beba46ec cc03 44a2 878c b65d0d876682 800x380 - Omicron funding delivered to local authorities

Omicron funding delivered to local authorities

Just before the Christmas break, the Chancellor announced a new support package for some businesses most affected by the Omicron variant.

The biggest single measure was the re-introduction of one-off grants of up to £6,000 for businesses in the hospitality and leisure sectors many of whom have seen their seasonal trade hugely impacted by this latest COVID-19 variant. It is thought that some 200,000 businesses will be eligible for these new grants. On 7 January 2022, the government delivered funding to councils across England to provide these one-off grants.

This means that firms in the hospitality, leisure and accommodation sectors, many of whom have seen a decline in footfall and increased cancellations due to the Omicron variant, will be able to apply for one-off grants of up to £6,000 per premises depending on rateable value:

  • businesses with a rateable value of £51,000 or above: £6,000
  • businesses with a rateable value between £15,000 and £51,000: £4,000
  • businesses with a rateable value of £15,000 or below: £2,667

The government will also provide for a £102 million top-up for discretionary funding to help local authorities support other businesses outside the hospitality and leisure sectors.

The devolved administrations in Scotland, Wales and Northern Ireland will receive an additional £150m through the Barnett formula to help offer similar measures. This will be allocated with around £80 million going to the Scottish Government, £50 million to the Welsh Government and £25 million to the Northern Ireland Executive.

Source: Department for Business, Energy & Industrial Strategy Tue, 11 Jan 2022 00:00:00 +0100
64641b20 0821 4d92 b10f f9a65cd8d1bb 800x380 - New £1bn support package announced

New £1bn support package announced

The Chancellor, Rishi Sunak has announced a new £1bn support package for businesses most impacted by the highly transmissible Omicron variant that is sweeping across the UK. The biggest single measure is the re-introduction of one-off grants of up to £6,000 for businesses in the hospitality and leisure sectors (in England) many of whom have seen their seasonal trade hugely impacted by this latest COVID-19 variant. It is thought that some 200,000 businesses will be eligible for these new grants.

The main support measures announced on 21 December 2021 are as follows:

  • Businesses in the hospitality and leisure sectors in England will be eligible for one-off grants of up to £6,000 per premises.
  • £102 million top-up for discretionary funding will be made available for local authorities to support other businesses outside the hospitality and leisure sectors.
  • Government will also cover the cost of Statutory Sick Pay for COVID-related absences for small and medium-sized employers across the UK. This applies to businesses with less than 250 employees for up to 2 weeks per employee. Firms will be eligible for the scheme from 21 December and will be able to make claims retrospectively from mid-January.
  • £30 million further funding will be made available through the Culture Recovery Fund, enabling more cultural organisations in England to apply for support during the winter.

The devolved administrations in Scotland, Wales and Northern Ireland will receive an additional £150m through the Barnett formula to help offer similar measures. This will be allocated with around £80 million going to the Scottish Government, £50 million for the Welsh Government and £25 million for the Northern Ireland Executive.

Source: HM Treasury Tue, 21 Dec 2021 00:00:00 +0100
1aac00d9 308f 4f30 bc4c b8a31fa908e2 800x380 - Teesside Freeport open for business

Teesside Freeport open for business

The first of the English Freeports, Teesside, opened operations on 19 November 2021, and is expected to be followed shortly by Thames and Humber. The Teesside Freeport will be at the forefront of local low carbon sector creating thousands of jobs in green energy.

Businesses in Freeport tax sites are able to benefit from tax reliefs including:

  • an enhanced 10% rate of structures and buildings allowance
  • an enhanced capital allowance of 100%
  • full relief from Stamp Duty Land Tax
  • business rates relief on certain business premises within freeport tax sites
  • employer National Insurance contributions relief, subject to Parliamentary process and approval

In addition, local councils will be able to retain 100% of business rates growth generated by the freeport tax sites for the next 25 years, providing them with financial security to invest in regeneration in their local area.

The Teesside Freeport also has a custom's site designation. This is a special kind of port where normal tax and customs rules do not apply. Rather there are simplified customs procedures including tariff suspension, exemption, and deferral available.

In total, the government has committed to the creation of eight Freeport locations across England and at least one Freeport in each of Scotland, Wales and Northern Ireland. 

