A major change in the way VAT is reported comes into force from tomorrow. Every small business that charges VAT will have to file accounts through the HM Revenue & Customs (HMRC) Making Tax Digital (MTD) system.
Author Archive: Muhammad Zia
Brexit leaves shortfall in university-led training projects funding
The Government has been warned that as many as 164 university-led skills and training projects could be halted or axed due to European funding running out by the end of next year – reducing skills and training support for SMEs.
The UK Shared Prosperity Fund (UKSPF) will award £2.6 billion of new funding for local investment by March 2025 in place of European Structural and Investment Funds (ESIF), which the UK is no longer eligible for following Brexit.
According to advocacy organisation Universities UK, following the UK’s departure from the European Union, urgent action is needed from the Government to bridge the funding gap while it sets up its replacement for EU funding for local skills and training partnerships.
Support for small businesses essential
Universities UK is the collective voice of 140 centres of learning across the UK whose mission is to help universities be the best in the world, through their research and teaching, and the positive impact they have locally, nationally and globally.
It says that vital training, skills development, and jobs are at risk as is the retraining, upskilling and support for small businesses essential to the success of levelling up.
- There are currently 192 university-led projects in England, funded by £412 million of ESIF money, providing high-quality skills training, and supporting local pay, employment, and productivity growth, with half working with small and medium-sized businesses.
- In Wales, there are 53 projects led by universities with £300 million investment from ESIF.
Uncertainty on the allocation of the UKSPF will leave a significant gap in funding, putting vital community projects and the jobs of experienced staff at risk, according to Universities UK
The type of projects that could be impacted include:
The FLEXIS App project, led by Cardiff University, is generating green and economic growth across Wales through industrial partnerships. The project has received most of its funding, almost £3 million from the ESIF programme, which runs out in November 2022.
Productivity Through Innovation (PTI) is a project delivered by Nottingham Trent University, University of Nottingham and University of Derby to help around 200 local SMEs increase turnover, competitiveness and profitability. The project is receiving £3.5 million from the ESIF – half its total funding – which runs out in March 2023.
The University of Manchester’s Bridging The Gap programme, delivered by the Graphene Engineering Innovation Centre (GEIC), accelerates the adoption and commercialisation of graphene and 2D materials. The programme has engaged with more than 200 SMEs, generating new products and jobs. The project is receiving £1.9m from ESIF, which will end in December 2022.
Universities UK has written to Secretary of State for Levelling Up, Housing & Communities, Michael Gove, outlining the university sector’s concerns around the initial plans for the UK Shared Prosperity Fund.
For help and advice with related matters, please get in touch with our expert team today.
How the Spring Statement will affect businesses and individuals
The Chancellor’s Spring Statement has attracted a mixed reaction, with some tax changes going ahead, some promised later and a hoped for move on VAT in the hospitality sector not appearing.
How can you cope with the cost-of-living crisis?
Many are feeling the impact of the increasing cost of living on their finances, with the inflation rate soaring to a 30 year high of 6.2 per cent in February. Continue reading
Getting the data right is key to growth in hospitality
Hopes that the temporary VAT cut for hospitality would be extended were dashed in Chancellor Rishi Sunak’s Spring Statement this week.
£1.1m training fund gives helping hand to UK exporters
British exporters are being offered a helping hand with a training and consultancy package to help them boost their businesses.
They are being given access to a £1.1 million programme to help them trade more effectively overseas.
The Institute of Export and International Trade (IOE&IT) has launched a voucher scheme, providing vouchers worth £1,100 to 1,000 businesses that want to either start or improve their exporting efforts.
Why is it needed?
The International Trade Accelerator Voucher scheme can help businesses access training, consultancy, and educational services.
Marco Forgione, the Institute’s Director-General, said that the initiative was in response to a fall in the number of UK exporters in the last year.
He said there was no one reason for the decline in numbers of exporters, citing COVID-19, Brexit, ongoing supply chain disruption and the sanctions after Russia’s invasion of Ukraine as all playing a part.
The institute’s latest export monitor found that in February numbers had declined by 521 to 61,005 compared with the year before. The number was also the lowest since January last year.
How does it work?
The £1,100 allows those taking part to buy a suite of tools and services without any obligation to spend any money with the Institute.
Last November the Government said that it wanted more British companies to trade overseas and to reach £1 trillion a year in exports by 2030.
Mr Forgione added that some companies were discouraged from exporting because they were not familiar with how to do it.
