At 11pm on the 31st December 2020, the UK left the European single market and customs union.
But after more than 6 months of post-Brexit Britain, what are the tangible effects of Brexit on UK companies? In this article, we cover some of the positive and negative impacts Brexit had on UK businesses, and how things are different.
The key effects of Brexit on UK businesses
Leaving the European Union has been a double-edged sword for businesses in the UK. We’re still waiting to see the full outcome and effects. It’s now harder to exchange goods with the EU, but easier to trade with some other markets.
Before Brexit, we were part of a single trading area. Goods could be imported and exported between the UK and EU without tariffs, border checks, and need for documentation. Now there are customs borders between Great Britain and the EU, operating at places like Dover. We can escape tariffs but need to provide documentation and pass checks.
Industries that trade regularly with the EU have been most affected, but there are also issues around workers.
Here are some of the positive and negative impacts of Brexit on UK businesses, and how we can help. Note that some of the below only applies to Great Britain (England, Wales, Scotland), with different rules for Northern Ireland.
Positive impacts of Brexit on UK businesses
Less EU restrictions
After Brexit, the UK is less restricted by some EU regulations. It’s argued that Brexit has had positive impact on UK businesses, by allowing them to trade more freely with non-EU markets. For example America and Australia.
The UK is working to put in place new trade agreements with many non-EU countries around the world.
Opportunity for growth
Emerging markets like China, South Africa and Brazil are accounting for more consumer spending every year. The fall of the pound makes British products cheaper for international markets, which could make them more appealing.
You may want to research which countries need your products and services, and work them into your strategy.
Becoming an AEO
If it can dedicate the resources, a UK business might want to apply for Authorised Economic Operator status. This essentially means you’ll have an easier time moving goods between countries, as you’re seen as ‘trusted’. HMRC awards AEO recognition, and acceptance depends on things like compliance, records, and dedication to customs.
However, becoming an AEO business is difficult, and smaller businesses may prefer to use a broker or agent.
Negative effects of Brexit on UK businesses
Tariffs for British exports
Luckily, the UK secured a post-Brexit trade deal with the EU, allowing UK businesses to continue tariff-free trading. You can read the agreement between the UK and EU in the Trade and Cooperation Agreement (TCA) of April 2021.
However, imported or exported UK goods have to meet specific terms the TCA set out to qualify. Businesses need to demonstrate goods originate from either the UK or EU. If they’re agricultural produce, they need to have grown in British or European soil to be considered originating. If they’re from outside, they need to have been ‘significantly changed’.
If products don’t meet rules set out by the TCA, they can be subject to the UK global tariff or common customs tariff. And even if they meet them, Europeans can be subject to unexpected custom duty charges when buying from the UK.
Claiming the preferential tariff rates can be more effort than it’s worth, and some businesses just pay the customs duty.
Disruption in supply chain
Many companies stockpiled before Brexit, in order to skip tariffs for importing EU goods. To continue good relations between UK and EU businesses, it’s important to offer transparency about any charges or tariffs they may face.
There are also logistical problems with the supply chain – delays haven’t been helped with a pandemic either.
CE Marking Changes
“CE marking is an administrative marking with which the manufacturer or importer affirms its conformity with European health, safety, and environmental protection standards for products sold within the European Economic Area.”
Businesses now have to factor in the new UKCA marking, while before they were just using CE marking.
The CE marking is still relevant for the EU (so if UK companies are selling there – CE is still used), but now products being sold in UK cannot use the CE marking and need to use UKCA marking. The change is being phased in gradually.
Decrease in EU workers
Brexit has been tough on the workforce, with the end of freedom of movement between the UK and EU. Businesses won’t be able to rely on cheap labour, and you may need to invest more in apprenticeships and existing employees.
After the 1st January 2021, non-UK citizens arriving in the UK will also need a work visa. Your business will need to apply to become an approved employer sponsor, in order to still offer work to non-UK citizens. If you have existing EU, EEU or Swiss employees, they will need to apply for settled or pre-settled status to remain working in the UK.
Confidence in the UK
Since Brexit, the FTSE 100 share index has been volatile, and the Sterling rate hasn’t returned to pre-Brexit levels. Confidence in UK businesses will probably continue to be unstable and unpredictable for the foreseeable future.
There are many legal services available to businesses looking to reduce the negative effects of Brexit.
Our thoughts on the impact of Brexit on Businesses
As notaries, we deal with international documents and businesses on a daily basis. Our role is to notarise and certify documents so they’re still able to be used abroad, alongside helping clients legalise them via apostille or embassies.
Here are a few things we’ve noticed at MSC notaries since Brexit and the effects it’s had on businesses we know.
Are we getting more businesses wanting to relocate out of the UK?
“Not so many businesses relocating, but a lot of businesses seem to be opening up subsidiaries in EU countries.”
Is there now more/less paperwork that businesses need notarising?
“On the whole probably a bit more. Whereas before, notarisation wasn’t required for certain documents/processes, some EU countries are now insisting that documents are notarised and/or legalised before being sent. Similarly, a lot of documents that didn’t need to be apostilled/legalised before now require this before being sent to the end user.”
Have costs for notarisation/apostille/legalisation changed since Brexit?
“Per document fees are the same. The volume of documents has increased so clients are finding total costs are higher.”
How has Brexit affected MSC Notaries from a business perspective?
“From a practical point of view, it hasn’t had much impact. However, we are seeing a slightly higher volume of documents coming through which require notarisation and legalisation.”
How can MSC Notaries help businesses after Brexit?
With some businesses wanting to move abroad, we can help notarise and legalise corporate documents for use overseas. We offer a streamlined and professional notary service in London for a wide range of businesses.
If you need help out-of-hours or at your office, we offer a mobile notary service for London and beyond.