with more remote working, there are opportunities for more phishing attacks. Common schemes include receiving bogus emails claiming to include important links to more information on Coronavirus. The National Cyber Security Centre has reported an increase in the number of websites registered relating to the Coronavirus suggesting that criminals are likely to be taking advantage of the pandemic.

There are a number of resources available which are worth considering to help against cyber attacks which include:

The National Cyber Security Centre guide to home working can be found by clicking here

The Centre for Protection of National Infrastructure has produced high level guidance on security practices during pandemics which can be found by clicking here.

The National Cyber Security Centre have a guide on spotting and dealing with phishing emails which can be found by clicking here.


There are a large number of frauds taking place which are taking advantage of the current schemes. One example is that Europol are currently investigating a €6.6 million transfer to a company in Singapore in order to purchase alcohol gels and face masks where the goods were never received. There have been a number of cases where criminals have been impersonating government officials, police or medical/health professionals to gain access to properties.

Unfortunately, it is even more important to stay vigilant in an already testing time.

Stay safe

Alexander Sloan