He said: “Businesses can see international trade as more complicated, more challenging and difficult than the reality. What they require is for any mystery, concern and doubt to be removed.”
He said that the institute had experts who could “demystify” trade, and how to trade “compliantly and effectively”.
How to apply
Applications for a voucher can be completed online at the IOE&IT website here. Upon acceptance, applicants will have their voucher details emailed to them within 24 hours.
The voucher can be used immediately and will be valid for 365 days to be used against any of the training, consultancy or education services that the IOE&IT offer.
Real-time online sanctions tracker to assist importers and exporters
As the war in Ukraine rages, UK SMEs are facing new import and export headaches on top of any problems already being experienced with Brexit.
Workers given helping hand in Spring Statement, but not enough for business, says Rotherham Taylor Limited
With businesses across the UK facing spiking inflation, many hoped the Chancellor would deliver measures to reduce bills, but Preston-based accountancy firm Rotherham Taylor Limited say while individuals were given a helping hand, businesses received less support.
Against a backdrop of growing uncertainty, a spiralling cost-of-living crisis, weaker economic forecasts and rising inflation, Rishi Sunak faced a difficult task.
Having outlined a slowdown in growth following the OBR’s latest forecasts, many assumed that little could be done, but the Chancellor surprised Parliament by announcing a new tax plan.
Rotherham Taylor Limited said that his announcement of a 5p cut to fuel duty for one year and a £3,000 increase to the National Insurance Primary Threshold and Lower Profits Limit was aimed at keeping more money in the pockets of average workers.
Rebecca Bradshaw, Director at Rotherham Taylor Limited, said: “The increase to the National Insurance threshold, which will be introduced in July, will bring the rate in line with Income Tax and should help to alleviate the pressures created the Health and Social Care Levy, which sees National Insurance Contributions (NICs) increase by 1.25 percentage points from April.
“Unfortunately for employers, this rise in the threshold won’t benefit them as it doesn’t apply to the secondary threshold by which employer’s NICs are set.
“However, the Chancellor did increase the Employment Allowance, which reduces eligible employers’ annual National Insurance liability, from £4,000 to £5,000.
“This is a small giveaway considering that employers already face a higher National Insurance bill from next month and increases in other employment costs, such as the National Minimum and Living Wage.”
Beyond the changes to National Insurance and the cut in fuel duty, individuals will also welcome proposals to cut the basic rate of income tax from 20 per cent to 19 per cent from April 2024.
“There was a lot of positives to come out of the speech for businesses,” added Rebecca. “The Chancellor intends to reform other tax reliefs in the Autumn Budget later this year with a focus on ‘people, capital and ideas’, importantly improving access and funding via the R&D tax credit scheme through further reforms that could offer a £5 billion boost by 2024.”
Rotherham Taylor Limited said that most workers and businesses would welcome the tax cuts, but difficult decisions still lay ahead given rising costs.
Spring Statement 2022
Exactly two years since the first lockdown was announced, the eyes of the public were firmly fixed on the Chancellor, Rishi Sunak, as he rose to the despatch box in the House of Commons to deliver his Spring Statement.
Yet again, Mr Sunak found himself addressing MPs against a background of crisis, with the residual impact of COVID, the invasion of Ukraine and the cost-of-living crisis all affecting the economy in different ways.
The cost-of-living crisis will have been weighing especially heavily on the Chancellor’s mind. Just hours earlier, the Office for National Statistics (ONS) had confirmed that inflation had hit a 30-year high of 6.2 per cent. Meanwhile, petrol and diesel were averaging 166p and 178p a litre respectively, and anxiety is rising about the £693 increase to the energy price cap coming into effect on 1 April.
Compounding matters, a 1.25 percentage point increase in National Insurance Contributions (NICs) for employees and employers is set to take effect on 6 April.
Employers will also need to contend with substantial rises in the rates of the National Minimum Wage (NMW) and National Living Wage (NLW) from 1 April.
Individuals and businesses alike were hoping the Chancellor would announce further measures to address the cost-of-living crisis.
However, this was a Spring Statement. While they can morph into mini-Budgets, they typically contain little by way of concrete tax and spending measures.
Instead, the main purpose of a Spring Statement is to set out the latest economic forecasts prepared by the Office of Budget Responsibility (OBR), often followed by the launch of various consultations on the Government’s longer-term plans.
