The news is inundated with the possibility of a recession, with some of the best sources in the world clear about its inevitability. While the thought of a recession instills panic in many, it’s a normal part of our economic cycle.
There’s no sugar coating the fact that most businesses will be affected in the short-mid term. The tremors of the Coronavirus pandemic will likely be felt for well over a year as businesses struggle to overcome the impact of the outbreak.
However, now more than ever it’s time to focus on evolving your strategies and learn new and relevant ways to grow.
Would you believe us if we said £15k in marketing can actually cost you £1k net?
Continuing to market in this environment means the above figures are entirely possible. However, this model only works well if you believe in digital marketing; are profitable and have cash in the bank.
They are also obviously subject to the nuances of your own tax situation, the methods and advisors you use currently e.g in the case of R&D splits between contractors and employees
Essentially, marketing costs are tax deductible whether you are self employed, a limited company or an LLP.
What does this mean for you?
What this means is that if you spend £15k per annum, £2.85k is mitigated against Tax (19% Corporation Tax in this example) Subsequently, you effectively spend £12.15k rather than £15k in real terms.
If you invest wisely into digital marketing then sophisticated techniques can be employed on your behalf to drive leads into your business. Furthermore, time spent by contractors and employees can often be claimed as an R&D tax credit.
Typically, about a third of the spend can be claimed back however, make sure you seek advice from your Accountant/Tax Adviser to ensure you act within the law and your claim is bona fide. Using some of the sophisticated IT, software and algorithms used in digital marketing can help you significantly here.
Thus, £15k less a third is a £5k saving on your marketing spend leaving £10k net.
So, the effective saving to date is £2.85k in corporation tax and a £5k tax rebate (or corporation tax reduction). That’s a considerable £7.85k saving in total.
One may also impact on the other but I am sure you get the idea.
The EU has several different funding programmes that you may be able to apply for, and most B2B businesses are eligible for support (in particular the manufacturing and engineering sectors). Using the right grant specialist you can claim between 33% and 50% of your marketing spend across a number of schemes
Many of these grants are regional and some are listed here - the top 226 small business grants & funding programmes in the UK. Don’t forget to take into consideration grant rebates from the EU while they still exist.
This brings the £15k investment down to £5k to £7.5k or a spend of £7.5k to £10k. For the purposes of this example, we’ve used £6.15k as the rebatable grant mix. So with all of the above tallied together that’s an £7.85k saving added to the £6.15k grant rebate. In total, this equates to £14k in either offset tax; tax rebates or EU grants.
Now that is what we call more bang for your buck. With all this uncertainty, there are a few things we know to be true. What happens next depends directly on how you manage the pandemic today.
If you want to find out more about what’s available to you then get in touch today. Leave your details here and we will talk you through.
With years of expertise in business funding and support we can help you continue to grow through a recession and come out the other side stronger.