We are all well aware that Government, in all its guises, is a major creditor of any business (National Insurance Contributions, VAT, Corporation Tax & Business Rates).
However, on the other side of the balance sheet, Government is also a major provider of business support – even more so in the current economic climate due to the pandemic.
Some Government support is delivered locally or regionally. There has been locally delivered pandemic related support such as business rates relief and grants.
In January, the Chancellor of the Exchequer announced a further £4bn grants package – for the retail, hospitality and leisure sectors – to be delivered through local authorities.
As well as locally delivered UK Government support, there is also direct business support from local government.
For example, in Lancashire there is the Business Growth Hub & Rosebud Business Finance scheme through the County Council & business growth support through the Local Enterprise Partnership.
Looking at the wider North West region, there is business support in the form of equity and debt financing available through the Northern Powerhouse Investment Fund (NPIF). The NPIF offers:
- Micro-financing (£25k to £100k)
- Debt financing (£100k to £750k)
- Equity financing (£50k to £2m) for early stage to late stage businesses
Ask yourself, is your business utilising all the local & regional business support that is available?
We have seen unprecedented levels of business support from the UK Government due to the pandemic.
There are two key programmes of pandemic related support from the UK Government:
- The Furlough Scheme – currently extended to 30th April
- Coronavirus Business Interruption Loan Scheme – currently extended to 31st March
Focusing on CBILS, this support is free of interest & fees for the first 12 months. As such, not only would a business get a cash injection from a CBILS facility but there would be no cost attached to that borrowing in the first year.
CBILS loans are repayable over a maximum of 6 years (likely to rise to 10 years) and overdrafts are repayable over a maximum of 3 years. SMEs up to £45m turnover are eligible. CBILs support can be accessed through 117 lenders across the UK from the big banks to specialist business finance providers. Consequently, CBILS support can be tailored to the needs of your business.
Other UK Government support is available through specific national bodies such as Innovate UK.
Finally, some UK Government support is tax related. It may be a surprise to some that there is support from HMRC but, in fact, there are 3 significant tax relief schemes:
- R&D tax credits
- Embedded Capital Allowances
- Patent Box
R&D Tax Credits
R&D tax credits are available to businesses developing new or improved products, processes, materials, services or devices.
That sounds “techy” and narrow in scope but, in practice, the application of the relief is broad. It can be relevant to almost any company – many you wouldn’t naturally associate with the term ‘R&D’.
Latest figures reveal £5.3bn of support was received by over 59,000 businesses who claimed R&D tax relief. That was an average of £90k of tax relief or tax refund per claimant- cash in their pocket not the taxman’s!
59,000 businesses is very small when compared to the total number of UK businesses. Consequently, there must be many businesses out there who are not availing themselves of R&D tax relief.
For SMEs, R&D tax relief has an additional benefit in that they can claim an extra 130% of qualifying costs giving total tax relief of 230% of R&D spend.
The principal industry sectors that have accounted for the greatest level of R&D tax credits are:
- Information & Communication
- Professional, Scientific & Technical
- Wholesale & Retail
- Support Services
- Construction & Mining
- Arts & Entertainment
Ask yourself, has your business claimed R&D tax relief?
Embedded Capital Allowances (ECA)
ECAs could be available if you have bought or improved commercial property.
Property acquisition costs can be split into embedded fixtures & fittings (qualifying for capital allowances) & “bricks and mortar”.
On average, 25% of a property purchase cost may be embedded fixtures & fittings. That percentage varies with property type & use, with industrial sheds having lower percentages and buildings such as care homes having higher percentages.
Some of the fixtures and fittings that qualify for ECA are:
- Lifts, escalators & moving walkways
- Space and water heating systems
- Air-conditioning & air cooling systems
- Hot & cold water systems (but not toilet and kitchen facilities)
- Electrical systems, including lighting systems
- External solar shading
Ask yourself, has your business acquired or improved premises and, if so, have you claimed Embedded Capital Allowances?
Finally, Patent Box is designed to encourage businesses to keep and commercialise intellectual property in the UK. A lower rate of Corporation Tax of 10% applies to profits earned from patents in a Patent Box.
How Ampios Can Help
Here at Ampios, we have a team of dedicated specialists that can help point you in the right direction or work with your business on an ongoing basis. We have comprehensive links with a range of lenders and can also introduce you to accountants and other specialists who are expert in liaising with HMRC. If you need to get in touch, we’d love to have a chat. Give us a call on T: +44 (0)333 987 4672 or send us a message via our contact form.