Samantha Senior is the founder and owner of The Aesthetics Accountant. Counting some of the industry’s most celebrated professionals as clients, the company provides traditional accountancy services as well as strategic planning for tax efficiency and assistance with key decision making to ensure financial optimisation.
The Chancellor of the Exchequer delivered his 2021 Budget to Parliament on 3 March, but what does it all mean for medical aesthetic practitioners? The businesses within our industry fall into the “personal care” sector, grouped together under “hair and beauty”. There is little recognition in Parliament for the medical aesthetic industry providing cosmetic treatments; to them what we do is not dissimilar to “beauty”.
Although the medical aesthetic clinics solely providing medical treatments have been allowed to stay open during lockdown (to provide medical care treatments only), as we know, practitioners performing cosmetic treatments have been forced to close.
Below are details of The Chancellor’s grants, schemes and initiatives set out in the new Budget and who they affect:
• SEISS Grant (sole traders only) – SEISS will continue with a fourth and fifth payment. This grant is for the self-employed only. Unlike the previous three grants, the newly selfemployed will now be eligible for the fourth and fifth SEISS Grants. Any self-employed person that submitted their self-assessment tax return before 2 March 2021 for the tax year ended 5 April 2020 will now be eligible. The fourth grant will cover the period from February 2021 to April 2021. Capped at £7,500, it will be again be set at 80% of three months’ average trading profits (annual trading profits must not exceed £50,000).
If your total trading profits for the tax year ended 5 April 2020 was £10,000, your grant would be calculated by:
Grant value = £1999.99
The fourth grant will be made in “late April 2021.”1 As clinics are hopefully allowed to re-open on the 12 April [as Aesthetic Medicine went to print], the grant is ill-timed as it would have been a great help to a sole trader’s cash flow to cover re-opening costs. The fifth grant will cover the period from May to September 2021. It will be available in July 2021. The fifth grant will be worth:
• 80% of three months’ average trading profits, capped at £7,500, for those with a turnover reduction of 30% or more; or
• 30% of three months’ average trading profits, capped at £2,850, for those with a turnover reduction of less than 30%.1
• Furlough scheme – The furlough scheme continues to be open to both sole traders and limited companies that employ staff. The government will continue to pay 80% of furloughed staff’s pay. Staff can also be flexi-furloughed, meaning a staff member could be bought back in to work several days a week and furloughed the rest. From July, employers will be asked to contribute 10% towards the scheme, and 20% in August and September. Company directors, if fitting the eligibility, are able to claim furlough and/or flexi-furlough on their wages.
• Restart Grants (sole traders and limited companies) – These are a new grant available to help restart the economy. Restart Grants will be available for any small business in the personal care sector, as well as other industries including hospitality, accommodation, leisure, personal care and gyms. Those businesses that will reopen on 12 April 2021 will be eligible for £6,000, depending on their rateable valuable. Businesses that will be affected further by restrictions, and opening later in June 2021, can receive up to £18,000, depending on their rateable value.
A lot of businesses in our industry will not be eligible for this grant, such as businesses renting a room in a larger clinic or salon, or businesses running at home with no rateable value. The restart grants are claimed via local councils. I would recommend that you contact your local council and LEP (Local enterprise partnership) as soon as possible to apply for these grants.
• Corporation tax (limited companies) – Corporation tax will remain at 19% for those with profits under £50,000 but will increase to 25% in 2023. Only businesses with profits of £250,000 or greater will be taxed at the full 25% rate.
• Tax losses (sole traders and limited companies) – Temporary extension has been introduced to carry back trading losses for corporation tax and income tax for three years prior. Losses occurring in limited company accounting periods ending in the period 1 April 2020 to 31 March 2022 and for tax years 2020 to 2021 and 2021 to 2022 for sole trader businesses can be carried back to the previous three year’s accounts.² Carrying the losses backwards means businesses can reclaim the tax previously paid. This could free up significant amounts of cash to use in the business going forward.³
• Recovery Loans – These have been introduced to replace the BBLS (Bounce Back Loan Scheme) and CBILS (Coronavirus Business Interruption Loan Scheme). These loans may be the only option for small businesses falling through the cracks of the grants and schemes eligibility, but with any financial agreement and loan I would seek advice from a financial advisor. Businesses of any size can apply for loans from £25,000 up to £10 million, through to the end of this year. The government will continue to stand behind these Recovery Loans, providing lenders with an 80% guarantee.
• Business rates holiday – This will continue until June, then business rates will instead be discounted until the end of the tax year.
• Apprentice incentive – Businesses hiring new apprentices will have their incentive doubled to £3,000. This is a great incentive for our industry. Outsourcing costs for jobs like social media, administration, or bookkeeping could easily be run in house by an apprentice, saving costs and giving you the incentive of £3,000. It is worth looking into.
The personal care sector has been fighting for support throughout the pandemic. With many businesses considered ineligible for funds, campaigns were set up to request a cut in VAT and a grant fund specifically for the personal care sector. Despite the myths, VAT is charged on medical cosmetic treatments and the #chopthevat campaign would have benefited the medical aesthetic industry. Disappointingly, neither of these requests were met in the Chancellor’s Budget. As an industry we have been enormously impacted by covid-19, but there is light at the end of the tunnel. There is high demand for aesthetic treatments and a fast recovery looks promising once restrictions ease and practitioners can return to clinic.
1. Self-Employment Income Support Scheme (SEISS) grant extension | Accountancy Daily: www. accountancydaily.co/self-employment-incomesupport-scheme-seiss-grant-extension
2. www.hmrc gov.uk