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Brexit Deal Clarified for Small Businesses



Almost 4 and half years after the referendum result, the UK and the EU finally concluded a trade deal on 24 December and small business owners are relieved that the Brexit deal has finally been agreed, as it means certainty going forward. A 1,246-page legal text of the Trade and Cooperation Agreement deal has been released and there is a lot to take in but here the main points that impact on small businesses.
 

Tariffs on exporting and importing goods

One of the big headlines in the Brexit deal is the agreement that there will no tariffs imposed on qualifying goods. To be free of tariffs, goods being exported from the UK to the EU and vice versa must comply with rules of origin which is how customs authorities classify where an export has come from. Let’s dig a little deeper into what does the agreement mean in practice for online and multichannel retailers:
 

Selling to the EU

EORI numbers

Exporters from Great Britain to the EU will need an EORI number starting with the letters GB from January 1 – already previously needed to export to non-EU countries – to show they are a recognised trader. This, says Government guidance, is to help avoid increased costs and delays as their goods move through customs.
 
A further EORI number starting with XI will also be needed to move goods between Northern Ireland and non-EU countries or to make a declaration or get a customs decision in Northern Ireland. Only traders who have an EORI number starting in GB can get one of those.
 
Retailers shipping from Northern Ireland will only need an EORI number if they are exporting outside the EU.
 
The UK government’s own information says the GB EORI number can take about a week to come through. Here’s the link to get it.
 
VAT

From January 1 most goods being exported to the EU will attract a 0% UK VAT rate. Here’s the page to look at to check the exceptions.
 
Instead, traders will have to pay import VAT when goods arrive at the destination country. VAT is dealt with by member states so retailers sending goods to customers in the EU will need to be aware of the different rules in each member state about whether import VAT will be liable at the border or whether the accounting of it can be deferred to the importer’s quarterly return.
 
The EU has, as a result of Covid-19, delayed introducing a scheme that will require platforms to collect and account for VAT on behalf of sellers until July 1 – although, as detailed below – it comes into operation for those sending from the EU to UK from January 1.
 
Rules of origin

The free-trade deal struck between the UK and EU applies to goods mostly originating from the UK and EU. Where goods aren’t mostly from the UK or EU they are not covered under the deal so tariffs would be payable.
 
So what counts? Government detailed guidance on the agreement struck says that goods must be either ‘wholly obtained’ from the UK or EU - so, entirely made in the UK from materials produced in the UK – or ‘substantially transformed’ in the UK or EU – in such a way that value is added through the production basis, the goods change tariff classification as a result, or that goods are made from specific products using specific processes covered in detail in the agreement.
 
The government guidance on understanding rules of origin is available here. It suggests that, in practice, customs intermediaries will help businesses comply with their obligations.
 
There is some leeway for that since up till the end of June, traders importing from the EU to the UK will have six months to submit a full customs declaration – including declaring proof of origin – and pay any tariffs that are necessary. Additionally, traders will not need to have declarations from their suppliers in place at the time goods are exported until December 31 2021.
 
Customs declarations

Most UK online retailers selling to EU customers from this country do so by sending orders in individual parcels to the customer, either via the postal service or via a courier. The UK and EU have negotiated a tariff-free deal, so there will be no tariffs charged on exports to the EU. But, everyone in England, Scotland or Wales sending parcels to the EU whose contents are worth up to £270 will have to fill in a CN22 customs declaration form (guidance here). Those sending items worth £270 or more have to fill in a longer CN23 customs declaration. Neither are required for retailers in Northern Ireland sending a parcel to the EU.
 
The Post Office says that about 45% of the total international parcel traffic sent through Post Offices in Great Britain currently goes to EU destinations. Customs forms, available within branches, should be used for any parcels sent from now on, in order to be sure parcels have the correct documentation if they arrive on or after January 1.
 
Amanda Jones, Post Office retail and franchise network director, says: “Postmasters are on hand to provide practical advice, particularly to small businesses, who regularly send parcels to the EU. Customers should also look out for a leaflet in branches that has information about the new customs declaration requirement.”
 
Couriers handling parcels will handle these formalities on behalf of retailers and brands, but they will need the new information required for the customs declaration in order to complete the task. DPD’s transitional Brexit Guide, for example, covers the seven new pieces of information they will need – from commodity codes and product descriptions through to EORI numbers and country of origin.
 
Logistics and delivery

Those who are not sending individual parcels via post or via a courier – for example, shipping a wholesale order to an EU retailer or transferring goods to their own EU operations – will need to follow a different process, and most businesses will use a courier, freight forwarder or customs agent to make the declaration and get goods through UK customs. Here’s the government step-by-step guidance for those exporting to the EU but not using the post.
 
Those sending animal products will need to clear the EU’s Sanitary and Phytosanitary (SPS) Measures, as set out in paragraph 1.2.3. in this document on the UK/EU border. The UK/EU trade agreement allows for further harmonisation of these measures in the future.
 
