We are aware that COVID-19’s continued spread may leave businesses with difficult decisions. As they are forced to find new ways of working, payroll and cashflow are a major concern for most UK companies. Where we can, ForrestBrown is here to help. The research and development (R&D) tax incentives remain an established way for businesses to get a boost — a rebate for funds you’ve already spent on innovative projects.
The top priority for ForrestBrown at this time is to protect the wellbeing of our employees, clients, partners and friends, and to ensure our continued ability to serve clients. Every one of our ForrestBrown colleagues has been successfully set up to work remotely. This means we are currently still working at full capacity and continuing to serve our clients.
At ForrestBrown, we have a single focus. All we do is R&D tax credits. But we’ve already heard from several concerned business owners looking for information on the government’s £330bn SME relief fund.
It would be remiss of us to offer advice beyond our expertise. But we can say that wider government help is available, and we can point you in the right direction for the emergency funding you need to get through this challenging period.
For more information on the impact of COVID-19 funding on R&D tax credits, read: COVID-19 and R&D Tax Credits – What businesses need to know.
Government coronavirus business relief
Please note that new measures and further details may be announced in the coming days and weeks. We will endeavour to keep you updated, but you can also check the Gov.uk page on COVID-19 support for businesses for more information.
To help small businesses through the worst effects of social distancing, immediate government help is available. The first tranche was announced in Spring Budget 2020, and further measures have been introduced since. This help is currently available in the following forms:
- Coronavirus Job Retention Scheme
- Job Support Scheme
- Coronavirus Business Interruption Loan Scheme
- Deferred VAT payments
- Business rates reductions, and grants for businesses who have low rate bills.
- Extending SSP, and allowing employers to reclaim it.
- Time to Pay being extended.
- Self-employed business coronavirus relief
- NEW start-up funding via Future Fund
- NEW Bounce Back Loan scheme
Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme (CJRS) applies from 1 March 2020 to help businesses affected by COVID-19 to pay people’s wages. Employers can contact HMRC for a grant to cover most of the wages of their workforce who remain on payroll but are temporarily not working during the coronavirus outbreak.
This support package means:
- UK workers of any employer who are placed on the CJRS can keep their job, with the government paying up to 80% of a worker’s wages, up to a total of £2,500 per worker each month.
- From 1 August 2020, employers were able to bring back furloughed employees on a part-time basis and the government contribution to their salaries decreased by 10% each month from 80% in August to 60% in October. During this period, employers were liable for employer NICs and pension contributions, as well as top-up salary payments to ensure employees still received at least 80% of their salary.
- The government has since extended CJRS until March 2021 with employees still receiving the original 80% of their current salary for hours not worked, up to a maximum of £2,500. For the extended period, employees do not need to have been previously furloughed.
- Any employer in the country- small or large is eligible for this scheme, including charitable and non-profit entities.
Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
For more information, visit the Gov.uk page for the Coronavirus Job Retention Scheme.
Job Support Scheme
It was originally announced in September that a Job Support Scheme (JSS) would go live in November 2020, following the planned end of the Coronavirus Job Retention Scheme. It was also expanded shortly after launch to include further support for businesses forced to close due to official restrictions.
The new nation-wide lockdown has put paid to the JSS for now, however. With the extension of CJRS, the JSS has, in turn, been put back to the new end date of CJRS.
The JSS is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19. However, the scheme is available for all sectors and not focused only on those particularly affected by the pandemic (e.g. hospitality, nightclubs, events, etc).
Eligibility depends on viable jobs being restricted to part-time hours so the employee can keep their job. The company will continue to pay its employee for time worked, but the cost of hours not worked will be split between the employer, the government (through wage support) and the employee (through a wage reduction). The employer has to pay, then claim the appropriate proportion back from the government.
Coronavirus Business Interruption Loan Scheme (CBILS)
CBILS are loans being delivered through all the major banks who are receiving a large volume of enquiries. You should note:
- Loans are available for UK-based businesses with up to £45m turnover.
- The list of financial providers offering these loans is deliberately long (40+).
- The first 12 months of the interest and any lender fees are to be covered by the Treasury.
- 80% of the loan is guaranteed.
- Loans can be up to £5m (up from £1.2m in the Budget).
To access these loans, the key takeaway and advice of the British Business Bank is to speak to your bank or another of the lenders listed.
Deferred VAT payments
This is an automatic offer, so you don’t need to apply for it.
- VAT payments due between 20 March 2020 and the end of June 2020 will be deferred.
- No VAT registered business will have to make a VAT payment normally due with their VAT return to HMRC in that period.
- Businesses will not have to pay this VAT until the end of the 2020-21 tax year.
Self-employed business coronavirus relief
For the self-employed, income tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021, benefitting up to 5.7m self-employed businesses.
- The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) who have lost income due to coronavirus (COVID-19).
- This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed
Use this scheme if you’re self-employed or a member of a partnership and have lost income due to coronavirus. Please note that this scheme is not available to business owners who operate through a limited company. They may be able to claim through the Job Retention Scheme instead.
Future Fund for start-ups
On 20 April 2020, the government announced its new £1.25bn Future Fund to help the UK’s high growth start-up businesses if they are suffering reduced investment as a result of the business interruption of COVID-19.
To read more about Future Fund for start-ups, visit the UK gov news page: Billion pound support package for innovative firms hit by coronavirus.
Bounce Back Loan help for SMEs
On 27 April, the government unveiled plans to launch the Bounce Back Loan scheme on 4 May. This scheme will help small and medium-sized businesses affected by coronavirus (COVID-19) to apply for loans of up to £50,000.
The government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months.
If you’ve already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until 4 November 2020.
More information can be found on the .Gov website page:
R&D tax credits and coronavirus
For most UK companies these uncertain times make finding new ways of working, meeting payroll costs and keeping healthy cashflow the main concerns. R&D tax credits can be another valuable source of government-backed business funding. Claiming the emergency government coronavirus funding discussed above does not preclude your business from successfully claiming R&D tax credits too.
The money provided to your business by R&D tax credits can still be used to extend your capital runway, to pay wages or towards materials, software and consumables. All of which could be vital help to any business’s cashflow now and as restrictions on worker mobility continue.
Read more on the interaction between R&D tax credits and the government’s coronavirus funding in our regularly updated blog: COVID-19 and R&D Tax Credits – What businesses need to know.
The history of R&D tax credits
R&D tax credits have existed since the year 2000.
At ForrestBrown, we are still able to prepare and submit R&D tax credit claims as normal. We’re working with HMRC to get up to date information on their R&D tax credit processing times.
HMRC recognises the importance of ensuring payments reach companies at this time. Although they too have been affected by COVID-19, HMRC have deployed additional resources to keep things on track.
Here to help
As the UK’s largest specialist R&D tax credit consultancy, our experts can help – whether you need advice on a claim prepared elsewhere or you’re new to R&D tax credits and have any questions about the incentives.
If you want us to evaluate – or re-evaluate – the opportunity for an R&D tax credit claim in your business, simply email us email@example.com.