Clarification of government support to UK businesses suffering from eye-watering increases in their energy bills, have been announced 21 September 2022. Details of the support proposed are set out below.

Key features

The Government will provide a discount on wholesale gas and electricity prices for all non-domestic customers (including all UK businesses, the voluntary sector like charities and the public sector such as schools and hospitals) whose current gas and electricity prices have been significantly inflated in light of global energy prices. This support will be equivalent to the Energy Price Guarantee put in place for households.

It will apply to fixed contracts agreed on or after 1 April 2022, as well as to deemed, variable and flexible tariffs and contracts. It will apply to energy usage from 1 October 2022 to 31 March 2023, running for an initial six-month period for all non-domestic energy users. The savings will be first seen in October bills, which are typically received in November.

As with the Energy Price Guarantee for households, customers do not need to take action or apply to the scheme to access the support. Support (in the form of a p/kWh discount) will automatically be applied to bills.

To administer support, the Government has set a Supported Wholesale Price – expected to be £211 per MWh for electricity and £75 per MWh for gas, less than half the wholesale prices anticipated this winter – which is a discounted price per unit of gas and electricity. This is equivalent to the wholesale element of the Energy Price Guarantee for households. It includes the removal of green levies paid by non-domestic customers who receive support under the scheme.

The level of price reduction for each business will vary depending on their contract type and circumstances:

• Non-domestic customers on existing fixed price contracts will be eligible for support as long as the contract was agreed on or after 1 April 2022. Provided that the wholesale element of the price the customer is paying is above the Government Supported Price, their per unit energy costs will automatically be reduced by the relevant p/kWh for the duration of the Scheme. Customers entering new fixed price contracts after 1 October will receive support on the same basis.
• Those on default, deemed or variable tariffs will receive a per-unit discount on energy costs, up to a maximum of the difference between the Supported Price and the average expected wholesale price over the period of the Scheme. The amount of this Maximum Discount is likely to be around £405/MWh for electricity and £115/MWh for gas, subject to wholesale market developments. Non-domestic customers on default or variable tariffs will therefore pay reduced bills, but these will still change over time and may still be subject to price increases. This is why the Government is working with suppliers to ensure all their customers in England, Scotland and Wales are given the opportunity to switch to a fixed contract/tariff for the duration of the scheme if they wish, underpinned by the Government’s Energy Bill Relief Scheme support.
• For businesses on flexible purchase contracts, typically some of the largest energy-using businesses, the level of reduction offered will be calculated by suppliers according to the specifics of that company’s contract and will also be subject to the Maximum Discount.

A parallel scheme, based on the same criteria and offering comparable support, but recognising the different market fundamentals, will be established in Northern Ireland.

If you are not connected to either the gas or electricity grid, equivalent support will also be provided for non-domestic consumers who use heating oil or alternative fuels instead of gas. Further detail on this will be announced shortly.

Steps to take – for affected businesses

Any government support will automatically be discounted on your electricity and gas bills. No action/claim needs to be made.

Unfortunately, even with this support, energy hungry business sectors will still need to accommodate significant price increases compared to those charged a year ago.

Now is the time to revisit your financial planning to see how profitability is affected based on energy costs at the new supported rates.

In response to the various concerns voiced with regard to the present cost of living crisis, the Chancellor, Rishi Sunak, announced a raft of support measures in Parliament 26 May 2022. This update summarises the grants and other financial support packages provided to counter these concerns.

Energy Bills Support Scheme doubled to a one-off £400

Households will get £400 of support with their energy bills through an expansion of the Energy Bills Support Scheme.

• As well as doubling the £200 of support announced earlier this year, the full £400 payment will now be made as a grant, which will not be recovered through higher bills in future years. This is a sensible and welcome change.
• Energy suppliers will deliver this support to households with a domestic electricity meter over six months from October. Direct debit and credit customers will have the money credited to their account, while customers with pre-payment meters will have the money applied to their meter or paid via a voucher.
• This support will apply directly for households in England, Scotland, and Wales. It is GB-wide and equivalent support will also be delivered to people in Northern Ireland.
• This support is in addition to the £150 Council Tax rebate for households in England in Council Tax bands A-D, which was announced in February, and which millions of households have already received.

A £650 one-off cost of living payment for those on means tested benefits

More than eight million households on means tested benefits will receive a payment of £650 this year, made in two instalments. This includes all households receiving the following benefits:

• Universal Credit, Income-based Jobseekers Allowance, Income-related Employment and Support Allowance, Income Support, Working Tax Credit, Child Tax Credit, Pension Credit.
• DWP will make the payment in two lump sums – the first from July, the second in the autumn. Payments from HMRC for those on tax credits only will follow shortly after each to avoid duplicate payments.
• Claimants will need to be in receipt of one of these benefits, or have begun a claim which is later successful, as of 25th May 2022 to be eligible for the first of the two instalments. HMRC and DWP will provide further guidance, and the government will set out the eligibility date for the second instalment, in due course.
• This payment will be tax-free, will not count towards the benefit cap, and will not have any impact on existing benefit awards.
• The government will make these payments directly to households across the UK.
• Legislation will be introduced shortly to allow payments to be made to this timetable.