Logistics UK says that the EU/UK deal appears to head off threats to the supply chain, since it allows goods to be shipped both by sea and by air. But retailers and brands will be making customs declarations for the first time in 40 years – while also potentially dealing with SPS requirements – and that’s likely to mean delays. Logistics UK has written to the government to ask for new arrangements to be put in place for lorry drivers who may have to wait to clear customs from January 1. That, it says, is necessary to prevent a repeat of what it terms the “national embarrassment” that saw gridlocked lorry drivers spend Christmas in their cabs with few toilet or hot food facilities available while the French border was temporarily closed as a Covid-19 safeguard.
 
“With new customs procedures in place from 1 January 2021, it is vital that all the systems needed to support hauliers as they move across our borders are in place and in full working order,” says Logistics UK policy director Elizabeth de Jong. “From 1 January, the industry will need regular, nationwide real-time information feeds from the government on the status of all ports, combined with early insight where traffic building – this will highlight where problems are likely to occur and help delays to be mitigated.”
 
Data

Online and multichannel retailers have built up large EU customer databases in recent decades and there have been questions about whether they will be able to hold onto those databases in the future. The final provisions section of the EU/UK agreement allows fo existing arrangements to continue at least for the next six months.

Free flow of personal data from the EU, EEA and EFTA states can continue “until adequacy decisions are adopted, and for no longer than six months”, the Government’s explainer of the treaty says. It also adds that “The UK has, on a transitional basis, deemed the EU and EEA EFTA States to be adequate to allow for data flows from the UK.
 

Buying from the EU

EORI numbers

Retailers selling from the EU to the UK will need to have an EORI number, as assigned by the member state in which they operate. Here’s a link to the EU information on this.
 
VAT

VAT is liable to be paid on imports from the EU. The UK government has agreed that UK end customers will not have to pay import VAT, but retailers selling to the UK will have to set up an account with HMRC – the UK tax authority – to pay that VAT. There’s Government information here on how to deal with UK VAT. UK companies will have to account for goods that they import and that are worth more than £135 via their quarterly VAT return. Some of the big platforms, such as Amazon and eBay, will be liable to collect any VAT due from their sellers from January 1 and send it to HMRC.
 
Amazon has written to sellers, in the run up to January 1, to say it will calculate and collect UK VAT from sellers that are not based in the UK but have stored stock in the UK or that are delivering parcels worth up to £135 from stock stored outside the UK. VAT will then be deducted from the seller’s total earnings.
 
Amazon also reminds customers at the same time that the VAT tax exemption for sales of goods worth less than £15 delivered from outside the UK will be removed from January 1. This is a UK action rather than part of the EU deal.
 
Rules of origin

As stated above, the free-trade deal struck between the UK and EU applies to goods mostly originating from the UK and EU. Where goods are made using raw materials or components from other countries not covered by the deal, additional tariffs may become payable.
 
Government guidance on understanding rules of origin as agreed in the UK/EU treaty is available here. It suggests that customs intermediaries will help businesses comply with their obligations. The leeway for those importing goods from the EU to the UK is that traders will not need to have declarations from their suppliers in place at the time goods are exported until December 31 2021.

See above for rules on data.
 

Business travel and selling services in the EU

The end of freedom of movement means unlimited businesses trips to the EU are no longer possible and UK businesses lose the automatic right to offer services across the EU. The deal allows for short term business trips totalling 90 days in any 180 days without a visa or work permit. Activities permitted include meetings, attending conferences and market research. The full list of permitted activity when on a short-term business trip to the EU is outlined here (for anything not on this list, you might need a work visa):

The activities Short-term business visitors are permitted to engage in are:

a) meetings and consultations: natural persons attending meetings or conferences, or engaged in consultations with business associates;

b) research and design: technical, scientific and statistical researchers conducting independent research or research for a legal person of the Party of which the Short-term business visitor is a natural person;

c) marketing research: market researchers and analysts conducting research or analysis for a legal person of the Party of which the Short-term business visitor is a natural person;

d) training seminars: personnel of an enterprise who enter the territory being visited by the Short-term business visitor to receive training in techniques and work practices which are utilised by companies or organisations in the territory being visited by the Short-term business visitor, provided that the training received is confined to observation, familiarisation and classroom instruction only;

e) trade fairs and exhibitions: personnel attending a trade fair for the purpose of promoting their company or its products or services;

f) sales: representatives of a supplier of services or goods taking orders or negotiating the sale of services or goods or entering into agreements to sell services or goods for that supplier, but not delivering goods or supplying services themselves. Short-term business visitors shall not engage in making direct sales to the general public;

g) purchasing: buyers purchasing goods or services for an enterprise, or management and supervisory personnel, engaging in a commercial transaction carried out in the territory of the Party of which the Short-term business visitor is a natural person;

