The new tax year starts 6 April 2021, and without dwelling too much on the historical trickery that has landed us with this odd commencement date, what are the challenges we will need to grapple with in the coming year?
Keeping clear of COVID
Pretty obvious really, no-one would willingly risk a dose of COVID-19 and its variants. Unfortunately, to achieve this, we will likely need to abide by government restrictions for most if not all of 2021-22.
Coping with lockdown
Even if lockdown ceases to have its current impact, particularly on the leisure, entertainment and hospitality trades, it is unlikely that we will be free of social distancing rules and regulations for some time.
Those trades adversely affected by this disruption will need to plan accordingly.
Working from home
Many jobs are now being advertised with two or three days a week working from home rather than the office. Which means:
- Employers will need to rethink their human resource services to support staff achieving the same levels of productivity when working away from their employers’ office.
- Employees will need to achieve a new relationship with work when working from home; be firm in setting the boundaries.
- Does this change offer an opportunity to reduce office space (and overheads) by desk-sharing?
Retaining profits and reserves
Financially, business owners will need to keep an eye on the following indicators if they are to keep heads above water:
- Apart from any capital introduced by business owners, the major source of value in most businesses is profits retained in the business after all taxes have been paid. In the last year, many firms will have used any opening reserves to fund losses during the worst periods of lockdown.
- As a result of the above it is possible that businesses have either reduced or exhausted cash reserves and had to borrow – most using the government-backed loan schemes – to maintain liquidity.
Planning is vital.
If you have not yet created an integrated budget for 2021-22, now would be a good time to make a start.
- Will you encounter any cashflow challenges?
- If yes, how will you plug these cashflow gaps. Do you need to approach your bank now?
- How difficult will it be to re-establish and maintain profitability?
- Are you under or over-staffed?
- Has Brexit affected your supply lines?
Until you sit down and work through your options you are vulnerable. And if the past year has taught us anything, its that we can no longer take anything for granted. We must expect the unexpected.
We can help
Please call if you need help with this planning process. And don’t delay. There is no point in closing the proverbial stable door once your busines recovery options have left the stable.