Thousands of businesses in Cumbria are being warned about going into the red if owners have kept the same salaries during the pandemic.

Cumbria Chamber of Commerce is urging bosses to check they don’t risk getting caught out when back-dating their accounts later this year.

Companies in Cumbria could go into the red if owners retained the same salaries and dividends despite profits being hit due to Covid-19.

Statistics showed that currently 3,296 businesses were estimated to have overdrawn director’s loan accounts, with the largest number being in Eden and South Lakeland.

National UK figures suggest that, despite the pandemic putting businesses under widespread strain, a large number of small business owners are taking the same or similar dividends from their companies despite not making a profit.

Suzanne Caldwell, Cumbria Chamber of Commerce managing director, said: “It’s vital that business owners ensure their salaries, and the dividends they have given themselves and partners, are in line with their company’s performance.

“Because of the way that accounts are filed, their true financial position won’t be known for several months, and many have been granted an additional three months to file their returns. After such a difficult year the last thing we want to see is thousands of companies at risk due to a tax oversight in uncertain times.

“There’s been very little warning or advice from the Government to help small business owners in this looming issue. The recent lockdown couldn’t have come at a worse time for businesses in Cumbria, often the busiest time of year for many shops, pubs and restaurants. We’re hoping to see businesses bounce back and don’t want that impacted by a further spanner in the works.”