Knowledge hub > Covid-19 update
Covid-19 update
What funding support is available for businesses
We want to make sure every single business knows where to go right now to help them through the challenges caused by coronavirus. We might not be able to advise, but we can point you in the right direction.
- The Coronavirus job retention scheme was due to come to an end on 31 October but has now been extended until the end of April 2021. The contributions paid by the Government had been reducing as the scheme was being wound down with the maximum Government contribution under the furlough scheme was 60% of normal pay. The extended scheme will cover 80% of furloughed worker’s income up to £2,500 a month. Flexi-furlough will continue to be an option, so employees can work part-time and receive a furlough grant for unworked hours.
- The Job Support Scheme (JSS) will now launch when the new furlough extension ends. Under the JJS Open scheme (for businesses that are operating but facing decreased demand) employees must work for at least 20% of their regular working hours with employers covering the wages for those worked hours. For hours not worked, employers will be asked to contribute 5% of employees’ wages while the government will contribute 61.67% of wages (for hours employees do not work), to a monetary cap of £1,541.75 per month per employee. Under the JJS Closed scheme (for businesses that are legally required to close their premises as a direct result of coronavirus restrictions) an employee will receive two thirds of their normal pay which will be fully funded by the government. Claims under these schemes can be made by employers from 8 December 2020.
- The Coronavirus Statutory Sick Pay Rebate Scheme will repay employers the Statutory Sick Pay paid to current or former employees from 28 February 2020. Up to 2 weeks of statutory sick pay can be claimed back.
- The £330bn of support announced by the Chancellor will be made available through banks. Speak to your bank or lending provider about access to the scheme.
- The Coronavirus Business Interruption Loan Scheme (CBILS) is a loan up to £5m interest-free for 12 months to help businesses with the impact of Covid-19. This is accessed through the British Business Bank.
- The Coronavirus Large Business Interruption Loan Scheme (CLBILS) has been increased so that the loan size scheme will be £200m rather than £50m. Companies borrowing more than £50m through CLBILS and the Bank of England’s Coronavirus Corporate Financing Fund will be asked to agree to not pay dividends and to exercise restraint on senior pay and share buy-backs.
- New “bounce back loans” will give the UK’s smallest businesses guaranteed access to loans of up to £50,000 (capped at 25% of turnover) within 24 hours of applying. The loans will be 100% guaranteed by the Treasury and available from 4 May 2020.
- The new coronavirus Future Fund scheme will issue convertible loans between £125,000 to £5 million to UK innovative companies, subject to at least equal match funding from private investors. To qualify the business would need to have raised at least £250k in funding rounds over the last 5 years.
- The Job Retention Bonus is a £1,000 one-off taxable payment to the employer for each eligible employee that you furloughed and kept continuously employed until 31 January 2021. The bonus can be claimed between 15 February 2021 and 31 March 2021. This money does not have to be paid to your employee.
- The grants for smaller businesses of up to £10k will be channelled through local authorities. If you think you may need this support, speak to your local authority.
- UK registered businesses can apply for a share of up to £20 million grant for innovation in response to new and urgent needs as a result of the Covid-19 pandemic.
- Business rates are cut and will automatically be applied.
- Most banks have launched a working capital support facility so speak to them if you need this.
- VAT payments are delayed for 3 months. Instead of paying the full amount deferred before June 2020 by the end of March 2021, businesses can opt-in to a scheme which enables you to make smaller payments up to the end of March 2022, interest free.
- Cash grants of up to £25,000 for the retail, hospitality and leisure businesses. Your local authority will write to you if you are eligible.
- Don’t forget the long-standing R&D tax credit scheme which could provide a cash injection
How will the Coronavirus Business Interruption Loan Scheme (CBILS) effect my R&D tax credit claim?
We have received several queries from concerned clients and accountants highlighting that the CBILS is state aid and wondering how that impacts R&D claims.
If the CBILS relates specifically to the company’s R&D expenditure [on a project] rather than being intended more generally to support the company, then this could impact your R&D claim. This is because the Government has notified CBILS as a State aid under the European Commission’s new Temporary Framework for COVID-19. The measure is a fully notified aid, so the restriction on receipt of other State aid (s1138(1)(a) CTA 2009) potentially applies.
Therefore providing the loans are provided to generally support the company and are not provided to fund a specific R&D project then there will be no impact on the R&D claim. We very much doubt that there will be any clients or claimant companies receiving funding for a specific R&D project under the CBILS scheme and therefore not something we envisage becoming an issue for any companies R&D claim. We will continue to monitor the situation and as we are members of the Research and Development Consultative Committee (RDCC) we will be able to feedback to HMRC through that channel.
Also for further clarity this also only applies to anyone claiming under the SME scheme, RDEC claimants will remain unaffected by this.
The financial benefit of claiming R&D tax credits, more important now than ever
If you are a company who can take the R&D tax benefit as cash, it will be a vital cash injection so making a claim is more important than ever.
Businesses and Accountants will be spinning many plates in the coming months so making sure you have other advisors around to lighten the load is crucial.
HMRC will continue to pay out tax credits even if you have delayed payments to HMRC due to Covid-19. Now is the time to be proactive and get ahead by starting the claim processes as soon as you can. We will make this processes as smooth as possible and will minimise the time you need to spend on this – leave it to us and you can focus on steering the ship.
R&D activity helps to protect jobs across the company. 80% of R&D tax claims are made up of people’s time so if you have resources that cannot be utilised in the normal way, think about if they can be deployed into development roles to help when the tide eventually turns. A percentage of these costs will be able to be reclaimed through R&D tax relief.
Should any companies need the cash sooner, there are R&D tax short term loan options available. We work with Rocking Horse Group and can facilitate the introduction should this be an option you wish to explore.
UK’s innovative companies answering the call
In the face of adversity, the entrepreneurial British spirit cannot be kept quiet and innovation shines through. From cutting edge medical research to find a vaccine, through to changing production lines to deliver what Britain needs right now.
This pandemic is moving at an unprecedented rate but we will stay ahead and beat it thanks to common sense and innovation and it’s our privilege to champion and take pride in the work of our fellow UK businesses.
And we will stand shoulder to shoulder with you
Now is the time to do as much as possible for each other and as a SME working with hundreds of companies across the UK we will do everything we can to support. We will get the R&D tax credits sorted and work around client priorities, we will change our payment terms to help others with cashflow issues, we will listen to our clients and adapt with them, our terms will flex with those that need it the most and we will survive together.
Our incredible team have moved to 100% remote working and have not slowed down for a second. We are ready to continue to deliver for our clients when we know that right now, doing what we do is more important to our clients than ever before.
We won’t be able to come and see our clients in this period but we will still use our experience and knowledge to capture as much qualifying activity as possible. Working remotely is not new to us and we have the experience and team to manage your claim regardless. If there is still more to get by coming to visit you, we will know that, and come back when we are allowed to find and recognise that value for you.
