Business Support Update - January 2022

In this edition:

  • £120m Package of Financial Support for Businesses in Wales Impacted by Omicron
  • Welsh Government Delivers Budget
  • New Welsh £45million Fund Open to Train Staff
  • Six Month Extension on Recovery Loan Scheme
  • Customs Declarations from EU Changed on 1 January 22
  • Plug-in Car Grants and Tax Incentives for Company Cars
  • Hot Topic- Cryptoassets the View from HMRC

£120m Package of Financial Support for Businesses in Wales Impacted by Omicron

New restrictions were put in place on Boxing Day 2021 in response to the rise in cases of the new COVID-19 Omicron variant. Wales has moved into a revised version of Alert Level 2 and restrictions are now in place for hospitality businesses, including licensed premises, cinemas and theatres and nightclubs are closed. The Welsh Government has put together a new £120m financial package of support available to nightclubs, events, retail, hospitality, leisure, tourism businesses and their supply chains designed to help businesses impacted by the spread of Omicron through the period 13 December 2021 to 14 February 2022. 

The fund is set up in three parts:

  • Non Domestic Rates (NDR)

Retail, hospitality, leisure and tourism business who pay Non Domestic Rates will be entitled to a payment of £2,000, £4,000 or £6,000 depending on their rateable value. Businesses will need to re-register their details through a quick and easy online process in order to receive their payments. Registration is now open through local authority websites.

  • Local Authorities Grants

Local Authorities will also administer a Discretionary Fund for businesses and sole traders who do not pay rates. The fund will provide £500 to sole traders and freelancers and £2,000 to employing businesses in impacted sectors.

  • Economic Resilience Fund (ERF)

ERF grants are available for severely impacted hospitality and leisure business – and their supply chains who have seen a reduction in their turnover of more than 60%. Eligible businesses can apply for grants of between £2,500k - £25,000, with grants dependent on their size and number of employees. The application window for the ERF will open week commencing 17 January 2022 with payments starting to reach businesses within days.

An eligibility checker is now available on the Business Wales website please click here

Welsh Government Delivers Budget

On 20 December, the Welsh Government outlined a Budget to 'build a stronger, fairer and greener Wales'.
Presenting the Budget, Welsh Government Finance Minister Rebecca Evans stated that it will help to 'support the Wales of today and shape the Wales of tomorrow'.

The Welsh Government unveiled a £116 million package of funding to aid with the economic recovery from the coronavirus (COVID-19) pandemic. This will be combined with existing permanent relief schemes that see over 85,000 properties continue to receive support. The scheme will be capped at £110,000 per business.

Many firms had been receiving 100% off their rates, which help to pay for services provided by local government, but previous COVID-19 business rate schemes have come to an end.

A further £35 million has been set aside to freeze the non-domestic rates multiplier for 2022/23, so there will be no increase in the amount of rates businesses are paying.

Meanwhile, an additional £1.3 billion in funding will be supplied to the NHS in Wales to help provide effective, high quality and sustainable healthcare following the COVID-19 pandemic.

The Budget also tackles inequality and invests in future generations through an additional £320 million to continue a long-term programme of learning and education reform.

£45 million Package of Funding for Welsh SME’s to Train Staff

The Welsh Government announced a £45 million package of funding that aims to help small businesses across Wales to grow through supporting thousands of people to train and work in key sectors.

A total of £35 million will go towards helping small and medium sized businesses (SMEs) in Wales ‘relaunch, develop, decarbonise and grow to help drive Wales’ economic recovery’. It aims to fund more than 1,000 businesses, help to create 2,000 new jobs and safeguard a further 4,000 jobs.

The key sectors and jobs that the funding is targeted at include:

  • NHS and Social Care - retraining staff to return to work
  • HGV Lorry Drivers – training and support
  • Green Construction and Renewable Energy – reskilling individuals in these sectors
  • Hospitality- training for chefs, waiting and front of house staff.

The remaining £10 million will go towards supporting Personal Learning Accounts that will enable further education colleges to deliver additional courses and qualifications. The aim is to help 2,000 people access a wider range of job and learning opportunities in priority sectors facing labour shortages.

This funding will be administered by local authorities and aims to help kick-start and grow the economy following the impact of the Coronavirus pandemic and the UK’s departure from the EU.

To be eligible for funding businesses should look to identify ways in which investment will help them re-launch their business, develop it in innovative new ways, and create new jobs. Businesses will be expected to match-fund any grants made available by the Welsh Government.

The £35 million SME funding application process is now open and applications will need to be made directly to local authorities once their individual grant schemes open.

For further information on the above fund click here

Recovery Loan Scheme (RLS) Extended with Key changes

The Recovery Loan Scheme (RLS) launched on 6th April 2021 to help UK businesses access finance as they recover following the Covid-19 pandemic was extended until 30th June 2022 in the Autumn Budget.

In addition, there are some key changes to the scheme that came into effect from 1st January 2022:

  • The scheme will only be open to small and medium sized businesses with a turnover of less than £45 million
  • The maximum loan amount available on the scheme will be £2 million
  • The Government guarantee to lenders is being reduced to 70%

All of the above changes now apply to all offers made from 1st January 2022.

For further information and to find a lender please click here

Customs Declarations from EU - Changes from 1 January 22

From 1 January 2022, businesses are no longer able to delay making import customs declarations under the Staged Customs Controls rules that have applied during 2021. Most businesses will have to make declarations and pay relevant tariffs at the point of import.

The tax authority says businesses should consider how they will make their declarations. They can either appoint an intermediary, such as a customs agent, or submit the declarations themselves.

Some businesses already have a 'Simplified Declarations' authorisation from HMRC that allows their goods to be released directly to a specified customs procedure without having to provide a full customs declaration at the point of release.

