As COVID-19 continues to develop in the UK, we are looking to provide as much support as possible to those business affected by the effects of the pandemic.
Although there is significant uncertainty over what will happen in the coming weeks and months, there are things that businesses can consider to help them through these difficult times.
Check whether you can claim Research and Development (R&D) tax relief
R&D tax relief provides companies with the opportunity to claim generous tax savings for their innovative activities. The opportunities for making a claim are often overlooked however, with business owners overestimating the level of innovation required to claim. Projects qualifying for R&D relief include those seeking an appreciable improvement in science or technology. If the company is loss making and generates a tax refund from R&D activities, the company could also consider shortening its year-end to receive a refund from HMRC sooner than otherwise would be available. More information on R&D tax relief.
Check whether you have maximised your Capital Allowance (CAs) claims
CAs are the mechanism by which tax relief is obtained on the depreciation of assets and equipment. Expenditure on acquiring, upgrading or fitting out property is one of many areas in which CAs could be available, and should be carefully reviewed to maximise potential claims. Claims are often done at a high level by less specialist accountants, with insufficient attention being paid to fully identifying and properly allocating qualifying costs. A more detailed review by a capital allowances specialist can result in significant additional tax savings. More information on Capital Allowance claims.
Review ways of incentivising staff through non-cash methods
Commonly, staff are paid bonuses depending on their performance which is a relatively tax inefficient method of rewarding them. During the current pandemic cash will be king more than ever, therefore the business could consider giving staff share options in the business which would continue to motivate staff without adversely affecting cash flow. The most common type of share scheme is an EMI option scheme. More information on EMI Option schemes.
Business Insurance
Businesses could take out insurance which covers against illness/injury to key employees which would cover the financial loss to a business sustained by the loss of that person. Our Wealth Management team can offer advice on a huge variety of policies and ideas which can be tailored specifically to your situation.
Get help from HMRC if you’re struggling to meet tax payment deadlines
A Time To Pay arrangement allows businesses to make a formal arrangement with HMRC for tax payments to be spread over a longer period of time than they would otherwise be due in a more affordable fashion. TTP arrangements have been around for a while, however, the existing offering has been extended and therefore more support is available to businesses. More information on TTP Arrangements.
Implementing a holding company structure
A holding company is a separate parent company created to own a controlling interest in one or more subsidiary companies. A holding company doesn’t necessarily trade itself; its main purpose is to form a corporate group. One of the benefits of a holding company is that they can be used to ring-fence key assets in the holding company which may protect them from risks in other group companies. More information on holding companies.
We would be happy to offer a free consultation to those business owners who are worried about the effects of Covin-19 and would like to review the options available to them.
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David Robinson
As a Tax Partner, I advise clients on all aspects of UK tax, ranging from business taxes, transactions and private client matters, helping to achieve the objectives and aspirations of businesses and their owners.
View my articlesTags: Business Taxes, Covid-19
