UNITED KINGDOM

Source: IMF, International Financial Statistics, July 2021.

• The United Kingdom’s (UK) central bank is the Bank of England (www.bankofengland.co.uk).

• Lifting fees are not applied on payments between resident and non-resident accounts.

Both  available  although  most  transactions  are undisclosed. We may require exports to be disclosed if they represent a large % of the transaction.

Both programmes are available.

Alongside receivable financing we are able to offer.

financing against inventory, plant and machinery and commercial property. Facilities must always be receivables led, and other asset financing cannot exceed 50% of the total financing amount.

A debenture will also be required if we are asked to lend against non-receivable assets.

Available.

Standard  concentration  level  is  15-20%,  higher is possible depending on the structure of the transaction.

Usually 85%-90%. Receivable Purchase  facilities can be up to 100%.

100%.

120 days after invoice date for recourse transactions only.

Ability to create structures that meet the requirements of independent auditors, to be classified as “Off-balance Sheet”.

Yes, automated transfer.

On-line applications: Yes, Client Manager.

Delayed dunning (< 60 days from due date) is available but not commonplace in the UK market.

Yes

GBP, EUR, USD. All major currencies with prior approval.

• Credit transfers are used by companies to pay salaries and suppliers, and to make tax and treasury payments.
• High-value and urgent GBP-denominated domestic credit transfers are settled in real time via CHAPS. (The Bank of England has announced plans to develop a new generation of RTGS capable of supporting the future demands of a rapidly changing payments environment. The implementation is to be phased over a number of years and is expected to be completed by 2024, with the legacy infrastructure closed down by early 2025.)
• High-value and urgent EUR-denominated domestic and cross-border transfers can be settled by the Dutch or Irish components of TARGET2, or by the Euro Banking Association’s EURO1 system. Fourteen banks in the UK participate directly in EURO1.
• Electronic credit transfers in other currencies can also be processed via bilateral correspondent banking.
• Low-value and non-urgent GBP-denominated transfers can be settled through BACS (three-day settlement) or the FPS (near real-time settlement). 
• SEPA credit transfers can be settled via STEP2 or via correspondent banking networks. There are 103 SCT participants in the UK.
• Cross-border transfers can be made via SWIFT and settled through correspondent banks abroad.
• The European Payment Council’s SCT Inst scheme (a pan-European 24/7 instant payment scheme for SEPA credit transfers) enables the transfer of funds (the maximum threshold value is EUR 100,000) to another account in less than ten seconds. There are 22 participants.
• EBA Clearing and Italy’s SIA Group have developed and implemented a pan-European platform for instant EUR payments called RT1. It is fully compliant with the SCT Insts scheme and is in line with the ISO 20022 global messaging standards for instant payments. As of June 2021, there were 1,252 SCT Inst participants.
• EBA Clearing has launched a pan-European request to pay (R2P) infrastructure solution with the support of 27 payment service providers from 11 countries. The new 24/7 service is compatible with the SCT and SCT Inst schemes and allows payees to take the initiative to request a specific payment from the payer.
• TIPS is a pan-European service for the settlement of instant payments in central bank money. The service enables payment service providers and ACHs with access to TARGET2 to offer fund transfers 24/7, 365 days a year. TIPS is aligned with SCT Insts. It is primarily focused on EUR payments but is technically capable of settling payments denominated in other currencies.

• Direct debits are used for regular payments, such as utility bills.
• The most common type of direct debit in the UK is the pre-authorised direct debit.
• SEPA direct debits (SDDs) are available in the UK and can be settled via STEP2 or via the SEPA-compliant clearing and settlement mechanisms (CSMs). Forty-three banks participate in the Core SDD scheme and 25 in the B2B SDD scheme.
• Direct debits are settled on a three-day cycle via BACS.

• The cheque as a method of payment is in decline but is still commonly used by consumers and small companies. In 2019, the volume of cheque payments declined 20% to 275.5 million.
• Cheques are truncated into electronic items before being settled via the C&CCC system on a three-day basis. For cheques drawn on banks in Northern Ireland and presented to a bank in Great Britain (or vice versa), clearing takes four days via the Belfast Bankers’ Clearing Company.
• The C&CC has completed the roll-out of a new way of clearing cheques, the Image Clearing System, which enables digital images of cheques to be exchanged between banks and building societies for clearing and payment, speeding up the clearing process from six weekdays to one.

• Card payments, particularly debit cards, are the most popular method of payment. There were 20,883 million debit cards transactions 2020, with a value of GBP 800 billion, a 9.1% and 2.2% increase respectively.
• There were 96 million debit cards and 63 million credit cards in circulation at the end of February 2021. Of these, 87 million debit cards were contactless and 52 million credit cards. One in four payments in the UK in 2020 were contactless.
• Visa-branded debit cards are the most widely issued although Visa Delta, Visa Electron, Maestro and Solo debit cards are also available.
• All debit card payments are processed by VocaLink on a same-day basis.
• Visa and MasterCard-branded credit cards are the most widely issued. American Express and Diners Club credit cards are also available.
• Credit card payments are processed by the card-issuing company.
• All cards issued are SEPA-compliant with EMV chips.