h) after-sales or after-lease service: installers, repair and maintenance personnel ands upervisors, possessing specialised knowledge essential to a seller's contractual obligation, supplying services or training workers to supply services pursuant to a warranty or other service contract incidental to the sale or lease of commercial or industrial equipment or
machinery, including computer software, purchased or leased from a legal person of the Party of which the Short-term business visitor is a natural person throughout the duration of the warranty or service contract;

i) commercial transactions: management and supervisory personnel and financial services personnel (including insurers, bankers and investment brokers) engaging in a commercial transaction for a legal person of the Party of which the Short-term business visitor is a natural person;

j) tourism personnel: tour and travel agents, tour guides or tour operators attending or participating in conventions or accompanying a tour that has begun in the territory of the Party of which the Short-term business visitor is a natural person; and

k) translation and interpretation: translators or interpreters supplying services as employees of a legal person of the Party of which the Short-term business visitor is a natural person. For activities that involve selling services and goods, work permits and other requirements are likely to be needed from the appropriate country. Touring musicians, for example, are not covered by the 90-day visa-free rule. A petition calling for a free work permit that gives visa-free travel for touring bands, musicians, artists and TV and sports professionals has received more than 190,000 signatures.


In the many annexes in the Brexit deal document, several exceptions and restrictions for providing services are laid out. Analysis by the Institute for Government says: "UK nationals will not, for example, be able to sell actuarial services in Italy or construction services in Cyprus. They will not be able to be surveyors in Bulgaria or tobacconists in France."

The agreement allows for mutual recognition of professional qualifications in the future but as a briefing paper by the House of Commons Library says: "From 1 January 2021, UK qualified workers wishing to work in the EU will have to meet the qualification requirements of each individual Member State. The same is true for EU workers seeking recognition of their qualifications in the UK."

Business owners providing services in the EU/EEA should read the latest government guidance for the country they are visiting:
   

EU funding schemes

British businesses have received billions of pounds of funding from the EU and the agreement allows for the UK's continued participation in some schemes subject to the UK contributing to the EU budget. 

Continued UK participation in the following programmes was agreed until 2027:
  • Horizon Europe, the EU’s research and innovation programme
  • Euratom Research and Training programme
  • International Thermonuclear Experimental Reactor, the fusion test facility under construction in France
  • Copernicus, EU satellite system for monitoring the Earth

The government's latest guidance on EU funding is here and Horizon Europe details are here.
 

Sharing of personal data

The EU-UK Trade and Cooperation Agreement allows for the continued free trade of personal data from the EU/EEA to the UK for up to six months after the end of the transition period until adequacy decisions come into effect.

Government guidance says: "Personal data is any information that can be used to identify a living person, including names, delivery details, IP addresses, or HR data such as payroll details. Most organisations use personal data in their daily operations.

"An example of this is a UK company that receives customer information from an EU company, such as names and addresses, to provide goods or services."

Although nothing changes for now, the government advises businesses to "work with EU/EEA organisations who transfer personal data to you to put in place alternative transfer mechanisms to safeguard against any interruption to the free flow of EU to UK personal data".

The Information Commissioner's Office has also published guidance here.

GDPR will be retained in UK law.
 

Small business Brexit advice

The Brexit trade deal commits the UK and EU to provide advice to small and medium-sized enterprises (SMEs). The government's explainer document says:

"The agreement includes typical commitments to provide SMEs with clear and accessible online information about the agreement, helping them to trade and do business in each party’s jurisdiction. This covers customs procedures, intellectual property rights, and public procurement.

"The agreement commits each party to provide for a searchable online database, on measures such as customs duties, taxes and rules of origin.

"The agreement also establishes a framework that will allow the parties to work together to increase opportunities for SMEs and to report on their activities."

Business West has prepared a nine-point guide to completing customs declarations when trading with the EU:
 
  1. Apply for postponed VAT accounting
This allows you to defer paying VAT when importing goods. Instead your import VAT will be paid on your usual VAT return.
 
  1. Apply for a Duty Deferment Account
This will allow you to defer paying your import duty and duty can be paid once a month rather than every time you import your goods. Currently HMRC has waived the need to put up a Customs Comprehensive Guarantee and, if you qualify, will give you a £10,000 credit limit per month.
 
  1. Check your commodity codes
You need to ensure you are using the correct Commodity Code for your goods. There are many implications such as financial or criminal penalties if you are using the wrong codes.
 
  1. Do you need to pay import duty?
Check whether import duty may be payable on your goods after January 1 2021 if importing goods from the EU
 
  1. Register if you trade with Northern Ireland
If trading with Northern Ireland – register on the TSS Trader Support Service
 
  1. Check you have a GB EORI number
You cannot trade with the EU if you do not have an EORI number.
 
  1. Get an XI EORI number if you trade with Northern Ireland
Ensure you have an XI EORI number if you trade with Northern Ireland. You cannot trade without one.
 
  1. Check current trade agreements
You need to check the detail of each trade agreement with each country to ensure your goods can be imported using the correct procedures (for example – using the correct document to claim preferential origin).
 
