What you need to know this week
Our round-up of the key business updates and insights for you
December 4, 2020
Welcome to our weekly wrap. This week we’ve rounded up the latest news and insights, including the applicant test and third self-employment government grant, Brexit transition planning, UK funding and tax thresholds from last week’s Spending Review.
Third SEISS grant opens up for applications
The third self-employment income support scheme (SEISS) grant this week opened for applications.
To qualify for the grant, applicants must either be currently trading and affected by reduced demand, or temporarily unable to trade as a result of the coronavirus pandemic, according to Government officials.
If an applicant is eligible, the third grant will offer a lump sum up to a maximum of £7,500 to cover 80% of their business’s average trading profits, covering the period between November 2020 and January 2021.
Grant applicants to face new test
However, the Association of Independent Professionals and the Self-Employed (IPSE) has warned that the rules for claiming the third grant are ‘stricter’ and ‘more complex’ than before.
The new guidance now includes an additional test regarding eligibility, which requires the claimant to plan to continue trade and believe there will be a significant cutback in their profits due to the pandemic.
UK ‘through Covid by Spring’ but economic benefits are ‘months away’
Health minister Matt Hancock has said the UK will be through the coronavirus pandemic by Spring.
Hancock was speaking on a live TV appearance when he also confirmed he will be having a Covid-19 vaccine when it is made available to him, despite having already had the coronavirus, and that those who have had Covid-19 will be eligible and encouraged to take the vaccine.
Yet, despite the optimism, analysts have predicted there will not be an immediate boost to the economy, with the economic benefits of the vaccine still months away.
The prospect of a wide scale roll out could see global output return to pre-pandemic levels by late 2021, however, meaning employers can plan for a post-Covid world.
Income tax personal allowance and national insurance limits for 2021-22
The Spending Review confirmed that the government will use the September CPI figure as the basis for setting all national insurance limits and thresholds, and the rates of class 2 and 3 national insurance contributions for 2021/22.
Both the Income Tax Personal Allowance and Higher Rate Thresholds will increase in line with the CPI figure.
When increasing the income tax personal allowance, the increase is rounded up to the next £10 – therefore, the personal allowance for 2021/22 should be £12,570 (up from £12,500 in 2020/21).
Brexit transition planning: VAT on overseas goods
HMRC has published guidance on how organisations deal with VAT when selling overseas goods to customers within Great Britain from the end of the transition period.
From January 1, 2021, VAT is to be charged at point of sale for goods under a value of £135. The guidance makes clear that for both direct sales and those through an online marketplace that the seller must add the value of individual items sent in a consignment together.
If this exceeds £135 then they may be liable for import VAT and Customs duty. This may result in an adjustment to the VAT already accounted for at the point of sale.
The seller must also keep records, including invoices, for six years.
Organisations that sell directly to customers who are currently operating within the VAT flat rate scheme will have to decide whether to stay in the scheme from January 1, 2021.
Due to the fast moving nature of the current Covid-19 pandemic, we are endeavouring to cover as much of the critical news as possible. If you are self-employed or run a business and need assistance and advice on how the recent announcements could make a difference to you or your business, feel free to get in touch with the experts at Morgan Reach. Our business growth experts at Morgan Reach will guide you through what support is available for you or your business as well as the latest news that may affect you.