Businesses that want to use Simplified Declarations will need authorisation to do so - please note it can take up to 60 calendar days to complete the checks needed for this.

From 1 January businesses must use the correct country code for the country of origin and the country of dispatch when they complete their customs declaration. HMRC says that for EU countries, the individual country code of the relevant member state should be used. The EU country code must not be used and will be removed from HMRC's systems shortly.

For detailed guidance on imports, exports and customs for businesses please visit gov.uk here

Plug-in Car Grants and Tax Incentives for Company Cars

New homes and buildings such as supermarkets and workplaces, as well as those undergoing major renovation, will be required to install 145,000 extra electric vehicle charge points from next year, under new legislation announced by Prime Minister Boris Johnson. This is part of plans to encourage people to buy and run plug-in cars in the future.

There are tax benefits and grants available for those who choose an electric company car. For the 2021/22 tax year if an employee chooses an electric company car over a petrol or diesel vehicle the car will fall into the 1% benefit-in-kind (BIK) tax bracket.

There are also a number of grants available towards purchasing a low admissions plug-in vehicle.

The amount of the grant depends on which category the vehicle is in. The 7 categories are:

  • cars
  • motorcycles
  • mopeds
  • small vans
  • large vans
  • taxis
  • trucks

For a full list of eligible vehicles and level of grants available please see the gov.uk website here

In addition, The Electric Vehicle Homecharge Scheme (EVHS) provides grant funding of up to 75% towards the cost of installing electric vehicle smart charge points at domestic properties across the UK.

From April 2022, the EVHS will no longer be open to homeowners (including people with mortgages) who live in single-unit properties such as bungalows and detached, semi-detached or terraced housing.

Installations in single-unit properties need to be completed by 31 March 2022 and a claim submitted to the Driver and Vehicle Licensing Agency (DVLA) by 30 April 2022.

Hot Topic- Cryptoassets the View from HMRC

Although cryptoassets are still a relatively new asset class and they remain mysterious to many people, there is no doubt they are becoming ever more mainstream. They continue to grow in popularity with investors appearing to overlook pricing volatility in the hope of gaining a profit if valuations soar. Cryptoassets are not just an asset class for investments either, increasingly they can be used as a form of currency too.

However, HMRC takes an interest when trades and gains are made. The tax authority can access data from crypto exchanges, so it is important to ensure that all activity is fully compliant and reported where appropriate. Here, we take a look at cryptoassets and their treatment by the taxman.

What are cryptoassets?

Cryptoassets – it's a broad term, encompassing cryptocurrency and tokens. HMRC defines cryptoassets as cryptographically secured digital representations of value or contractual rights that can be transferred, stored, traded electronically and use some form of distributed ledger technology (DLT).

HMRC guidance recognises four main types of cryptoassets: exchange tokens (which include cryptocurrency, like Bitcoin), utility tokens, security tokens and stablecoins. Exchange tokens are the main focus of its guidance.

HMRC's view of crypto

HMRC aims to cut through to the underlying transaction, rather than getting hung up on crypto terminology. And it reserves its right to amend its guidance as cryptoassets themselves evolve.

It's important to be clear that there are no bespoke rules for cryptoassets: the existing tax provisions flex to accommodate them. In practice, this means that depending on the circumstances, the sale or purchase of cryptoassets could bring any of a number of taxes into play. For individuals, this could include capital gains tax (CGT), income tax and national insurance contributions (NICs). For businesses carrying out activities involving exchange tokens, it could mean corporation tax, corporation tax on chargeable gains, payroll taxes and VAT.

Businesses may increasingly need to consider the tax position where they receive occasional payment in cryptoassets in the course of an existing, non-cryptoasset trade: the glamping site owner who accepts a one-off payment in bitcoin, for example. If a business accepts exchange tokens as payment from customers or uses them to pay suppliers, the tokens should be accounted for within the taxable trading profits.

An asset class

HMRC does not consider cryptoassets to be money or currency. This means, for example, the corporation tax foreign currency rules don't apply. HMRC's view is that cryptoassets don't create a loan relationship for corporation tax purposes.

HMRC does not consider buying and selling cryptoassets to be gambling. This has implications for how proceeds are treated. With gambling winnings, profits are not taxable, and losses are not relieved. This is not the case with cryptoassets.

Investments: CGT

According to HMRC, most individuals hold cryptoassets as a personal investment, with a view to capital growth. This means there is the normal CGT regime to consider, with its annual exemption (currently £12,300) and rules on taxation of gains above this threshold.

With many crypto investors taking their first steps in the world of CGT and self assessment, it's important to be alert to the possibility that there's a liability to CGT any time assets are disposed of. Details should always be recorded and may need to be reported to HMRC in due course.

Trading in cryptoassets

If purchases and sales of cryptoassets are considered to amount to a financial trade, profits or losses come under income tax rules, with income tax and NICs potentially due. But to constitute trading, HMRC expects considerable frequency, organisation and sophistication in the activity, and treatment as a trade will be the exception rather than the rule.

VAT

Where goods or services are sold for exchange tokens by a VAT registered business, VAT is due in the normal way. The value of the supply on which VAT is due is the pound sterling value of the tokens at the point the transaction takes place. Exchange tokens received for mining are generally outside the scope of VAT. This, however, is an area to watch. HMRC flags up the possibility of change, pending other regulatory developments.

How we can help

If you trade, invest or accept cryptoassets as payment for services then there may well be tax implications. Please don't hesitate to contact us to discuss any matters related to cryptoassets and tax.

For help or advice on the support available for businesses please contact your usual BPU Adviser or contact:

Huw Palin, Director
Email: huwp@bpuaccountants.co.uk

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