  1. Make sure you have a customs broker
Ensure you have a customs broker in place to process your import/export declarations from the first of January.


Useful links:  
Sources:

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Everything You Need to Know About Self-Employed Tax Return

Each year, HM Revenue and Customs remind self-employed to complete their tax return before the deadline. A Self-Assessment tax return can look very daunting, but if you’re prepared, organised and understand what you’ll be asked for they’re a lot simpler than they look. Here’s our guide on how to do a self-employed tax return.

Each year, around 11 million customers complete a Self Assessment tax return. The deadline for filing a return on paper is 31st Oct of each year. When this deadline is passed, the only way to do it is online via the government portal. The customers have until midnight on 31 January of the next year to file their tax return online and pay your tax bill. Each customer needs a Government Gateway login and password, which can take up to 10 days to arrive – so make sure you apply well in advance if you’re filing online for the first time.

The Self-Assessment process can seem complicated at first, so here we break down the tax return step-by-step – from registering for Self-Assessment to filing a tax return and then paying your bill.

 

What is Self-Assessment?


Self-Assessment is a system HM Revenue and Customs (HMRC) uses to collect Income Tax form for self-employed people. Tax is usually deducted automatically from wages, pensions and savings thus You might even need to complete a Self-Assessment return if you’re not self-employed – for example, if you earn money from renting out a property, or have significant income from savings, investments and dividends. You can find out detailed information on Self-Assessment here.
 

Who needs to submit a tax return?


HMRC says that you need to send a tax return and pay your tax bill through Self-Assessment if, in the last tax year, you were:
 
  • have earned more than £2,500 from renting out a property
  • have received, or their partner has received, Child Benefit and either of them had an annual income of more than £50,000
  • have received more than £2,500 in other untaxed income, for example from tips or commission
  • are a self-employed sole trader whose annual turnover is over £1,000
  • are an employee claiming expenses over £2,500
  • have an annual income of over £100,000
  • have earned income from abroad that they need to pay tax on
You can also use this tool to find out if you need to send a tax return for the 2019 to 2020 tax year (6 April 2019 to 5 April 2020): Check if you need to send a Self-Assessment tax return
 

How to register for Self-Assessment?

 
The majority of Self-Assessment customers choose to complete their tax return online, which provides an immediate calculation of any tax owed.

If you are required to send a tax return and this is your first time online, you need to register for Self-Assessment and Class 2 National Insurance. To do so, you need to follow these steps:
 
  1. Register online. Once you’ve completed the questions, HMRC will create your account.
  2. You’ll receive a letter with your Unique Taxpayer Reference (UTR) number within 10 days (21 if you’re abroad). You’ll need your UTR to file a return.
  3. You’ll then receive another letter with an activation code for your account. You can get a new activation code if you do not receive it or you lose it.
 
Once you’ve activated your account, you can file your tax return any time before the Midnight 31 January otherwise, you’ll get a penalty of £100 if your tax return is up to 3 months late if you need to send a tax return and you miss the deadline for submitting it or paying your bill. You’ll have to pay more if it’s later, or if you pay your tax bill late. You’ll also be charged interest on late payments: Estimate your penalty for late Self-Assessment tax returns and payments
 
If you’ve filed a return online before, Re-register online (form CWF1) if the work you plan to do is different from what you did before. You’ll need your 10-digit Unique Taxpayer Reference (UTR) from when you registered before. You can find your UTR if you do not know it. You’ll receive a letter with a new account activation code 10 days later (21 if you’re abroad). Once you’ve reactivated your account, you can file your tax return any time before the Midnight 31 January. If the work you plan to do is the same as you did before, sign in to your account.

If you’ve filed before but you did not use the online service, Create an account for the online service using your UTR. You can find your UTR if you do not know it. You’ll receive a letter with an activation code for your account. Once you’ve activated your account, you can file your tax return any time before the Midnight 31 January.

What are allowable incomes and expenses?

Income

If you’re earning money through self-employment, you will be asked to enter your turnover under the business income section.

This is the total of everything you had coming in during the tax year before expenses are deducted.

If you have more than one source of self-employed income, you can enter this amount separately, but make sure the job which you earn the most from is your main employment.

Tipp: If you’re getting a self-employed income COVID support grant, this will need to be reported as income.
 

Expenses

There are two ways to declare your expenses if you’re self-employed.

If annual turnover is below £85,000 you can just enter your total expenses without having to itemise them. If you’re self-employed and your turnover is more than £85,000, you will have to enter an individual amount for each kind of expenses, plus a total at the end. Knowing what expenses, you can and can't claim to reduce your self-employed tax bill can be tricky.