Mr Sunak and his allies had spent the days and weeks ahead of the Statement letting it be known that he wanted largely to stick to his existing plans and resist calls to make major changes.
Delivering the Mais Lecture at Bayes Business School last month, Mr Sunak said:
“And the impact of these trends on people is being exacerbated by high inflation. This is primarily a global problem, driven by higher energy and goods prices.
“The government is dealing with high inflation by helping people with those extra costs, and through the monetary policy framework.
“But over the longer-term, the most important thing we can do is rejuvenate our productivity.”
The suggestion was that Government assistance with the cost-of-living crisis should be limited and that dramatic interventions would not be on the cards.
But the scale of the crisis meant political pressure on the Chancellor from diverse quarters to take immediate action was increasing by the day.
In the event, the Chancellor bowed to pressure and pulled several rabbits from his hat with a focus on supporting workers.
As expected, the OBR’s forecasts for the economy painted a less optimistic picture than they did at the Autumn Budget.
Growth is now expected to be 3.8 per cent in 2022, down from the previous forecast of six per cent, 1.8 per cent in 2023 and 2.1 per cent in 2024.
Meanwhile, inflation is projected to reach 7.4 per cent this year with a peak of 8.7 per cent in Q4, 4 per cent in 2023 and 1.5 per cent in 2024.
The picture in relation to unemployment is generally more positive, with a forecast of four per cent in 2022, 4.2 per cent in 2023 and 4.1 per cent in 2024.
The Chancellor dedicated a substantial proportion of his speech to the invasion of Ukraine and stressed the impact of the crisis on the global economy and on the cost of living in the UK.
He began with one of the more eye-catching announcements of his speech, and one that hasn’t featured in even a full Budget for many years – a one-year temporary 5p a litre cut in fuel duty applying from 6pm on Wednesday 23 March 2022.
The Chancellor committed to cutting VAT for homeowners installing energy saving measures to 0 per cent.
He also reiterated his February announcement of a £9 billion package to help with rising energy bills following the increase in the price cap.
Shifting away from a direct focus on the immediate pressures on the cost of living, the Chancellor unveiled his Tax Plan, setting out his intentions for the remainder of this Parliament, which is due to last until 2024 and comprises three elements:
- Helping families with the cost of living
- Creating the conditions for private sector-led growth
- Letting people keep more of what they earn
As well as the temporary cut to fuel duty, the Chancellor said he will increase the annual Primary Threshold and Lower Profits Limit for National Insurance to £12,570 from July 2022, as part of the first commitment. Meanwhile, Class 2 NIC payments will be reduced to nil between the Small Profits Threshold and Lower Profits Limits.
He said that 70 per cent of workers would see their National Insurance payments fall, even after the addition of the Health and Social Care Levy, which comes into effect on 6 April as planned.
Next, he said that the Employment Allowance will rise from April 2022 from its current level of £4,000 to £5,000, saving businesses up to an additional £1,000 on Class 1 National Insurance contributions.
Moving to creating the conditions for private sector-led growth, the Chancellor said his focus would be on “capital, people and ideas”.
He announced his intention to cut and reform taxes on investing in businesses, building on the momentum of the super-deduction.
He also said the Treasury will engage with businesses on ways to cut taxes on investment and will confirm plans later this year at the Budget.
On people, the Chancellor said he would look at ways to offer more high-quality employee training.
On ideas, he said that further reforms to Research and Development Tax Reliefs would be announced at the next Budget, with the Government planning a boost worth £5 billion.
Moving to letting people keep more of what they earn, the Chancellor announced a surprise cut to the basic rate of income tax from 20 per cent to 19 per cent from April 2024.
He said that, alongside this, the Government will look to reform tax reliefs and allowances before 2024.
The Spring Statement was a classic example of the Chancellor managing expectations downwards in order then to exceed them.
In this case, what had been billed as a rather vanilla financial statement containing little by way of substantive change transpired to include not only increases in the National Insurance thresholds for employees and the self-employed and cuts to fuel duty, but also plans to cut the basic rate of income tax in two years’ time.
While this will be good news for the finances of many individuals, notwithstanding the forecast that inflation will reach a peak of 8.7 per cent in the autumn, employers and business owners might be hoping there will be more for them at the Autumn Budget 2022.
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How can your business boost its revenue?
Raising revenue is often one of the key objectives for small and medium-sized businesses (SMEs), however it can be a difficult process to navigate.Continue reading
