Author Archive: Muhammad Zia

How will the UK’s free trade deals help British businesses?

Since officially leaving the European Union earlier this year, the UK has been free to strike its own international trade deals with markets from around the world.

But what deals have been agreed, and how will they help British businesses?

In this blog, we are going to explore how far the UK has come since leaving the EU.

Rollover trade agreements

Despite leaving the single market, the UK has managed to retain many of the trade agreements agreed while it was an EU Member State. It means British businesses can continue to trade freely, or on beneficial terms, with 63 countries without lifting a finger.

A further seven countries, meanwhile, are in ongoing negotiations with the UK in a bid to roll over existing deals.

The 63 countries include Canada, a trade deal worth over £17 billion a year, Singapore (£14 billion), Switzerland (£34 billion) and Turkey (£15 billion).

UK-EU free trade deal

The UK-EU deal came into force on 1 January 2021 after years of negotiation. While limiting freedom of movement, the agreement prevented any tariffs and quotas from being introduced, making it cheaper to trade with the single market.

It also means that the UK is no longer required to follow strict EU product standards, but as a by-product, more checks and inspections need to be carried out at the border.

UK-US trade deal

Existing deals with the US are limited, but progress has been made. For example, the UK is now allowed to export British beef to US markets after a 20-year hiatus.

A comprehensive free-trade deal, however, is reported to be off the table for now.

UK-Australia and New Zealand free trade deal

The UK agreed a free trade deal with Australia in June. The deal is expected to boost British exports by millions of pounds each year and cut red tape, making it easier for businesses to transport their products ‘down under’.

A “historic” free-trade deal with New Zealand was also struck this month.

UK-Norway, Iceland, and Liechtenstein free trade deal

The deal, agreed in July, will boost sectors such as digital, financial, and professional business services by introducing a range of new digital provisions, such as data sharing and electric documents, contracts, and signatures.

The agreement will also “slash tariffs” and red tape on British exports, saving British firms time and money.

UK-Japan free trade deal

The UK’s first major trade deal as an independent nation, the UK-Japan Comprehensive Economic Partnership Agreement is expected to boost trade with Japan by an estimated £15.2 billion each year.

The deal includes “cutting edge” digital and data provisions, improved market access for UK financial services, tariff-free access for more UK goods, new and more liberal Rules of Origin for certain products, new protections for UK goods and services, and improved mobility for businesspeople.

Get expert advice

For help and advice with related matters, please get in touch with our team today.

Rotherham Taylor Limited says Autumn Budget offers a temporary business boost

The team at Preston-based accountancy firm, Rotherham Taylor Limited have welcomed the Chancellor’s latest Budget speech, saying it offers a boost to companies and communities in recovery.

After almost two years of economic difficulty, the latest estimates from the Office of Budget Responsibility (OBR) show that the UK economy is growing faster than expected.

Nevertheless, many businesses and households are facing a winter cost crisis and so Rishi Sunak set out his plan to assist them.

For many high street businesses, the announcement of significant reforms to business rates couldn’t come at a better time. This will include a new 50 per cent discount (worth up to a maximum of £110,000) for companies in the retail, hospitality, and leisure sectors, which will last for one year.

Businesses will also benefit from an extension to the £1 million Annual Investment Allowance until the end of March 2023, which will support further investment in plant and machinery through Corporation Tax relief.

Rebecca Bradshaw, Director at Rotherham Taylor Limited, said: “Going into this Budget many businesses feared that they would experience further tax rises, but in the main, the measures outlined by Rishi Sunak will help some businesses.

“The autumn and winter are likely to prove difficult for businesses and households as they deal with rising costs and inflation. This Budget has provided some small giveaways that should cushion the blow.”

However, despite the many positive steps taken in the Budget, Rotherham Taylor Limited said that earlier announcements, such as an increase to Corporation Tax in 2023 and increases to National Insurance and dividend tax next year meant that businesses and their employees still face mounting costs.

The Budget also confirmed changes to R&D tax credits that will refocus support to innovations in the UK, restricting claims where R&D activities are performed overseas.

“Over the next few years, starting from April 2022, businesses will start to see their costs increase further due to the measures previously announced by the Government,” added Rebecca.

“Owners and shareholders will also see their ability to draw income from their business squeezed thanks to the increase in dividend tax rates. Whilst this Budget’s attempts to address this increase in everyday costs, many organisations could still experience a financial struggle.”

Rebecca added that many taxpayers would appreciate the fact that the Chancellor had avoided making headline changes to personal tax, with both Capital Gains Tax and Inheritance Tax largely left alone.

“Speculation had been growing that the Chancellor might come after wealthier taxpayers, but in this Budget, he has left personal taxation largely untouched, which should help people plan for the future,” added Rebecca.

However, looking further ahead, Rotherham Taylor Limited said that businesses and individuals should remain cautious, as future Budgets could contain surprises that mean a larger tax bill.