Here’s a list of different expenses you can include if you’re self-employed:
 
  • Accountancy fees
  • Accommodation expenses incurred on business travel
  • Bank charges
  • Business assets (like computers and software) and office furniture
  • Business mileage
  • Charity donations
  • Employee costs
  • Eye tests and glasses
  • Insurance costs
  • Marketing costs
  • Office stationery (paper, postage etc.)
  • Office overheads (including heating, lighting, water rates, business rates)
  • Pension
  • Professional subscriptions
  • Phone and broadband costs
  • The use of your home as an office
  • Stock
  • Training costs
  • Travel and subsistence costs
  • Workwear (including protective clothing and uniforms)

For more information on each category you can visit: Expenses if you're self-employed or use the simplified expenses checker to compare what you can claim using simplified expenses with what you can claim by working out the actual costs.
 
Once you’ve submitted your Self-Assessment tax return, you will be told how much tax and, if you’re self-employed, National Insurance Contributions (NICs) you will need to pay. Then you can set up their own payment plan to help spread the cost of their tax liabilities, up to the value of £30,000. you can make payments in instalments, but these are an advance on your next tax bill. You can arrange for what is called a budget payment plan through your online account and decide how much you want to pay each week or month. You can also choose to stop paying for up to six months. The only restriction is you must be up to date with your previous Self-Assessment payments.
 
Although there’s lots of guidance on the GOV.UK website and you can also call the Self-Assessment helpline on (0300) 200 3310, for those doing it for the first time it can seem like a daunting task. If you’d rather have someone else handle your bookkeeping and Tax Return, check out B&F Services or speak with our consultant. As a team, we are responsible for completing over 3000 projects and securing over £55m in funding for start-ups and entrepreneurs thus your Tax Return will be in a safe hand.

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UK Small & Medium Enterprises Grants: November Update


Securing grants for your small business or start-up is a constant challenge – but there is help available. Here, we have rounded up a comprehensive list of grants from all over the UK. In our previous blog, we talked about UK Business Visas and Grants and introduced them to you. In this article, we are going to provide updated information about the UK SME grants and the currently available supports for small and medium businesses in the UK.

 

What are business grants?


A business grant is a sum of money given to a business to help them further their business. They are usually distributed by governments, corporations, foundations, or trusts. Unlike many other types of business funding, grants do not have to be paid back and business owners are not required to give up equity in exchange for a grant – a condition of winning investment – therefore, they are an attractive form of financing for many companies.
 
Small business grants are often aimed at specific regions, specific industry sectors, specific types of businesses, or specific community groups, which can make grants hard to access for certain companies. For example, some grants for new businesses may only be available for women, while other government business grants may be solely available for start-ups in the environmental sector.
 
The application process is highly competitive – everyone wants free money, after all – while the size of business grants can vary considerably, from several hundred pounds to hundreds of thousands. It is also important to remember that applying for business start-up grants can be an intense, time-consuming process, with lots of tricky steps, procedures, and processes to get to grips with.
 
If you are confused about what grants, ventures or loans are suitable for your business, book a call with us here and wait for one of our experts to contact you for a FREE CONSULTATION!

 

Types of business grants

As mentioned earlier, we have already introduced a number of business grants in this article. Let’s take a look at the other types of business grants out there.

 

Innovate UK Grants

Innovate UK’s pilot programme of innovation loans started in 2017 and, through 7 competitions, has now committed £75m to about 100 successful applicants.

As part of the Government’s coronavirus response package that includes changes to the timing of projects, continuity grants, additional business advice, a ‘fast-start’ competition and the Sustainable Innovation fund, Innovate UK is offering up to £210 million in loans to small and medium enterprises (SMEs) and third sector organisations that have a challenge in continuing innovation activity as a result of the COVID-19 pandemic.

Loans are for organisations that find themselves facing a sudden shortage or even unavailability of funds resulting directly from the COVID-19 pandemic. This innovation continuity loan may be suitable if you need funding of between £250,000 and £1,600,000.

 

Who can apply?

There are three parallel strands for innovation continuity loans:
 
  • strand 1: applicants who are continuing and completing a live project with an Innovate UK award
     
  • strand 2: applicants who have a new project that follows on from a project with an Innovate UK award that was completed in the last 36 months
     
  • strand 3: applicants who are continuing, completing or following on from innovation activity that has not been supported by an Innovate UK award in the last 36 months
You must match all of the criteria:
 
  • for strand 1: currently, funded project participants in an Innovate UK award
     
  • or for strand 2: participants with a project that follows on from a project with an Innovate UK award that completed in the prior 36 months
     
  • or for strand 3: participants with a project that is continuing, completing or following on from innovation activity that has not been supported by an Innovate UK award in the last 36 months
     
  • SMEs (the definition of micro, small and medium-sized enterprises (SME) used by Innovate UK is set out in the European Commission Recommendation of 6 May 2003) and third sector organisations
     
  • undertakings that find themselves facing a sudden shortage or even unavailability of funding resulting directly from the COVID-19 pandemic
     
  • undertakings that were not in difficulty (within the meaning of Article 2(18) of the General Block Exemption Regulation) on 31 December 2019, but that faced difficulties or entered in difficulty thereafter as a result of the COVID-19 outbreak. The Temporary Framework has been extended to provide public support to micro and small companies in difficulty. Micro and small companies are exempt from this test unless:
  1. they are in insolvency proceedings
  2. have received rescue aid that has not been repaid
  3. or are subject to a restructuring plan under State aid rules
They will offer loans of between £250,000 and £1,600,000. The total loan amount cannot exceed 100% of the eligible project costs of your project providing these costs are not already covered through your existing award. They may consider further reasonable costs arising from an increase in the cost of delivering your R&D activity as a result of Covid-19 that are not already covered by other government support.

