Please note that this article is intended for educational purposes only and should not be deemed to be or used as legal, employment, data protection or tax advice. For guidance or advice specific to your business, consult with a qualified professional.
Brexit has dominated the news since 2016, when the UK voted to leave the European Union. A trade deal was struck between the two in December – but what does it mean for your small business? From VAT to imports and exports, we offer a helping hand to navigate the new environment and key Brexit business changes.
What impact will Brexit have on eCommerce?
Britain is no longer part of the single market and customs union after leaving the EU. This means goods aren’t automatically allowed to move freely between the two and a full customs border is now in place.
If you run an eCommerce service selling goods to the EU, you should expect to face a longer list of rules. We recommend factoring the following into your Brexit business planning:
New customs forms. When posting goods internationally, you may now need to fill in a customs declaration form. Forms CN22A and CN22B are required for items with a value up to £270. Form CN23 is for items valued above £270.
EORI numbers. Your small business might also need an Economic Operators Registration and Identification (EORI) number to keep track of any goods you sell online to EU customers.
Special licences. If you sell sensitive items such as chemicals, food or software, you may require a special licence to send these goods to EU buyers.
What are the import and export changes after Brexit?
The most important thing to get your head around is the need for customs declarations on all UK-EU imports and exports. This wasn’t the case before Brexit, when the UK was a member of the European customs union.
Customs declarations are legal documents attached to goods you ship across the border, stating the value of the package and what it contains. Customs officials use these declarations to check the correct taxes and duties are being paid. Your items could get held up at the border without a valid customs declaration.
When importing goods through the ports, you may now need to pay customs duties and VAT too. The amount you pay depends on the type of products you’re importing. You’ll also face taxes and duties when exporting goods, with different rules applying in each country.
Even postal deliveries are affected and there are now forms to fill out if you’re posting goods to the EU. You may have to also pay VAT, customs duty or excise duty to the courier when importing items by post.
It’s important to note things are slightly different for Northern Ireland, which has special status.
VAT rule changes after Brexit explained
Make sure you get in touch with your EU suppliers if you regularly import goods from the continent. This is because the VAT rules changed at the end of 2020, placing more responsibility on them.
HM Revenue and Customs (HMRC) is no longer collecting tax when goods are imported into the UK from the EU. Instead, European sellers are asked to register with HMRC and then charge UK VAT at the point of sale. Delays and extra costs could arise if your EU suppliers don’t comply with these changes.
To pass on VAT import costs to your customers instead of swallowing them yourself, you can use the reverse charge process. However, this can only be applied if you’re definitely selling the goods on to customers in Britain, rather than using them within your business.
Is business travel in the EU impacted?
Visas and work permits are something else to consider as part of your small business’ Brexit preparation.
On a positive note, you’re unlikely to need these documents for routine business meetings in the EU, Switzerland, Norway, Iceland and Liechtenstein – as long as you’re travelling there for less than 90 days in a 180-day period.
However, a visa or work permit may be needed if you’re intending to stay beyond that period. These documents may also apply if your staff provide services to clients in countries where your business has no physical presence. The same is likely to be true for any staff transferring from your UK office to a branch in an EU country. The Government has put together a handy list of entry requirements for different countries for guidance.
One last thing: before agreeing to any contracts with EU partners, it’s worth checking your UK professional qualifications will be recognised in other countries.
Hiring EU talent
Brexit has brought an end to freedom of movement between the UK and EU member states. In a nutshell, this means people can no longer move between Britain and the EU to live, work and travel as and when they choose.
This could pose a headache for your small business as you navigate Brexit. British employers are no longer allowed to simply hire talented workers from the EU and wait for them to move here. Instead, the UK is moving to a points-based immigration system. So, what does this mean in practice?
Skilled workers from the EU and elsewhere will now need to apply for a visa to relocate here. To get enough points to qualify, they’ll need a job offer from an approved employer. The role needs to have a skill level of RQF3 or above – equivalent to A-levels – and a salary of at least £25,600. A good standard of English is also essential. Irish citizens aren’t affected by these changes.
Will GDPR rules change after Brexit?
Since 2018, the General Data Protection Regulation (GDPR) has provided safeguards to EU and British citizens by managing how companies can collect and process their personal data.
Brexit is unlikely to change how your small business complies with data protection rules. That’s because the UK Government is bringing in new legislation that follows the main terms of the GDPR. It means our data protection laws will remain aligned with those used in the EU – avoiding any major disruption to companies and individuals based here.
Learn more about Square’s commitments to GDPR compliance.
Further Brexit support
If you still have concerns about the impact of Brexit on your small business, there’s plenty of support available.
The Brexit Advice Service offers guidance from specialist advisers, while the Government’s SME Brexit Support Fund provides £2,000 grants to help with imports and exports.