“A big part of the Chancellor’s speech was re-affirming the Government’s commitment to fiscal responsibility. We cannot overlook that he said that ‘everyday spending must be paid through taxation’,” added Rebecca.

Do you want to know how the measures announced in the Autumn Budget affect you? Find out how we can help by contacting us.

Autumn Budget 2021

With the Speaker of the House of Commons by tradition not presiding over the Budget, the Chancellor might have hoped he would escape a rebuke over the number of important announcements disclosed to the media in advance.

That was not to be, with the Chancellor instead receiving a ticking-off from Dame Eleanor Laing, the Chairman of Ways and Means, who takes charge on Budget day.

Before Rishi Sunak rose to the despatch box, we already knew the public sector pay freeze would end. The Treasury had also confirmed there would be £5.7 billion for public transport in city regions, £5.9 billion to tackle waiting lists in the NHS, an increase in the National Living Wage to £9.50 an hour, £1.8 billion for housing on brownfield sites, as well as further cash for education.

The question, then, was what the Chancellor was saving for the Budget and whether this would include any significant tax changes.

The 2021 Spring Budget marked a post-pandemic turning point in the Government’s approach to tax and spending. Already this year, the Government has announced several significant tax rises. Corporation Tax is rising in 2023 and next year will see Dividend Tax and National Insurance Contributions rise by 1.25 percentage points.

Any taboo around tax rises had been blown apart. But, at the same time, the cost of living has risen rapidly, putting pressure on households and businesses.

The question, then, was how the Chancellor would balance the cost of the spending plans already set out and the need to recognise the pressure on households and businesses against his desire to repair the public finances following the pandemic.

Would taxes rise and, if so, who would be the winners and losers?

The economy and public finances

In contrast to his two previous Budgets in Spring 2020 and Spring 2021, the Chancellor struck a strikingly optimistic tone about the country’s economic prospects.

He said that forecasts from the independent Office for Budget Responsibility (OBR) predict economic growth of 6.5 per cent this year, with the economy returning to its pre-pandemic size at the beginning of 2022.

Next year, the OBR expects GDP to rise by six per cent, followed by increases of 2.1 per cent in 2023, 1.3 per cent in 2024 and 1.6 per cent in 2025.

The forecast is significantly better than that presented at the Spring Budget when the OBR predicted economic growth of four per cent this year.

Meanwhile, the OBR’s forecasts for long-term economic scarring as a result of the pandemic and for unemployment have been cut from three per cent to two per cent and 12 per cent to 5.2 per cent respectively.

Acknowledging the increasing pressure on households and businesses, the Chancellor said that inflation is predicted to average four per cent next year.

Turning to borrowing, the Chancellor announced a revised Charter for Budget Responsibility, which will require that:

  • Debt falls as a percentage of GDP in normal circumstances
  • Borrowing is restricted to investment in future growth and not used for day-to-day spending
  • Public net investment does not exceed 3.5 per cent of GDP on average

He said these rules have been met.

Spending review

Moving to the spending review, the Chancellor said there would be real terms increases in spending for every Government department, with overall spending over the parliament rising by £150 billion, averaging 3.8 per cent a year.

He said local authorities will receive grant funding of £4.8 billion, while overseas aid will once again reach 0.7 per cent of GDP by the end of the Parliament.

The Chancellor went on to say that schools funding for each pupil will return to 2010 levels and a tripling of investment would create 30,000 new special school places.

He then set out 1.7 billion of Levelling Up funding for places include Stoke, Leeds, Doncaster and Leicester.

Next, he said there would be £21 billion for roads and £46 billion for railways as well as funding to bring public transport in regional cities in line with that available in London.

Finally, he outlined a £3.8 billion investment in skills and training.

Science and technology

Moving to his plans for science and technology, the Chancellor said that Government research and development (R&D) spending would reach £20 billion by 2024-25 and £22 billion by 2026-27.

However, he said there were problems with the way R&D tax reliefs have been working, announcing plans to expand them to cover investment in cloud technology and data, but also to restrict their use to domestic activities. He did not set out what would constitute domestic activities.

Elsewhere for science and technology, he announced the launch of visa programmes for highly skilled individuals.

He also confirmed a new UK Shared Prosperity Fund worth £2.6 billion to boost skills.

Hospitality, arts and culture

Hospitality was a significant theme in the Budget, with the Chancellor making several announcements targeted at the sector.

400,000 properties used by retail, hospitality and leisure businesses will be able to benefit from a 50 per cent business rates discount.

Meanwhile, the Chancellor announced extensive changes to alcohol duties, which included simplifying the banding to ensure the drinks with the highest alcohol content had higher duties and those with the least alcohol, the lowest duties.

He said this would mean high percentage drinks would attract more duty and the lowest percentage drinks would attract less than they have done until now.

Meanwhile, Small Brewers will be expanded to other small alcohol producers, while there will also be reliefs for draught beers and sparkling wines.

Turning to the arts and culture, he said tax reliefs for the sector would be doubled and extended until March 2024.