The Government is looking for businesses who can demonstrate that their innovation activities are making the best progress in innovation and have the best potential for the future.

To apply for an innovation continuity loan, please go to their dedicated landing page, which will direct you to the appropriate application forms.
 

Other Innovate UK funding opportunities

 
Innovate the UK runs a host of other competitions in more niche areas. These include:
 
  • SBRI competition – Modernising Energy Data Applications phase 1
  • SBRI – AI supporting early detection and diagnosis in heart failure management
  • Robotics for a more resilient future R&D strand
  • Robotics for a more resilient future feasibility strand
  • ATI Programme strategic batch: expression of interest October 2020
  • Innovation continuity loans: Strand 2 October 2020 follow-on competition
  • Knowledge transfer partnerships (KTP): 2020 to 2021, round 4

VC Funding

Venture capital (VC) investment can be a useful way to raise funds for your small business. A venture capital fund is an investment fund made up of contributions from wealthy individuals or companies, who give their money to a VC firm to manage their investment portfolio for them and to invest in high-risk start-ups in exchange for equity.
 
All investors are made aware of what funds or businesses their money is being invested in, as well as the potential risks and rewards of such investments.
 
Often when raising a fund, venture capital firms will target a certain amount or specific sector they'll invest in.
 
Each fund will normally finance multiple different businesses – with the range of likely individual investments normally announced when the fund launches.
 
So, here is our guide to the UK venture capital funds that we think you should get to know.
 
Kindred Capital
Latest fund size: £80m (February 2018)
 
Focus: Invests in start-ups from seed to Series A. Generalist.
 
Notable investments:
  • Events platform Pollen (previously Verve)
  • Tampon startup Daye
  • Artificial intelligence drug discovery startup LabGenius
  • Self-driving transport startup FiveAI
 
Index Ventures
Latest fund size: $1bn (July 2018)
 
Focus: Invests across the US and Europe in startups from seed to venture to growth. Focuses on tech sectors including financial services, software, mobility, retail and enterprise.
 
Notable investments:
  • Payments company Adyen
  • Open-source search startup Elastic
  • Digital bank Revolut
  • Digital payments provider TransferWise
 
Passion Capital
Latest fund size: £45m (2015)
 
Focus: Early-stage tech.
 
Notable investments:
  • Digital bank Monzo
  • Small business bank Tide
  • Proptech startup Nested
  • Cryptocurrency exchange Coinfloor
 
Balderton Capital
Latest fund size: $400m (November 2019)
 
Focus: Invests in startups at Series A. Generalist.
 
Notable investments:
  • Micromobility startup Voi
  • Digital bank Revolut
  • AI pharmaceutical startup Healx
  • Direct debit company GoCardless
 
Octopus Ventures
Latest fund size: £230m for its ‘Titan’ fund (April 2018).
 
Focus: Three key areas: fintech, health tech and industry 4.0. The team invests in startups at any stage of growth, typically investing upwards of £1m for seed, around £5m for Series A and following on with tickets of up to £25m.
 
Notable investments:
  • Holiday booking company Secret Escapes
  • Women’s health company Elvie
  • Online second-hand car retailer Cazoo
  • Digital health startup Big Health
 
Accel
Latest fund size: $575m (May 2019) — Accel’s sixth fund for early-stage European companies.
 
Focus: Early-stage companies (typically at the Series A round). Seeks out founders in Europe and Israel who are building “market-defining” business in both the consumer and enterprise sectors.
 
Notable investments:
  • On-demand food delivery company Deliveroo
  • Music platform Spotify
  • Mobile games company Supercell
  • Robotic processing automation giant UiPath

Gigabit Broadband Voucher Scheme

Gigabit-capable broadband connections offer the fastest and most reliable speeds available, and the Government is committed to a vision of a digitally connected Britain.
 
Homes and businesses in rural areas of the UK may be eligible for funding towards the cost of installing gigabit-capable broadband when part of a group scheme.
 
Rural premises with broadband speeds of less than 100Mbps can use vouchers worth £1,500 per home and up to £3,500 for each small to medium-sized business (SME) to support the cost of installing new fast and reliable connections.
 
Group projects are when two or more residents and/or SMEs get together to combine their vouchers towards the shared cost of installation. Single connections are not eligible for additional funding.
 
