Latest COVID-19 update from Shorts

Our accountancy partners Shorts are issuing weekly updates which we are sharing here for information.

 

Date of update: 6th May

Following the initial raft of support measures introduced by the Government, we are now beginning to see these filter through for our clients.

You can still find the latest information on our central Covid-19 Hub, which is regularly updated. Here is a summary of the most recent updates:

Furlough update:
We’ve been busy preparing and submitting furlough grant claims for our clients over the past week. If you are doing these claims yourself, we would like to share the following with you.

  • Calculations – we have found that there is no ‘one size fits all’ approach to the calculations, as they all have bespoke elements depending on the nature of the employer, whether wages are fixed or varied, and whether employees have basic hours.
  • Annual payroll – those individuals who are on annual payrolls (i.e. Directors paid once per year) can only claim under the scheme if they had an RTI for the 19/20 tax year that was submitted on or before 19th March 2020. Those Directors on an annual payroll whose pay was processed at the end of March 2020 will miss out.
  • Be prepared – the HMRC portal does not calculate the grant for you, but just allows users to manually insert the claim. The portal also times out after a period (we are informed 30 minutes), so employers should get all the information ready before accessing.
  • Refunds – our clients are receiving refunds in around 5 working days, in line with target of 4-6 days. If you have made a claim and haven’t received a refund after 10 days you should contact HMRC.

Bounce Back Scheme
Some of the UKs smaller businesses could benefit from 100% guarantees on loans of up to £50,000 under the new ‘Bounce Back Scheme’. The Bounce Back Loan scheme helps small and medium-sized businesses to borrow between £2,000 and £50,000. The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. Loan terms will be up to 6 years. No repayments will be due during the first 12 months. The government will work with lenders to agree a low rate of interest for the remaining period of the loan.

The scheme will be delivered through a network of accredited lenders. For more information, see this page on the British Business Bank website.

Business Grants – £617m of additional grants to be released by local authorities to small businesses
The government have announced additional funding to help small business (with fewer than 50 employees) with fixed property costs (such as rent) which have experienced a drop in income due to the Covid-19 restriction measures. Three grants of (1) up to £10k, (2) £10k or (3) £25k will be provided by local authorities and will cover businesses that are not subject to Business Rates – one of the groups that will be given priority is those businesses operating out of shared spaces. Details are to be announced shortly.

Support for company Directors
Although nothing has yet been announced, there are rumblings in the press that Rishi Sunak is looking into a scheme to support Directors of limited companies that pay themselves by way of dividend (rather than salary). To date, these individuals have, generally, received only a small amount of support from the Covid-19 measures, due to how they are paid.

 

Useful information from earlier updates:

Coronavirus Job Retention Scheme extended to 30 June and portal has gone live

The Chancellor has announced an extension of the scheme to 30 June, in response to the lockdown measures being extended. This is welcome news as it provides a degree of certainty for those businesses with employees on furlough.

The portal to make the claim has gone live today (20th April) and the first claims have been processed. The key message on this is that the portal does not allow claims to be saved, and employers must have all details ready before making the claim.

Guidance has been published by HMRC to help calculate the grant available, which highlights that there are a significant level of nuances to consider when making the claims. There is also a smaller Step by Step guide published by HMRC. This also confirms a few of the queries regarding the interaction with holiday pay. See our blog here for details.

The Government have also issued a useful video on the key points relating to the CJRS.

Support for Start-ups and Innovative Businesses

The Government has released plans to support start-ups businesses in the form of matched investment to the combined value of £500m via the new ‘Future Fund‘ for businesses previously in receipt of private equity investment.

The Future Fund offers loans of between £125,000 and £5m per business to assist with working capital and will launch mid- May. The state-backed loans will be convertible to equity in the event of the loans not being repaid within three years and are conditional of the business having received at least £250,000 of private sector investment over the previous five years, and provided that private sector investors are willing to match the value.

Additionally, Innovate UK will be providing £750m of funding to Research and Development focused SMEs via grants and loans. This support will comprise £550m of offered support for existing Innovate UK supported businesses. An additional £175,000 will be offered to around 1,200 businesses not currently in receipt of Innovare UK funding. Whilst £200m of already committed grant and loan payments from Innovate UK will be, on an opt-in basis for businesses, accelerated to existing Innovate UK customers.

Digital and tech businesses that have already raised funds are the businesses most likely to benefit from this new support.

Grants for business properties

We are seeing these grants being paid to our clients, but for those that have not yet done so, we are strongly encouraging businesses benefiting from Small Business Rates Relief (SBRR) or Rural Rates Relief (RRR), or for businesses paying Business Rates on properties in the Hospitality, Leisure and Service sectors, to register with their local authorities as soon as possible so as to obtain the £10,000 and £25,000 grants that are now available to them. Details and links to the online forms for the various authorities can be found in our blog.

Self-employed income support scheme

Some changes were announced to this, and we have updated our guidance.

 

Don’t forget that you can get advice from Shorts about R&D Tax Credits through their Radius service.