• There were 63,528 ATMs in the UK at the end of 2019.
• There were 3 million POS terminals in the UK at the end of 2019.
• ATMs are linked by the ATM network, LINK, operated by VocaLink.
• All ATMs and POS terminals are EMV-compliant.

• Several pre-paid cards are available in the UK, including the Cashplus MasterCard, a Visa-branded pre-paid card, a pre-paid Maestro card offered by VocaLink, and a contactless credit card, OnePulse, offered by Barclaycard.
• Mobile wallets are offered by a number of backs. Android Pay, Apple Pay and Samsung Pay are also available; 32% (17.2 million) of the adult population were registered to use mobile payments at the end of 2020.

• BNP Paribas' Global Trade Solutions (GTS) team in the UK supports corporations headquartered in, and operating in the UK with a comprehensive range of products and solutions including risk mitigation and liquidity management. The team combines worldwide trade expertise with an extensive international network to provide a best-in-class service to the bank's corporate clients. The GTS team comprises 3 trade finance experts, providing traditional trade services along with structured trade and tailor-made supply chain solutions, according to each corporate's needs.

• The UK has also negotiated “rollover” agreements to preserve preferential trading terms with blocs and countries covered by its EU membership. At the time the UK left the EU, the EU had around 40 deals covering more than 70 countries. The rollover trade agreements that took effect from January 1, 2021 include deals with around 60 countries, such as Japan, Israel, Chile, Kenya, Tunisia, Palestinian Authority, Singapore, South Korea, Liechtenstein, Iceland and Norway, Switzerland, Turkey, Ukraine and Vietnam.
• Most recently, trade agreements have come into effect with Canada (April 2021), Jordan and Albania (May 2021) and Mexico (June 2021). The UK has agreed an agreement in principle with Australia.
• Trade with other countries in the European Economic Area (EEA) and Switzerland is exempt from tariffs and other controls.
• The UK government is prioritising reaching agreements with the USA, New Zealand and the CPTPP.

Source: IMF, International Financial Statistics, July 2021.

• Import licences are required for certain steel products from outside the EU, as well as for nuclear materials, armaments and ammunition.
• Import licences with quotas are required for certain steel products from Kazakhstan, Russia and Ukraine and for certain textiles from Belarus and North Korea.
• Kimberley Process certificates and specific tamper-proof containers are required for rough diamond imports.

• The UK applies the UK Global Tariff (UGGT) to all goods imported into the UK unless the country the goods are coming from has a trade agreement with the UK.
• Imports from certain developing countries attract reduced tariffs according to the UK’s Generalised Scheme of Preferences. In the case of the least developed nations, imports on all goods other than arms and ammunition are free from tariffs.
• Under the Northern Ireland Protocol, goods imported into Northern Ireland from Great Britain (goods not deemed to be at risk of leaving the UK customs territory) are free from tariffs. However, goods ‘at risk’ of entering the EU’s single market are subject to EU tariffs.

• None

• None

• The UK prohibits the import of certain items in line with EU regulations and UN Security Council resolutions.
• Specific imports are prohibited in order to protect fauna and flora, for health and safety or moral reasons, and/or for national security.

• Export licences are required for items subject to international export controls.
• Kimberley Process certificates and specific tamper-proof containers are required for rough diamond exports.

• None

• None

• The UK has implemented the EU directive on export credit insurance.
• UK Export Finance, the UK’s national export credit agency, provides state-supported export credit insurance.
• Export credit insurance is also available from private insurance companies.
• Export financing is available privately from commercial banks.

• The UK prohibits the export of certain items in line with EU regulations and UN Security Council resolutions.

• The UK does not apply exchange controls.
• Restrictions apply to foreign investment in specific industries (radio and television broadcasting, UK shipping and airlines).

• N/A

• N/A

• N/A

• UK taxpayers may apply for advance pricing agreements as well as clearances from HMRC. Except where a clearance mechanism is available by statute, clearances (known as non-statutory clearances) may be applied for where it can be demonstrated that there is material uncertainty and the issue is commercially significant or the legislation is less than four years old. UK tax legislation includes a number of anti-avoidance provisions for which advance statutory clearance may be sought. Also, under a non-statutory clearance procedure, the UK tax authorities’ view of the tax consequences of specific transactions can be sought, on a named basis, with full disclosure, where there is both commercial and material uncertainty.