‘Rural’ is defined using agreed standard measures in the relevant part of the UK. For the gigabit voucher premises in the following areas will be defined as rural. Read more here

 
Also, in order to qualify for a business voucher you will be asked to self-certify that you meet the European Commission definition of an SME whereby your business has:
 
  • Up to 249 employees (in total in the organisation) and turnover no greater than €50m per annum, and/or
  • A balance sheet of no more than €43m
  • You will also have to self-certify that you have received less than €200k in public grants in the last 3 years – the de minimis limit.
  • You will be asked to provide evidence of your status as an SME or sole trader.

 

Horizon 2020

Groups applying for this award must include a university, college or other academic institution. It is open to everyone and has an emphasis on excellent science, industrial leadership and tackling societal challenges.
 
Horizon 2020 grants are typically made available as part of a specific call out for a particular business sector and partners from other EU countries are required. Read more here

 

R&D Tax Credits

R&D Tax Credits are for innovative projects in science and technology. They can be claimed by firms who want to research or develop an advance in their field. You can even claim it on unsuccessful projects.
 
You can apply if you have fewer than 500 staff and a turnover of under €100m or balance sheet total under €86m.
 
There are different types of R&D relief, depending on the size of your company and if the project has been subcontracted to you or not.
  • Small and medium-sized enterprises (SME) R&D Relief
  • Research and Development Expenditure Credit

Seed Enterprise Investment Scheme (SEIS)

You may be familiar with this scheme. It helps start-ups to raise money for their business. You get a maximum of £150,000 including state aid awarded in the three years running up to the date of investment.
 
Make sure you meet the conditions so investors can claim and keep SEIS tax reliefs relating to their shares. Said tax reliefs will be withheld or withdrawn if you do not meet these conditions for three years after the investment. The money must be spent within three years of the share issue.

 

How do you apply for a business grant?

 
There are thousands of business grants available at any one time in the UK, so how do you maximise your chances of securing the one you want? Here is the best way to apply for a grant:
 
  1. Find a grant you are eligible for – As there are so many grants you could potentially apply for, you will need to narrow down your options. You can use the business finance support finder to search for government business grants based on industry, size, or locality.
  1. Research your chosen grant – After you have settled on a grant, it is time to research. Contact the awarding body to assess your chances, read up on the objectives of the grant, and check that the grant’s time frame fits with your needs.
  1. Ensure you have the necessary funds – Many grants require you match the amount of grant money, meaning that you will be putting up 50% of the cost of the project. If that is the case for the grant you are applying for, ensure these funds are available.
  1. Make your application – Finally, it is time to make your application. Provide a thorough business plan, a clear work plan, and an outline of your business history. You should also address the objectives of the grant and explain how the awarding body will be meeting their objectives by selecting your business. This is where our team can help you the most. Contact us here for a free consultation. We guarantee your success!
 
 
With a strong presence in London over the last 15 years, B&F Services has successfully worked with 3000+ businesses and raised over £55,000,000 fund for small businesses to-date and have helped start-ups and investors to settle in the UK. Find out more about our team
 
We hope that you find this article useful and informative. Our company also offers a free consultation, which could help you decide better and achieve your goals easier. Contact us for a FREE CONSULTATION!

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2020 SME Update - Business Visas & Grants

Like the other countries, Coronavirus has impacted the UK Businesses as well as Visa policies and we would like to take the opportunity to shed some light on how currently B&F Services is helping overseas entrepreneurs and investors to take their Visa to the UK. As always, we are keen to work with you solicitors, migration lawyers and business consultants to assist companies and individuals starting their business in the UK.
It is not that long ago that we sent newsletters regarding the UK Government’s Business visa updates. But recently, the government has announced changes to the eligibility criteria for the Start-up, the Innovator and the Sole Rep visa. These changes took effect on 4 June 2020. In this blog we look at the planned changes to the named visa eligibility criteria.
 

IF YOU ARE APPLYING FOR A START-UP OR INNOVATOR VISA

If your endorsement from an endorsing body has expired because you have not been able to travel to the UK, you may still be eligible for a visa. The government will consider all applications on a case by case basis. Contact us for more information

 

REQUESTS FOR INFORMATION FROM AN ENDORSING BODY

According to the Home Office officials’ decision, if Start-up visa or Innovator visa applicants meet the eligibility criteria, they will be able to request further information or evidence from the visa applicant or the Endorsing Body that endorsed the visa application.
Before these updates, endorsement by the Endorsing Body was actually a guarantee for the second stage of the visa application process. After the 4 June, Home Office caseworkers have had the right to ask questions and raise concerns if they doubt that the endorsement by an Endorsing Body has been issued appropriately to the Start-up visa or Innovator candidates.
 
