Business groups, including the Confederation of British Industry (CBI), the British Chambers of Commerce (BCC) and the Institute of Directors (IoD) have responded to the news that the government has agreed terms for the UK’s Brexit transitional period.
The government outlined that the transitional period will last from 29 March 2019, the day when the UK will officially leave the EU, until 31 December 2020. During this transition period, the UK will be permitted to sign its own trade deals, the government said.
Many business groups welcomed the news. Dr Adam Marshall, Director General of the BCC, said: ‘This is a milestone that many businesses across the UK have been waiting for. The agreement of a status quo transition period is great news for trading firms on both sides of the Channel, as it means that they will face little or no change in day-to-day business in the short-term.’
The CBI hailed the agreement as a ‘victory for common sense’. Carolyn Fairbairn, its Director General, commented: ‘Agreeing transition is a critical milestone that will provide many hundreds of businesses with the confidence to put their contingency planning on hold and keep investing in the UK.’
Whilst the IoD welcomed the news, it also warned the government that it needs to focus on the ‘finer details and practical implications’ associated with the transition. Allie Renison, Head of Europe and Trade Policy at the IoD, stated: ‘Many businesses will only be able to sufficiently plan and prepare for Brexit once the precise details of the future relationship are known, and any changes to domestic infrastructure, like customs, have been implemented.’
HMRC is urging the public to declare Gift Aid on their charitable donations after research found that UK charities are missing out on £600 million in extra funding. Charities and Community Amateur Sports Clubs (CASCs) can claim an extra 25p for every £1 donated if Gift Aid has been declared.
The Exchequer Secretary to the Treasury, Robert Jenrick, said: ‘The UK has thousands of brilliant charities, all working hard to make people’s lives better. Through Gift Aid, we are already giving charities an extra £1.3 billion of funding so they can continue their important work.’
Individuals seeking to add a Gift Aid donation must have paid income tax or capital gains tax to at least the same value as the amount being donated. No additional costs will be applied for those using Gift Aid to donate to charity.
The Gift Aid Small Donations Scheme (GASDS), which was introduced in 2013, does not require declarations on donations worth up to £20. HMRC has written to 50,000 charities in order to make them aware of the GASDS, and continues to work closely with UK charities to ensure they get the most out of Gift Aid.
New rules aimed at combating online VAT fraud have been introduced by the government.
The rules, which were first announced by Chancellor Philip Hammond during the 2017 Autumn Budget, strengthen the powers to make online marketplaces accountable for VAT fraud perpetrated by online sellers using their platforms.
Under the government’s new rules, online marketplaces will be liable for any unpaid tax if they do not remove sellers who fail to pay VAT from their sites.
The regulations apply to both UK sellers and those based overseas.
Marketplaces are also now required to ensure that sellers using their platforms display a valid VAT number. The government hopes that this will help potential buyers to make an ‘informed choice’ in regard to purchasing goods from a VAT-registered business.
Commenting on the introduction of the new rules, Mel Stride, Financial Secretary to the Treasury, said: ‘Whilst the honest majority pay what they owe, some businesses that sell goods online to UK shoppers are failing to pay the correct amount of VAT.
‘We are clear that everyone must pay their fair share of tax, and tackling tax evasion in all its forms is a top priority for the government.’
The government has launched a new £67 million full-fibre broadband scheme, with the stated aim of assisting small businesses and individuals to gain access to faster broadband.
Under the new nationwide Gigabit Broadband Voucher Scheme (GBVS), vouchers worth up to £3,000 for small businesses and £500 for individuals will be available to help reduce the costs associated with connecting to full-fibre broadband.
During the 2018 Spring Statement, Chancellor Philip Hammond announced the first allocation of funding from the government’s £190 million Challenge Fund, which provides money to support the roll-out of full-fibre broadband to 13 areas across the UK.
At this time, £95 million was allocated to 13 successful bidders from around the country.
The government stated that it is committed to making full-fibre broadband available to ‘at least’ 10 million businesses and homes by 2022.
Businesses and individuals wishing to make use of the new GBVS will be able to obtain vouchers from suppliers registered with the scheme.
Commenting on the introduction of the GBVS, the Chancellor said: ‘We’re backing Britain’s small businesses by investing £67 million to bring full-fibre broadband to more businesses up and down the country.
‘This means faster, more reliable broadband access as we build the digital infrastructure we need to make our economy fit for the future.’
The new GBVS will launch at the end of March 2018, and will be open until March 2021, or until all available funding has been allocated. Further information can be found here.
In its response to the Chancellor’s Spring Statement, the Institute for Fiscal Studies (IFS) has suggested that tax increases amounting to £30 billion per year will be needed in order to cut the UK’s deficit.
To avoid spending falling as a fraction of national income beyond 2019/20, Chancellor Philip Hammond needs to find an extra £14 billion per year by 2022/23, the IFS said. It also stated that Mr Hammond would require an additional £18 billion of tax increases or spending cuts by the mid-2020s to eliminate the deficit.
The think tank said that ‘dismal’ growth in productivity and earnings is the ‘new normal’, alongside ‘dismal economic growth’.
In his Spring Statement speech, the Chancellor stated that the UK economy has reached a ‘turning point’ in the nation’s recovery from the financial crash of 2008.
The Office of Budget Responsibility (OBR) forecasts that the UK economy will grow at a faster pace than previously anticipated, with GDP growth reaching 1.5% in 2018.
However, in its report, the IFS said that the UK has had the ‘worst decade of growth since at least the last war’, and suggested that growth projections for the next few years are ‘subdued’.
Commenting on the matter, Paul Johnson, Director of the IFS, said: ‘The big specific challenge facing the Chancellor . . . remains over how to balance growing demands for spending increases against his desire to balance the books in the mid-2020s.’
Responding to the IFS, a Treasury spokesperson said: ‘Our balanced approach has reduced the deficit while also cutting taxes for over 30 million people and investing in our vital public services.’
In his 2018 Spring Statement, Chancellor Philip Hammond invited small businesses to provide feedback on the impact of the current VAT threshold.
In November 2017, the Office of Tax Simplification (OTS) outlined a range of measures intended to help simplify the VAT system. The OTS suggested examining the current approach to the level and design of the VAT registration threshold, and argued that the current threshold of £85,000 is ‘costly’, and that it has a ‘distortionary impact’ on business growth and activity.
The government recognises that the current design of the VAT registration threshold could be ‘disincentivising’ small businesses from expanding their firm and improving their productivity.
Its consultation will explore the effects of the VAT threshold on small businesses, and will examine different policy options, with a view to considering whether these options could better incentivise growth amongst small firms.
Businesses can contribute their views online at www.surveymonkey.co.uk/r/W7TLCZ7. The deadline for firms to respond is 5 June 2018.
Separately, the government will also consult on the creation of a new VAT mechanism for online sales, to ‘ensure that the VAT customers pay actually reaches the Treasury’.
Chancellor Philip Hammond delivered his first Spring Statement speech yesterday, responding to the latest economic forecasts published by the Office for Budget Responsibility (OBR).
Mr Hammond also provided an update on the progress of the measures announced at the 2017 Autumn Budget, and unveiled a number of consultations on key areas.
The Chancellor announced that the next business rates revaluation will be brought forward from 2022 to 2021, and invited the views of small businesses on the impact of the current VAT threshold.
For a detailed overview of the latest tax rates and information, view our 2018/19 Tax Rates Centre and read our 2018 Spring Statement summary.