Inspire’s Finance Clinic: Chris Downing, Director, answers your Covid-19 questions

Chris Downing, Director of Inspire, the business and tax advisers, answers your questions.

Question: I’m not sure if my business qualifies for the Coronavirus Business Interruption Loan Scheme (CBILS) what other options are available to me?

Answer: Over the last few weeks, the government has announced several different coronavirus support measures and help for businesses and self-employed, depending on the size of your business and the sector that you operate in. You can use the business support finder tool to work out which support measures you are eligible for.

Most recently, the Chancellor launched Bounce Back Loans which may be more suitable for small businesses and sole traders.  The scheme offers 100% government-backed loans of £2k-£50k.  The loans are interest-free for 12 months with a repayment term of up to six years.

The application process is straightforward and the banks have committed to funds being available within one day of the application being approved.  Eligibility is fairly broad  – your business has to be based in the UK and negatively affected by coronavirus – but you can’t claim for this, if you’ve already submitted a CBILS application (however, you can apply to transfer your CBILS to a Bounce Back Loan via your bank). The amounts are based on business turnover.

Bounce Back Loans are available through 11 lenders (including the major high street banks), so you should apply via your usual bank in the first instance.

Question: I’m self-employed and haven’t been able to work since lockdown. Do I still have to wait until June for any help from the government?

Answer:  There is a little bit of good news here.  At the beginning of May, the government announced that HMRC would be able to start processing Self-Employed Income Support Scheme (SEISS) claims earlier than planned.

HMRC have now begun contacting customers who are eligible to apply for SEISS. Those who are eligible will be able to claim a taxable grant worth 80% of their average trading profits up to a maximum of £7,500 (equivalent to three months’ profits), paid in a single instalment.

You can check your eligibility for SEISS here.  You will need your Unique Taxpayer Reference (UTR) and National Insurance number to hand. Once the eligibility check is completed, you will be given a date for when you can submit your claim.  The claims service will open on May 13, the initial successful claims will be paid by May 25, or within six working days of submitting your claim.

Question: Can I still furlough my employees using the Job Retention Scheme?

Answer: Yes, the government’s Coronavirus Job Retention Scheme is still open for you to apply. The scheme is a reimbursement to employers for the cost of paying employees, whilst they have no work from them. As such, the employees wage should be administered in the normal way through the payroll. The amounts are then returned to the employer by HMRC. The government will fund 80% of wages, up to a maximum of £2,500 per month.

HMRC is currently processing applications promptly and is paying claims within six working days.

It’s important to remember that to be eligible for the subsidy, when on furlough, an employee cannot undertake work for or on behalf of the organisation. This includes providing services or generating revenue. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.

This has been extended to the end of June, and we will await further announcements to see what support will be offered moving forwards. There have already been widespread redundancy announcements in some industries.

You can read more about the guidelines and criteria for the Job Retention Scheme here.

Question: A big part of my business is R&D, is there any extra help available for me?

Answer:  The government announced a package of coronavirus support measures to help businesses who undertake R&D, including extra funding from Innovate UK and the new Future Fund.

More details of the £500m Future Fund are due to be announced shortly, with applications opening later this month.  What we do know so far is that the government funding will be matched by private investment and that the scheme will initially be open until September 2020.  Loans will range from £125,000 to £5,000,000, subject to at least match funding from private investors.  You will have had to have raised money privately in the past five years to qualify for this route.

However, a more accessible route would be by contacting Innovate UK. They work with companies who specialise in high growth and Research and Development. There are grants and further loans available through them.

It’s important to remember your Research and Development Tax Credit claim too. Can you make the claim earlier this year? Can you change your year end to accelerate being able to make the claim and obtain a refund (if you follow this route).  Please do get in touch with Inspire, if you’d like to find out more.

Question: I have a tax bill due soon, is there any way I can defer the payment?

Answer: The government announced a package of measures to support businesses. Among these is a HMRC helpline for businesses and individuals who are unable to pay their tax due to the coronavirus. Help could include the agreement of a deferral period. The HMRC helpline number is 0800 0159 559. Our advice is to contact HMRC as soon as you can to make the necessary arrangements.

At the end of March, HMRC changed its guidance on who can defer their second payments of Income Tax.  Originally it was only self-employed individuals, now it is all tax payers under self-assessment. For Income Tax self-assessment, payments due on 31 July 2020 may now be deferred until 31 January 2021. This is an automatic offer with no applications required.

For the latest resources for business on Coronavirus support, visit Inspire.

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Got a question for Chris? The team at Inspire has much experience at advising business owners in good and more challenging times. Call 01202 717867 or email [email protected].