Moreover, the updated immigration Rules say that Start-up and Innovator visa applicants must be:
 
  • Founders of their business
  • Relying on their own business plans and have generated the ideas in the business plan or made a significant contribution to those ideas
  • Responsible for executing the business plan
 

SOLE REP VISA

Some of the key updates in applying for this visa include:
  • ownership of an overseas business is not limited to businesses that issue shares, it includes ownership by any arrangement
  • the dependent partner (of the main applicant) cannot have a majority stake, own or control the overseas business under any arrangement
 
Other updates, clarify the existing position, including:
  • that only genuine applicants can apply
  • the overseas parent company will need to continue to have its headquarters and principal place of business outside the UK
  • both the overseas parent company and the intended UK branch or wholly-owned subsidiary must be actively trading in the same type of business
  • the applicant needs to have the skills, experience and knowledge of the business necessary to undertake the role and have full authority to negotiate and take the operational decisions on behalf of the business
  • the applicant will not engage in business of his own nor represent any other business’ interest in the UK
 
There are also other changes including:
  • clarification that applicants must be the sole founder or an instrumental member of the founding team, relying on their own business plan, and responsible for executing the plan
  • an Innovator visa applicant’s business may have already started trading but the applicant must be the sole founder or an instrumental member of the founding team
  • the “Viability” criteria is to be expanded, requiring the applicant’s business plan to be realistic and achievable based on the applicant’s available resources
  • allowing applicants to change business venture, as long as the endorsing body is satisfied that the new venture meets all of the requirements for endorsement, and without the need to obtain fresh endorsement or submit a new visa application
 

VISA REFUSALS

If your Start Up Visa, Innovator Visa and Tier 1 Entrepreneur Visa endorsement application has been refused, we can help you as your business concept may only need some minor amendments in order for it to be approved. With our excellent connections with several endorsing bodies, we can help you to get back on the right tracks. Contact us here

 
 

Small Business Updates

Following the unprecedented impact of the coronavirus pandemic on both individuals and businesses around the world, the UK Government announced on 17 March 2020 a new package of relief measures which aim to help businesses which have been impacted or which have had to close. Read the following sections:
 

Coronavirus Business Interruption Loan Scheme

Launching from 23 March 2020, the new temporary Coronavirus Business Interruption Loan Scheme has been primarily supporting small and medium-sized businesses to access short-term cash flow support from accredited lenders.
This scheme can provide up to £5m for smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow. All UK-based businesses will be eligible for the scheme so long as their annual turnover is less than £45 million. Read more here 
 

Retail, leisure and hospitality businesses affected by coronavirus

For businesses in the retail, leisure and hospitality trades (including shops, restaurants, cafes, drinking establishments, cinemas, hotels and similar accommodations and live music venues), the UK Government has announced both a cash grant of up to £25,000 as well as a business rates payments ‘holiday’ in England for the 2020 to 2021 tax year.
The Retail and Hospitality Grant Scheme allows businesses in these sectors with a property that has a rateable value of £15,000 and under to receive a cash grant of £10,000, while properties with a rateable value of between £15,000 and £51,000 will receive a grant of £25,000.
Check if you're eligible for the coronavirus Retail, Hospitality and Leisure Grant Fund

 

Small business start-up grants

The available start-up grants are for the following sectors:
The Lottery Heritage Fund supports heritage projects ranging from designed landscapes to cultural traditions.
Innovate UK provides government grants to “develop and realise the potential of new ideas, including those from the UK’s world-class research base”.
Research and Development tax reliefs support companies seeking to research or develop an advancement in their field (even if the project is unsuccessful).
Read more here

 

Small business grants for young people

In response to the Covid-19 pandemic, the government is going the extra mile to support young business owners aging between 18 to 30 setting up a £5 million Enterprise Relief Fund. To be eligible, you need to have set up your business within the last four years and not have any other source of income during the pandemic.
 

New Enterprise Allowance

This scheme gives you mentoring and an allowance if you want to start, or develop, a business. To be eligible, you will need to be over 18 and either:
  • get Universal Credit, Job Seeker’s Allowance or Employment and Support Allowance (or have a partner who does)
  • be a lone parent, sick or disabled and on Income Support
Your mentor will need to approve your business plan. After that, you may get an allowance of up to £1,274 over 26 weeks. You should speak to your Jobcentre Plus work coach if you want to apply for the New Enterprise Allowance to help start or develop your own business. Read more

 

Grants for taking on an apprentice

According to this scheme, you can get financial help from the government to train an apprentice in your small business. If your pay bill is less than £3 million a year, you won’t pay the apprenticeship levy. This means you get 5% towards the cost of training and assessment for your apprentice, if the apprenticeship started on or after 1 April 2019.
The government pays their 95% share and you also pay your share both directly to the training organisation, according to a payment schedule you agree with the training organisation. Find out more

 
With a strong presence in London over the last 15 years, B&F Services have successfully worked with 3000+ businesses and raised over £55,000,000 fund for small businesses to-date and have helped start-ups and investors to settle in the UK. Find out more about our team

We hope that you find our email useful and informative. Our company also offers free consultation which could help you decide better and achieve your goals easier.

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