So we have now been on lockdown effectively for over a month, so other than increased family time and much lower air pollution from vehicle emissions, what other positive news has there been this week on the financial front?
Again there is only one new announcement really, but I also provide below an update on a couple of other areas and a couple of tax tips.
Coronavirus Job Retention Scheme
The CJRS portal opened on Monday and by 4pm that day we understand that 140,000 claims had been made in respect of over a million employees. This is really encouraging and the system has stood up well, being designed to cope with up to 450,000 applications per hour. I worked through a claim with a client earlier this week, and whilst the calculations of what employers can claim is not that straightforward, the guidance is clear and logical with helpful examples, so once calculations are complete actually entering the information is very straightforward.
We understand that claims submitted by midnight on Wednesday night should be processed in time for cash to land in business accounts by 30 April, in time for payday. So stage 1 appears to have been a success, now fingers crossed there are no hitches in actually issuing the money for stage 2!
Readers may have heard that the money received from the CJRS is taxable income for a business, but this could be easily misconstrued. Technically it is taxable, but as it is at least offset by wages, NIC and pension being paid out, which remains allowable for tax, there is no overall adverse tax effect so this is logical.
Self-Employed Income Support Scheme
No more news this week on a precise date for the launch of this scheme, but it is still expected by mid-May in time for money to be paid out in June. Yesterday was the final opportunity for individuals to submit any outstanding tax returns for 2018-19 in order to become eligible for the scheme. Anecdotally I have heard about some individuals filing provisional tax returns where they did not have all the figures together, but it remains to be seen whether this will be sufficient to qualify for the support, as we have not seen any guidance on this point.
Again any payments received from this scheme will be taxable business income as it is designed to replace lost business profits. I had a word with our VAT specialist Rob Case about treatment on VAT returns yesterday and his view (which makes a lot of sense) is that this would be treated more like grant income than income from making a supply, so should not appear on the business’ VAT returns.
More news on this scheme as it is announced, but in the meantime, remember we have a calculator which we can use to give our clients and contacts advice on the likely level of support they might expect, should they apply to the scheme.
Coronavirus Business Interruption Loan Scheme
I have seen some figures on uptake of the loan scheme this morning, which it was fair to say had a bit of a slow start, but I am pleased to see numbers increasing. As of Tuesday this week, I understand that around 36,000 completed applications had been received by lenders to date with just over 16,500 approved so far and more expected to be approved over the coming days.
Just over £2.8 billion has been issued under the scheme from those approved applications.
The CBI has called on the government to make three changes to the scheme for small businesses:
- Develop, with lenders, a fast and simple route to loans under £25k for small businesses who may be completely new to borrowing, possibly backed by 100% government guarantee (I have seen a news story this morning saying that the Treasury is seriously considering the 100% guarantee at this level)
- Increase the government guarantee from 80% to 100% for CBILs loans up to £500k, which could improve speed of delivery. In addition, allow lenders the option to provide a longer repayment schedule for loans up to this ceiling from 6 years to 10 years.
- Streamline documentation to speed up eligibility and viability assessments, making standard templates available such as those used in Germany and Switzerland.
Just a reminder that Will Abbott launched a CBILS checklist last week for those who are looking to apply for the Business Interruption Loan Scheme, do have a look at this and contact Will if you would like any support in putting an application or supporting information together.
Additional funds for high growth innovative businesses
On Monday there was an announcement about an additional £1.25 billion package to be made available through Innovate UK to high growth innovative businesses. For more information please see my article about the new package launched for innovative businesses.
Tip for company car users on furlough
If you are an employee on furlough and have use of a company car, but have a separate vehicle for your family use, then you could potentially save quite a bit of tax by getting your employer to make your company car “unavailable for private use” during your furlough leave.
There would need to be the right paperwork put in place to effectively prohibit the car from being used until your return to work, but if the furlough period (and hence unavailability period) is over 30 days in length then the taxable benefit will not apply for that period.
If you are an employer with employees in this position then this is worth looking into because there would also be savings in employer’s Class 1A National Insurance.
Please speak to a member of our tax team if you would like to look further into this.
We remain fully open for business (remotely) so please do call with any questions around your current financial situation. Enjoy your weekends and touch wood for some good barbecuing weather tomorrow!
James Geary is head of Corporate Tax and is happy to help with any questions or concerns you may have at this time – you can contact James on firstname.lastname@example.org or 01242 776000 to arrange a call back.