Welcome to BPU's 2021 Winter Newsletter

In this Issue

  • Latest Covid-19 Grant Support
  • Hot Topic - Brexit Trading & VAT advice
  • BPU's Martin Knight talks new VAT reverse charge for construction industry, Annual Investment Allowance and Land Tax
  • In the News - HMRC scam warning and more

COVID-19 SUPPORT FOR BUSINESSES

ERF Sector Specific Grant – now open

The Sector Specific Grant application window opened on 13th January 2021 and will close 12:00 midday on Friday 29 January 2021 or until funds are fully committed.

The ERF Sector Specific Support (operating cost) package is targeted at Hospitality, Tourism and Leisure (HTL) businesses and associated supply chain businesses that will be materially impacted by a greater than 60% impact of turnover as a result of the restrictions introduced on 4 December 2020 until the 22 January 2021.

This grant is to support businesses impacted by the restrictions introduced on 4 December 2020.

To apply : https://businesswales.gov.wales/coronavirus-advice/

We have recently sent out an email detailing all the support available for businesses in the hospitality, leisure and tourism sectors under the ERF Restrictions fund - click here for the full article.

Considering Starting a Business ?
A Business Wales Barriers Grant could help

If you are considering starting your own business there is a grant that could help.

In December The Welsh Government launched a programme of employment and skills support to help people back to work. A grant to support unemployed individuals that face greater economic barriers to starting a business is available.

Individuals will be able to apply for up to £2,000 to contribute towards costs of starting a business. This grant will help up to 600 individuals become self-employed or start a business, between December 2020 and March 2021.

Applications will need to be supported by a business plan outlining the business proposal and costs associated with getting established. The grant will be managed through the Business Wales service.

The grant is open to all unemployed individuals, however priority in allocating funding will be given to those most affected by the Covid-19 outbreak:

  • Women
  • Disabled people
  • People from BAME backgrounds
  • Young people not in education or training (NEETS) aged 18-24 or a College and University leaver in 2019 or 2020 (see full guidance notes)

Full guidance is available here. The Business Wales Barriers Fund is open to applications until 19th March 2021.

If you are considering applying for this grant and need help with the application process and supporting documents including a business plan then we can help.

For specific advice on any of the above or to discuss a funding application please speak to your usual BPU advisor or contact me directly.

Huw Palin Director
BPU Chartered Accountants
Email: huwp@bpuaccountants.co.uk

For all business support available via the Welsh Government and Business Wales please click here

Hot Topic

Trading Changes Following Brexit

The United Kingdom officially left the European Union (EU) on 31 January 2020 and the 11-month transitional period ended on 1 January 2021. There are important changes businesses must now make in order to continue trading with the EU. Great Britain (England, Wales and Scotland) is no longer subject to EU VAT legislation. Northern Ireland remains subject to EU VAT legislation in respect of transactions involving goods, but not for services.

VAT Alterations

Acquisitions (purchases of goods from EU member states) are treated as imports. A new system, Postponed Accounting, has been introduced and applies to imports received from all over the world, with some exceptions such as low-value consignments. The system is intended to mitigate the cashflow disadvantage posed by paying import VAT upfront and waiting to reclaim it in a later VAT return. Under the new system, import VAT can be deferred and declared to HMRC in the VAT return for the period of importation. The VAT can be reclaimed in the same return subject to the normal rules for reclaiming input tax.

Dispatches (zero-rated sales of goods to business customers in EU member states) are treated as exports. Exports are zero-rated, provided certain conditions are met. Distance sales (sales of goods to non-business persons in the EU) are also treated as exports. The EU distance-selling regime and thresholds no longer apply to UK suppliers.

Customs Changes

Following the UK's departure from the EU Customs Union on 1 January 2021 the UK operates a full, external border with the EU. New border controls on imports from the EU to Great Britain are being introduced in stages, with customs declarations for goods which are not controlled being delayed until 30 June 2021.

Customs Duty

From 1 January 2021, new rates of Customs Duty for imports apply where the UK has not agreed a trade deal with a particular jurisdiction. These are set out in the 'UK Global Tariff'. On 24 December 2020, the UK and the EU reached a trade agreement that, in principle, means trade in goods between the UK and the EU will be tariff-free. To check the tariffs that apply to different categories of imported goods, please see https://bit.ly/2VuLjbB.

