How Brexit Affects Small Businesses

Brexit Business EU

After lots of deliberation and discussion, it was a shock to the system when Brexit finally happened. As expected, business owners had many questions: how does Brexit affect small businesses? What does the future of trade look like with our close neighbours? What rules will I need to follow? As the date got closer and questions went unanswered, the public needed time to accept the new changes, and then the pandemic hit. 

5.94m small to medium businesses operate in the UK. Therefore, it was no surprise that Brexit’s impact on businesses would be intense. Once the UK eventually left on 31st January 2020, trading with Europe changed forever. 

Before Brexit, trading was a simple process. Customs made few checks, and very few documents were required when importing. 

Since then, importing is a whole different game; taxes have gone sky-high, and imports have dropped by 40%. Not only that, but the price of bringing goods into the UK has skyrocketed. For example, containers to Felixstowe from Shanghai used to cost around $2,000, now they are about $11,000. That’s a 450% increase! The cost of importing has risen to an extortionate amount; therefore, businesses in the UK will have to re-consider whether the process is even worth it! Brexit’s impact on business will continuously unfold. Hence, more and more companies are attempting to keep much of their operations inside the UK.

Brexit Pandemic Impact

Courtesy of YouGov

Tariffs After Brexit

Before Brexit took place, any goods coming into or leaving the UK had a VAT system in place. Trading was very easy, as it worked like a single market. Lorries would drive to France, collect their goods and go home. Today, lorries are stuck on borders for days due to paperwork. 

Therefore, Brexit impact on businesses has meant that importing and exporting requires you to understand the VAT requirements. When sending or receiving goods, make sure you have done your research to avoid unexpected hurdles. The new trading rules with Europe are here to stay, as the transition period ended in December 2020. Furthermore, you need to factor in that Northern Ireland has its own set of regulations. 

With so much new information to grasp, it’s hard to ensure your team are on the same page when they are not all in one place. Hence, deskless employees face challenges as they don’t have the same access to information as in-house employees. Phoning and calling your drivers can take ample amounts of time, especially if you can’t get hold of your driver. 

Brexit affects small businesses in many aspects. However, by having effective communication company-wide, you reduce levels of stress and uncertainty. Apps such as Connecteam allow you to record videos that will help show your drivers how to fill out the forms or complete paperwork that is now needed. Digitising information allows your staff to view protocols and procedures anytime, anywhere. 

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Preferential Tariff

After the UK left the EU, there was a transition period that ended on 31st December 2020. During this time, the EU and the UK formed an agreement on free trading. However, free trading is subject to a preferential tariff. To be eligible for the preferential tariff, you need to provide proof of origin. If you can’t show origin, you can still trade, and the Most Favoured Nation (MFN) laws will apply. You may need to pay customs duties to the UK Global Tariff. If your business requires you to export goods to the EU, you might have to pay Common External Tariff. If you have a small business or are considering opening a business, you may search which Brexit tariffs impact your business.

The preferential tariff is not awarded every time you import into the UK or EU. You need to check that the goods meet the rules of origin, according to the Trade and Cooperation Agreement. If you are trading with your customers who live in the EU, be aware that they might ask for the origin statement

For exports above £5,700, the EU exporter must provide the statement of origin with their registered export number. Knowing what qualifies and what doesn’t for the rules of origin is a bit tricky. You should check with an expert if you claim preferential duty as you don’t want to incur charges later on. 

 

Authorised Economic Operator

If you trade with several parts of the world and are based in Great Britain, you could consider the authorised economic operator (AEO). The AEO will allow you the following:

  • Expand your business with easier customs authorisations
  • Reduced amount of documents and goods checks due to a better risk score.
  • Trade with the USA, Japan, China, and the EU. 

Check for more information and to see if you can apply. 

