Business Update – November 2020

27 Nov 2020

office building windows and sky

Our November issue of Business Update contains the following articles:

Brexit: VAT and the end of the transition period

The UK will cease to be a member of the Single Market and Customs Union, and will no longer be a part of the EU VAT system once the Brexit transition period comes to an end on 31 December 2020. This has significant VAT implications for UK suppliers involved in international supply chains. Read more.

The new UK plastic packaging tax

A new plastic packaging tax is being introduced in the UK, with implications for the producers and importers of plastic packaging containing less than 30% recycled plastic. Though the proposals may still be subject to change, businesses likely to be affected should consider what the new tax might mean for them. Read more.

We can also report on the following recent announcements that will be welcomed by many businesses:

Extension of £1 million Annual Investment Allowance limit

The government has announced the extension of the £1 million Annual Investment Allowance (AIA) limit for a further 12 months until 1 January 2022.

The AIA provides cash flow benefits to businesses by enabling them to claim 100% upfront capital allowances on expenditure on certain qualifying plant and machinery, up to a specified annual limit each year. It was due to decrease from £1 million to £200,000 from 1 January 2021.

This move is intended to encourage UK capital investment and is good news for businesses planning to incur substantial capital expenditure early in 2021.

EMI share schemes to continue after 31 December 2020

HMRC has now confirmed that EMI share option schemes, which allow certain companies to offer employees tax efficient share options, will continue to be available after the Brexit transition period ends.

Previously, EMI schemes were approved under EU state aid rules and, back in February 2020, HMRC could only confirm that EMI schemes would be recognised until the end of the transition period.

EMI schemes will operate from 1 January 2021 under UK law.

Jamie Lane, Editor