Steps to take

Some practical actions to take now include:

  • Obtaining an Economic Operator Registration and Identification (EORI) number, which will be required when trading with the EU post Brexit. It is free to obtain an EORI number and you can do so by visiting https://bit.ly/37uD4BF.
  • Deciding whether to use an agent freight forwarder to help with making customs declarations. The following guidance outlines the services they can provide: https://bit.ly/36BCS4C
  • If you buy goods from the EU, checking whether those goods are 'controlled'. Ascertaining which declarations are required and when they will need to be made. For more information please see https://bit.ly/2Jw6wiP.
  • Checking the UK Global tariff (linked above) to see the rate of Customs Duty that is likely to apply to the goods you import.
  • Deciding whether to use the Postponed Accounting system (https://bit.ly/37KGLUf) to defer import VAT and familiarising yourself with the procedure for declaring the deferred import VAT on the VAT return.

This Hot Topic outlines the new VAT arrangements which will impact businesses supplying to or receiving goods and services from the EU. Every business is different and we welcome the opportunity to work with you to support your business through 2021. If you require more information on any of the issues contained in this Hot Topic, please contact us.

For specific advice on any of the above please contact me directly.

Huw Palin Director
BPU Chartered Accountants
Email: huwp@bpuaccountants.co.uk

Don't forget to file on time!

The deadline to complete online Self Assessment tax returns for 2019 to 2020 is 31 January 2021.If you are completing a tax return for the first time, you will need to register for Self Assessment. Need help - contact us!

Tax Advice

Martin Knight - BPU Director

New VAT Reverse Charge for Building and Construction Services
What it means for your business - Free Webinar

New rules around VAT are coming into affect for the construction industry as of 1st March 2021.

In a bid to tackle VAT fraud in the construction industry, HMRC are introducing a Domestic Reverse Charge.

The reverse charge means the customer receiving the specified service has to pay the VAT to HMRC instead of the supplier.

To help businesses in this sector understand how the new VAT Reverse Charge may affect them and how to prepare for the challenges, BPU Director Martin Knight will be delivering a seminar on the 9th February 2021. The seminar is being delivered in partnership with Business Wales and Transport for Wales.

This Fully funded briefing will explain how the new Domestic VAT Reverse Charge works and how and where it applies. It will provide relevant scenarios to help the supply chain understand how this is relevant to them.

9th February 2021 Agenda

  • 10:00 Introductions
  • 10:15 Domestic VAT Reverse Charge Explained with Q&A
  • 12:00 Close

To book your place please visit the Business Wales Website - click here

You will receive a link 24 hours before the event.

£1 Million Annual Investment Allowance Extended

The Government has announced the £1 million Annual Investment Allowance (AIA) temporary cap will be extended for another year until 1 January 2022.

The extension of the £1 million allowance aims to help stimulate investment in UK manufacturing and to support business confidence into next year. The allowance was originally due to be reduced to £200,000 on 1st January 2021.

Businesses can continue to claim up to £1 million for capital investments in plant and machinery assets purchased in the same tax year until 1st January 2022.

Annual Investment Allowance is a way to claim tax relief on certain assets that your business will buy. You can only claim AIA in the period you bought the item.

There are a number of factors that determine how much you can claim and what assets qualify for AIA. For further advice get in touch with us.

Welsh Government Increases Land Transaction Tax

From the 21st December 2020 The Welsh Government increased the rates of land transaction tax (LTT) on property sales.

In its draft Budget, on 21 December 2020, the Welsh Government announced changes to the higher residential rates, and non-residential rates and bands, of LTT. The temporary increase to the nil rate band of LTT for residential property transactions will end on 31 March 2021.

From 22 December, the higher residential rates of LTT increase by 1% across all bands. This applies to sales of second homes and buy-to-let properties as opposed to the main residential home.

The zero-rate band of the tax charged for lease premiums and assignments, and freehold property transfers increase from £150,000 to £225,000. The zero-rate band of the tax charged on the rent element of non-residential leases increases from £150,000 to £225,000.

The Welsh Government has also announced that it plans to increase the 'relevant rent' amount for the annual rent element of non-residential rents from £9,000 to £13,500 in February 2021.

The temporary increase to the nil rate band of LTT for residential property transactions will end on 31 March 2021. This means on 1 April 2021, these rates will revert to the original rates and starting threshold of £180,000. Purchases must be completed before this date to use the temporary reduction rates.

For further information on any of the above contact

Martin Knight , Director
Email: martink@bpuaccountants.co.uk

In the News

HMRC issues self assessment scam warning - read more

Monthly deadline approaching for furlough claims -read more

Chancellor unveils £4.6 billion lockdown grant package - read more

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