 

New VAT Laws

Any goods imported into the UK over £135 could incur VAT, even from the EU. Due to Brexit affecting business, a VAT return means you buy now and pay later. VAT return could do wonders for your business, as you fill out the import and VAT return on the same form. Whereas now, you may be paying for VAT once you receive your goods and then try to recover your cost later. Check to see if you are able to apply here.

 

Brexit Negative business

Courtesy of YouGov

Additional Forms

After Brexit, small businesses trading with Europe need to ensure they have all the necessary paperwork.  

  • EORI Number: The number must start with GB and it’s used when you pass goods from Great Britain and Europe. As the rules for Northern Ireland are separate, the number begins with XI. 
  • Posting goods: If your business requires you to post customers their goods, you need to fill out a customs declaration form. 

 

Conditions for Employing EU Citizens

As an employer, you have until 30th June 2021 to check the status of your non-UK employees. From the beginning of January 2021, Brexit impact on businesses meant that the rules for Non-UK citizens changed, and those arriving for work will require a visa. Should you decide that you want to employ someone from the EU, you could apply to become a sponsor. Once approved, the sponsorship will give the employee four years to work in the UK. 

If you have staff working for you in the UK from the EU, EEA or Switzerland, they have until 30th June 2021 to apply under the settlement scheme. The scheme is only for those who have settled or pre-settled in the UK before the 31st December 2020. 

 

Travelling to the EU for Work

If you need to travel within the EU, you might ask, how does Brexit affect businesses? Travelling now requires having a passport with at least six months validity. If you notice that your passport expires within less than six months, you should apply for a new one. 

Short stays in Europe may require you to apply for a visa waiver form, known as ETIAS. The ETIAS will only come into effect in 2022. The significant change is that UK nationals are able to stay for 90 days. 

 

Changes to Your Team

After understanding that anyone new coming into the UK may require you to sponsor them. You may be thinking that the Brexit impact on business has made you consider hiring British nationals, as it’s less hassle. If you are currently looking to hire new staff, your new employees onboard smoothly through Connecteam. Set up in just a few minutes. Upload all the training manuals, announce their arrival to the rest of the team members, and off they get to work. 

 

Connecteam Helps Manage Your Small Businesses 

During COVID, we all managed to adapt our work operations quickly to fit the new rules set by our governments. COVID has required us to perform daily checks, such as check our temperature, notify others if we have symptoms, etc. COVID made us all a little uneasy, and employees needed reassurance from their workplace. Without an effective work chat, rumours spread, and information from the media is more prevalent than the actual situation. Brexit has shaken up our world, of course not to the extent of Covid. 

Therefore, Connecteam takes off a little pressure when you need to communicate fast and efficiently. You can set up forms that help the new Brexit processes run smoother. For example, did you fill out form A or form B. Connecteam is ready to go in just a few minutes and with no setup fee. Thousands of small businesses choose to digitise their business and improve the overall employee experience. This includes the following:

Communication:

  • Communicate easily with a private or group chat
  • Reach any member of staff instantly with an in-app employee directory
  • Encourage engagement with a suggestion box, custom surveys or live polls
  • Share photos, videos or GIFS which can be accessed anytime and from any mobile device. 

Operational features:

Onboarding and skill-building features:

  • Send out training courses for new hires or enhance skills
  • Build a searchable library so employees have access to company material anytime, anywhere
  • Knowledge hub for new hires that include all materials like procedures, protocols, the employee handbook, etc. 
  • Better your onboarding by creating quizzes after reading certain material

Connecteam is a game-changer for business owners, start for free now!

 

Summing Up How Brexit Affects Business

There’s a lot to be said about the changes made due to Brexit. With so much uncertainty, the best way is to take each day as it comes. There is a lot to navigate, especially when you try to comply with the new rules. 

Good communication with your employees helps you stay focused. Everyone in your team should be kept up-to-date with the latest changes. However, your business can still succeed even with Brexit. Keep trading, and with our help, you are able to improve your communication game.

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Connecteam: Communication Game Changer

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