A one-off £300 Pensioner Cost of Living Payment

Pensioner households will receive an extra £300 this year to help them cover the rising cost of energy this winter. This additional one-off payment will go to the over eight million pensioner households across the UK who receive the Winter Fuel Payment and will be paid on top of any other one-off support a pensioner household is entitled to, for example where they are on pension credit or receive disability benefits. Eligible households currently receive between £200 – £300, so the payment will represent at least double the support for this winter.

• The Winter Fuel Payment (including the extra Pensioner Cost of Living Payment) is not taxable and does not affect eligibility for other benefits.
• All pensioner households will get the one-off Pensioner Cost of Living Payment as a top-up to their annual Winter Fuel Payment in November/December. For most pensioner households, this will be paid by direct debit.
• People will be eligible for this payment if they are over State Pension age (aged sixty-six or above) between 19 – 25 September 2022. There are certain circumstances where an individual above State Pension age does not qualify for the Winter Fuel Payment
• The government will make these payments directly to households across the UK.

£150 Disability Cost of Living Payment

Around six million people across the UK who receive the following disability benefits will receive a one-off payment of £150 in September: Disability Living Allowance, Personal Independence Payment, Attendance Allowance, Scottish Disability Benefits, Armed Forces Independence Payment, Constant Attendance Allowance, War Pension Mobility Supplement.

• We know people with disabilities may face a wide range of additional costs, such as specialist equipment, specialist food, and increased transport costs, and this payment will help with these costs as they are likely to have increased. Claimants must be in receipt of, or have begun an eventually successful claim for, one of these benefits as of 25th May 2022 to be eligible for this additional payment.
• For the many disability benefit recipients who receive means tested benefits, this £150 will come on top of the £650 they will receive separately.
• These payments will be exempt from tax, will not count towards the benefit cap, and will not have any impact on existing benefit awards.
• The government will make these payments directly to eligible people across the UK.

£500m increase and extension to the Household Support Fund

To support people who need additional help, the Government is providing an extra £500 million of local support, via the Household Support Fund, which will be extended from this October to March 2023.

• The Household Support Fund helps those in most need with payments towards the rising cost of food, energy, and water bills.
• The government will issue additional guidance to Local Authorities to ensure support is targeted towards those most in need of support, including those not eligible for the Cost-of-Living Payments set out on 26 May 2022.
• This brings the total amount provided through the Household Support Fund to £1.5 billion since October 2021.
• The Household Support Fund is administered by local councils in England and further information will be available directly from them. Individual councils will determine eligibility.
• The Barnett formula provides a share of this funding to the devolved administrations in Scotland, Wales, and Northern Ireland so they can decide how to provide support.

Funding

In total, it is estimated that the cost of these measures will be £15bn. The Chancellor announced a 25% Energy Profits Levy payable by the oil and gas industry, to be followed by a similar – but undisclosed – levy on electricity generation sector, when the details are agreed later this year. £5bn will be raised by this Levy in the first year. It is not clear how the remaining £10bn will be funded.

The impact of the levy is uncertain as it was also announced that the oil and gas industries are to be given a new 80% Investment Allowance. This means that for every £1 committed to qualifying investments will result in a 91p tax saving.

 

 

We are delighted to announce that we have been added to the Handpicked Accountants network, following recognition of our outstanding customer service to business owners across Cheltenham and neighbouring towns.

With over 20 years’ experience, we offer a year round accountancy service, including tax advice, bookkeeping, payroll and auditing services to small, medium and large businesses. We take pride in proactively advising each and every client to ensure they are operating efficiently, providing the necessary support along the way. Our team of chartered accountants are friendly and reliable and can advise you on how to best manage your finances.

Handpicked Accountants is a platform designed to remove the gap between business owners looking for accountancy services and highly esteemed local and national accountants known for delivering a high quality service. After working with over hundreds of accountancy firms over the years, they know what makes an accountant stand out and what to watch out for.

Handpicked Accountants have built longstanding relationships with accountants across the country so they can put you in touch with an experienced accountancy professional near you, including Cheltenham. Each accountancy firm is fully vetted to ensure they are of a high standard and can provide a dedicated service.

At Francis & Co, we use a range of accounting software including Xero, Sage, Quickbooks and Freeagent, which provide a full overview of your company accounts in one glance. You can manage invoicing and cash flow from any device, making it easy to fulfil your daily accounting tasks with the help of your accountant.

David Tattersall, Head of Client Relations at Handpicked Accountants, said, “We are really glad that Francis & Co Chartered Accountants have joined our network of reputable accountants. They are well known around the Cheltenham area for their outstanding service to owner managed businesses. I’m proud to welcome them on board. ”

You can view our profile on Handpicked Accountants here.

Theresa May gave her first major speech outlining her Brexit plan resulting in the Pound rising sharply.

http://a.msn.com/00/en-gb/AAlX4Cy?ocid=se

 

We are pleased to welcome Alice Prout to Francis & Co for the summer whilst she awaits her A level results!