Business and personal taxes

Before the Budget, there was some suspicion that business and personal taxes might be at the forefront of the Chancellor’s announcements. However, that turned out not to be the case with them receiving relatively little attention in the speech itself.

The Chancellor made no mention of the Capital Gains Tax (CGT) and Inheritance Tax (IHT) reforms that had been predicted in some quarters.

Instead, he turned his attention to business rates, saying he would not heed calls to scrap them, instead opting for more frequent revaluations every three years, starting in 2023; introducing an investment relief for green technologies and an improvements relief that would delay increases in rates, in the following 12 months; as well as cancelling the planned increase in the multiplier.

Away from business rates, the Chancellor confirmed a further extension to the £1 million Annual Investment Allowance until March 2023.

He said that, as expected, the planned increase in fuel duty would be cancelled. Also expected, was confirmation that the National Living Wage will rise to £9.50 in April 2022.

The Chancellor announced details of the Residential Property Developer Tax, announced in February 2021, confirming a four per cent levy on companies and corporate groups’ profits from UK residential property, where they exceed £25 million a year.

While not announced in the Budget, the documents published after the Chancellor sat down confirmed that the deadline for paying Capital Gains Tax (CGT) on property would be extended from 30 to 60 days.

Conclusion

The Chancellor struck a markedly different tone from his Spring Budget, with optimism that could have been mistaken for the Prime Minister.

There were no new major tax rises and good news for the beleaguered hospitality sector.

Strikingly, the Chancellor felt sufficiently optimistic to say he planned to see taxes going down by the end of Parliament.

Whether that ambition will come to pass will depend on whether the economy meets the new, more upbeat expectations set out by the OBR.

Official documents link

Budget reminder…

We are just a day away from the Autumn Budget, which will be taking place on Wednesday. As ever, our team will be monitoring the announcements on the day and published in the Red Book after the speech and we will send out our usual summary on Wednesday to digest!

Probate: Understanding the basics

Preparing your estate to be handled after your death can be an upsetting and sometimes challenging process. However, with the right plans in place and a trusted advisor to help, you are on the right path to ensuring your wishes are taken care of.

Why organise now?

Taking the time to arrange your affairs before your passing not only guarantees your wealth is given to your loved ones successfully, it also often ensures it is not heavily taxed.

What happens after my passing?

The managing of an estate after your death requires your family or an appointed professional to conduct a process known as probate.

What is probate?

After someone has passed, a legal document known as the Grant of Probate is required to transfer the assets from the deceased name to the beneficiaries.

This document allows the grant holder the power to do the following:

  • Administer an estate,
  • Ensure all relevant taxes are collected,
  • Ensure money owed to creditors is paid,
  • Ensure debts owed to the deceased are collected,
  • Ensure the remaining assets from the estate are distributed to the relevant beneficiaries.

At this stressful and emotional time, some families find it easier to appoint a professional to assist them with handling probate and other duties of an executor.

We are one of a small number of accountancy practices in the UK to be licensed to provide probate services by the Institute of Chartered Accountants in England and Wales (ICAEW).

Find out what we can do here. 

Northern Ireland Protocol: EU proposals would “cut 80 per cent of checks” on goods

The European Union (EU) has proposed to cut 80 per cent of checks on certain goods moving from Great Britain to Northern Ireland.

The move could draw a line under the so-called ‘sausage war’ and ease the movement of goods under the Northern Ireland protocol.

Here’s what you need to know.

What is the Northern Ireland protocol?

The protocol was introduced to prevent customs checks along the border between Northern Ireland and the Republic of Ireland to preserve the Good Friday agreement.

But as Northern Ireland is in the UK and the Republic of Ireland is in the EU, it was agreed that checks would instead be carried out between Northern Ireland and Great Britain.

This means certain products – such as milk, eggs, meat, and pharmaceutical products – need to be inspected before they are allowed to arrive in Northern Ireland.

This has caused significant disruption for businesses moving goods to retailers in Northern Ireland, with some saying the protocol has effectively created a border in the Irish Sea.

What is changing?

Up until now, British businesses have benefitted from extended grace periods easing the flow of restricted products entering Northern Ireland.

But the grace period is set to finish at the end of this year, sparking disagreements with the EU on how the Northern Ireland protocol will work in the future.

Following discussions, the EU has now set out proposals that would lead to an “80 per cent reduction” in checks that would have been required on food products arriving in Northern Ireland.

The European Commission also suggests that the new rules could “halve” the amount of paperwork involved.

The rule changes include:

  • Farmed food products arriving from Great Britain in a single lorry would only need one certificate, rather than a different one for each product.
  • Reducing the amount of customs information firms need to provide.
  • Passing legislation to enable the trade of medicines between Great Britain and Northern Ireland.
  • Relaxing the rules on the movement of chilled meats.

The full list of proposals can be found here.

What does this mean for businesses?

The new rules would significantly ease disruption at the border, but may come at a cost. The EU has requested additional safeguards in return, such as access to UK data.

Get advice today

Do you have concerns about your business? Speak to us.