Source: HM Government Tue, 23 Nov 2021 00:00:00 +0100
25e05797 8a00 4663 a105 8be8ddc1dce6 800x380 - Reporting COVID support scheme grants to HMRC

Reporting COVID support scheme grants to HMRC

Most COVID support scheme grants are treated as taxable income in the same way as other taxable receipts and need to be reported to HMRC. The grants are treated as income where the business is within the scope of either Income Tax or Corporation Tax. This means that if you received a support payment during the COVID pandemic, this may need to be reported on your tax return. This applies to the self-employed, partnerships and businesses.

The treatment extends to support measures including the following:

  • the Self Employment Income Support Scheme (SEISS)
  • test and trace or self-isolation payments
  • the Coronavirus Job Retention Scheme (CJRS)
  • Eat Out to Help Out
  • Coronavirus Statutory Sick Pay Rebate
  • Coronavirus Business Support Grants

HMRC’s guidance is clear that whether or not any tax is paid will depend on the business profits of the grant recipient (taking into account the grant and other business income and expenditure under normal tax rules), any other taxable income they may have and any personal or other allowances to which they are entitled.

HMRC also has the power to recover payments and charge penalties where claimants have made support grant claims that they were not entitled to. There is no requirement to report COVID welfare payments made by a council such as those to help with council tax payments and housing benefit.

Loans, such as Bounce Back Loans or those from the Coronavirus Business Interruption Loan Scheme (CBILS), are not COVID-19 support payments.

Source: HM Revenue & Customs Tue, 09 Nov 2021 00:00:00 +0100
7c4e59c1 9770 4868 8f62 8569002f00ba 800x380 - Autumn Budget 2021 - Recovery Loan Scheme

Autumn Budget 2021 – Recovery Loan Scheme

The Recovery Loan Scheme was launched on 6 April 2021. The scheme currently allows businesses of any size to access loans and other kinds of finance between £1,000 and £10 million. The scheme was originally meant to close on 31 December 2021 but the Chancellor has confirmed that the scheme will be extended until 30 June 2022.

The scheme is intended to provide further support to businesses to help them recover and grow following the disruption of the pandemic and the end of the transition period. Under the scheme, the government currently provides lenders with a guarantee of 80% on eligible loans provided to UK businesses. The scheme is currently open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.

From 1 January 2022, the following changes will come into force:

  • The scheme will only be open to small and medium sized enterprises
  • The maximum amount of finance available will be £2 million per business
  • The guarantee coverage that the government will provide to lenders will be reduced to 70%

These changes will apply to all applications made on or after 1 January 2022. Businesses that would like to benefit from the current scheme rules are encouraged to make an application before the year end.

Source: Department for Business, Energy & Industrial Strategy Thu, 28 Oct 2021 00:00:00 +0100
809ac6ea a67a 4f94 9d51 e6dc97bb0c89 800x380 - Autumn Budget 2021 - Creative industry tax reliefs

Autumn Budget 2021 – Creative industry tax reliefs

The sunset clause for the Museum and Galleries Exhibition Tax Relief (MGETR) was supposed to come into force on 31 March 2022. As part of the Autumn Budget measures, the Chancellor announced that the relief will be extended for another two years to 31 March 2024. This will help encourage the sector just as exhibitions are starting to tour again. The government will also keep the relief under review prior to making a final decision regarding its future.

The MGETR is part of a collection of creative industry tax reliefs (CITR) that allow qualifying companies to claim a larger deduction, or in some circumstances claim a payable tax credit when calculating their taxable profits.

The Chancellor also announced that to support theatres, orchestras, museums and galleries to recover from COVID, tax reliefs for all those sectors will be increased from 27 October 2021 and won’t return to the normal rate until 1 April 2024. The maximum rates will apply until 1 April 2023 and then there will be a further step before reverting to the standard rate from 1 April 2024.

For example, the rates for Theatre Tax Relief (TTR) will increase from 20% (for non-touring productions) and 25% (for touring productions) to 45% and 50% respectively from 27 October 2021. From 1 April 2023, the rates will be 30% and 35%, and rates will return to 20% and 25% on 1 April 2024.

Source: HM Revenue & Customs Thu, 28 Oct 2021 00:00:00 +0100
514c08c4 6ced 4b9d af39 1247679a603c 800x380 - Haulage company charged with loan fraud

Haulage company charged with loan fraud

An interesting case has seen a haulage company based in the West Midlands have their operator licence revoked. This followed a public inquiry into the company by the traffic commissioner for the West Midlands.

