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Why a grant is preferable to a loan

The Government has launched a raft of grants and loan guarantee arrangements since the COVID-19 lock-down started last month.

In almost all cases the grants are taxable and non-repayable, unless HMRC at some future date consider that the grants were claimed fraudulently.

Grants are treated in your accounts as other income.

Loans are an obligation to repay. Even if the Government guarantees 80% of loans taken out, the loans received are classified as liabilities not as other income. You will be expected to repay the full amount borrowed and cover interest payments – once any Government agreement to cover interest and charges has expired.

Which is why it requires careful planning to ensure that if you borrow to see you through the coronavirus disruption, then you need to be reasonably certain that you can repay the amount borrowed from future profits, or past, retained profits.

Borrowing to fund losses that eventually exhaust your hard-won retained profits will inevitably lead to insolvency.

If you are considering a loan, you will probably be asked to submit forecasts to back up your application. Please call if you need help preparing this information. If you are able to handle the application process yourself consider the wisdom of taking out loans at this time.

Source: Other Wed, 22 Apr 2020 05:00:00 +0100

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Some accountancy websites also provide pages and pages of tax information, helpsheets, etc. We prefer to give clients personally tailored advice. So, if you want details of tax rates and allowances just go to the HMRC website on which you should find what you’re looking for. If you need more individual advice please contact us.

Below are links to websites you may find of interest, but as we like to support our local community and clients, we have included links to websites that may be of interest:

HMRC
FT
BBC
VEALE WASBROUGH VIZARDS
CESP
PRACTICE INDEX
SIMCOMM ACADEMY

More Local:
FOOTPLATE EXPERIENCE
ANGLEBURY PRESS
OFFCAMBER.CO.UK