• Capital gains form part of a company’s taxable profits. Gains or losses on the disposal of substantial shareholdings in both UK and foreign companies can be exempt. The main conditions, broadly, require the selling company to have continuously owned at least 10% of the shares of the company being sold for at least 12 in the six years before disposal and the company being sold must be trading or the holding company of a trading group (without, to a substantial extent, any non-trading activities) for at least 12 months before the disposal (longer in some cases). In certain circumstances, the company being sold also must be either trading or the holding company of a trading group immediately after the disposal. There is a broader exemption for certain “qualifying institutional investors”.
• A non-resident company generally is not subject to tax on its capital gains unless the asset is held through a UK PE or, in certain cases, where UK residential property is owned. Where an election has been made to exclude the profits of Pes, the exclusion also may apply to gains and losses of certain capital assets of the PE.
• Gains from the disposal of UK property and certain UK property-related investment assets by non-residents are subject to UK tax.

• Interest paid to a non-resident is subject to 20% withholding tax, unless the rate is reduced under a tax treaty or the interest is exempt under the EU interest and royalties directive.
• There typically is no withholding tax on dividends paid by UK companies under domestic law, although a 20% withholding tax generally applies to distributions paid by a REIT from its tax-exempt rental profits (subject to relief under a tax treaty).
• Royalties paid to a non-resident are subject to 20% withholding tax, unless the rate is reduced under a tax treaty or the royalties are exempt under the EU interest and royalties directive. Advance clearance is not required to apply a reduced treaty rate.

• The UK has tax treaties with 127 countries. Different rates of withholding tax can apply to interest and royalties, depending on the terms of the agreement with the particular country.
• The UK, as part of the OECD/G20 Base Erosion and Profit Shift (BEPS) initiative, has signed a multilateral co-operation agreement with 30 other countries (“the MCAA”). Under this multilateral agreement, information will be exchanged between tax administrations, giving them a single, global picture on some key indicators of economic activity within multinational enterprises (MNE).
• With Country-by-Country reporting tax administrations of jurisdictions where a company operates will have aggregate information annually relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group. It will also cover information about which entities do business in a particular jurisdiction and the business activities each entity engages in. The information will be collected by the country of residence of the MNE group, and will then be exchanged through exchange of information supported by such agreements as the MCAA.

• The arm’s length principle applies.
• There are no ‘safe harbour’ provisions.
• There is a limit on deductions that can be taken for financing costs. These “interest deduction” rules broadly apply where the aggregate tax deductions for net financing costs of UK group companies exceed either 30% of tax EBITDA or, if the taxpayer so elects, the ratio of group net interest expense compared to accounting EBITDA (capped at 100%). There is a de minimis exemption from the interest restriction rules, under which the first GDP 2 million of interest expense is allowable. Where certain conditions are satisfied, restricted interest can be carried forward and deducted in future periods if additional capacity arises. Unused interest capacity can be carried forward for five years.

• Comprehensive transfer pricing provisions apply to transactions with both domestic and foreign companies.
• The UK transfer pricing rules follow OECD principles.
• The rules include a requirement to prepare documentation to demonstrate compliance with the arm’s length standard.
• Advance pricing agreements are possible in certain situations.

• Stamp duty arises on instruments of transfer relating to ‘stock and marketable securities’ and is charged at a rate of 0.5% of the consideration provided in the form of cash, shares or debt. Stamp duty reserve tax (SDRT) arises on agreements to transfer ‘chargeable securities’ at a rate of 0.5% of any consideration provided in the form of ‘money or money’s worth’.
• Loan capital is generally exempt from stamp duty and out of the scope of SDRT unless it is in some way equity-related, for example convertible into equity, or carries a return relating to profits, an interest rate that exceeds a reasonable commercial return, or a right to repayment that exceeds the nominal and is not commercially comparable.
• A charge to SDRT at 1.5% on entry to certain systems, e.g. on the transfer of UK shares to clearing services or national securities depositaries.
• Stamp duty land tax (SDLT) is charged on transfers of UK real property. Land and buildings transaction tax (LBTT) is charged instead of SDLT on Scottish property.
• For residential property, SDLT rates are between 0% and 12% (increased to 15% for certain property), depending on the value of the property. The rates for non-residential property are 0% to 5%. A 15% rate applies to purchases of residential property valued at more than GBP 500,000 by companies and certain other vehicles, though relief from the 15% rate is available for some businesses.
• As a temporary response to COVID-19, the nil rate bands for SDLT, LBTT and LTT on purchase of residential property are temporarily increased until June 30, 2021.
• In certain circumstances, transfers within a tax group may be free from stamp duty/SDLT.

• There are no specific tax rules for cash pooling arrangements.

• There are no specific financial transactions taxes.
• The UK Bank Levy is a tax on bank balance sheets; bank liabilities are taxed at a rate of 0.14%. The rate is halved for long-term borrowing, 0.07%. There is no charge on the first GDP 20 billion of chargeable liabilities.

All tax information supplied by Deloitte Touche Tohmatsu and Deloitte Highlight 2021 (www.deloitte.com).