The traffic commissioner found that almost all the company’s financial resources had been provided by a £50,000 Bounce Back loan in May 2020. The Bounce Back Loans scheme was launched in May 2020 to provide financial support to businesses across the UK that were losing revenue, and seeing their cashflow disrupted, because of the COVID-19 pandemic. The scheme allowed qualifying small businesses to borrow between £2,000 and £50,000 with no fees or interest to pay for the first 12 months.

However, the company in question had a turnover that was far below the £200,000 necessary to qualify for such a loan – the maximum permissible being 25% of turnover or £50,000, whichever is the lower.

There were also issues with the company’s bank statements that were provided as evidence of financial standing. The company also had a very poor maintenance record and numerous tachograph infringements. 

Source: Other Mon, 18 Oct 2021 00:00:00 +0100
e4c3e42d dcb0 4a58 aabb 9b9671e9a212 800x380 - Raising capital using the EIS

Raising capital using the EIS

The Enterprise Investment Scheme (EIS) has been designed to increase investment in the early development of high potential growth businesses. Companies seeking EIS investment are typically more developed than those looking for funding using the Seed Enterprise Investment Scheme (SEIS) and the investment limits and tax reliefs available reflect this. 

The maximum amount of funds that a company can raise through investments qualifying for the EIS is £5M in any 12 months with a maximum of £12m over the company’s lifetime. The company must receive investment under a venture capital scheme within 7 years of its first commercial sale.

There is a maximum limit on the number of employees that the investee company can have when shares are issued. The company must have less than 250 full-time employees or their part-time equivalents. For groups of companies, the limit applies across the group.

The company’s gross assets (or of the group assets where the company is a parent company) must not exceed £15 million before any shares are issued and not be more than £16 million immediately afterwards.

There are also time limits when investments can be raised by the company and how and when the money must be spent. 

There are different rules, typically more generous criteria, for ‘knowledge-intensive’ companies that carry out a significant amount of research, development or innovation.

Source: HM Revenue & Customs Tue, 05 Oct 2021 00:00:00 +0100
8ed5f6c3 d616 4b12 8da4 893530d1265e 800x380 - Reporting grants received to HMRC

Reporting grants received to HMRC

Most COVID support grants are treated as taxable income in the same way as other taxable receipts and need to be reported to HMRC. The grants are treated as income where the business is within the scope of either Income Tax or Corporation Tax.

This treatment extends to support measures including the following:

  • the Self Employment Income Support Scheme (SEISS)
  • test and trace or self-isolation payments
  • the Coronavirus Job Retention Scheme (CJRS)
  • Eat Out to Help Out
  • Coronavirus Statutory Sick Pay Rebate
  • Coronavirus Business Support Grants

HMRC’s guidance is clear that whether or not any tax is paid will depend on the business profits of the grant recipient (taking into account the grant and other business income and expenditure under normal tax rules), any other taxable income they may have and their personal and any other allowances to which they are entitled.

HMRC also has the power to recover payments and charge penalties when claimants have made support grant claims to which they were not entitled. There is no requirement to report COVID welfare payments made by a council such as those to help with council tax payments and housing benefit.

Loans, such as Bounce Back Loans or those from the Coronavirus Business Interruption Loan Scheme (CBILS), are not COVID-19 support payments.

Source: HM Revenue & Customs Tue, 05 Oct 2021 00:00:00 +0100
25e05797 8a00 4663 a105 8be8ddc1dce6 800x380 - SEISS claims deadline in a few days

SEISS claims deadline in a few days

The final deadline for making a claim under the 5th Self-Employment Income Support Scheme (SEISS) is 30 September 2021. The SEIS scheme is only open to those self-employed with annual profits of less than £50,000 and who receive at least half their income from self-employment. 

Self-employed persons whose turnover has fallen by more than 30% will qualify for an 80% grant, capped at £7,500. Those with decreases in turnover of less than 30% are restricted to a 30% claim, capped at £2,850. When making a claim, the online service will ask for turnover figures and compare them. The claims service will then tell the applicant if they can claim the higher or lower grant amount.

The turnover figures will be used to compare turnover in the pandemic year from April 2020 – April 2021. This ‘pandemic’ year turnover should then be compared to a previous year's turnover, known as the ‘reference’ year. For most self-employed the turnover reported in 2019-20 should be used as the reference year. However, this is not always the case and if 2019-20 was not a normal year for the business in question, the turnover reported in 2018-19 can be used. 

COVID-19 support payments such as previous SEISS grants, and local authority or devolved administration grants should not be included in the turnover figure. 

Source: HM Revenue & Customs Sun, 19 Sep 2021 00:00:00 +0100