UK Economic Growth Strong
Economic growth in the UK has recently been revised up to 0.9% for the second quarter of 2014, by the Office for National Statistics, with year-on-year growth standing at 3.2%.
The ONS also said that the UK reached its pre-recession peak earlier than previously thought, in the third quarter of 2013.
Services Good, Eurozone Bad
Growth was particularly strong in the dominant services sector (everything from lawyers to hairdressers and hotels) and also in construction from a buoyant housing market, with manufacturing figures weaker, though still positive, due to the resurgent economic issues in the Eurozone. Exports also suffered in the wake of this slowdown in foreign markets.
However, business investment, an important factor in generating sustainable economic success, reducing reliance on consumer spending and improving productivity, grew by a handy 11% in the second quarter and the Bank of England is forecasting growth of 3.5% for 2014.
Despite these figures, against a background of low inflation and a potentially cooling housing market, the consensus among commentators still seems to be no interest rate rise until 2015.
The International Monetary Fund also expects the UK economy to outstrip other developed countries and recently upturned its forecasts for UK growth, to 3.2% in 2014 and to 2.7% in 2015, slowing due to the assumed interest rate rise in that year.
The calculation of growth figures for the UK economy is now in line with other countries, in that it includes spending on research and development as well as the dubious economic benefits of illegal drug sales, prostitution and weapons manufacture!!
Homeworkers and Digital Traders
We thought it worth a very brief signpost to some new initiatives that could help two specific groups of typical small business or freelancer:
Historically, businesses within the EU, that are supplying goods and services to customers in other EU countries, have not had to register for VAT in the countries to which they provide them (only in the country of origin). For some ‘electronically supplied services’, such as e-books, apps and streaming, this is to change from January next year.
From this point, suppliers of services that are provided electronically will have to be registered for VAT in all of the destination countries and to account for VAT on supplies in these states. This applies to products that are actually delivered electronically, i.e. not traditional e-commerce, i.e. goods that are simply advertised, found and ordered online – the rules for these are unchanged.
The process can, however, be simplified by registering to use HMRC’s ‘Mini One Stop Shop’ (MOSS) service. Using this, small businesses affected can apply for VAT registration in one EU state and then account for VAT in each country using this single VAT registration, rather than having to register in each country individually.
The government expects up to 40,000 small businesses in the UK to use the facility.
An HMRC Q&A video is also now available to view on YouTube.
The Home Business Initiative, launched by the government in August, relaxes planning laws on home offices, clarifies that business rates will not apply (in most cases) and allows tenants to run businesses from home without affecting their lease status. The government estimates there are some 2.9 million homeworkers in the UK.