Brexit – Is It Business As Usual? (Updated Oct 2019)
The UK’s decision to exit the European Union may have left many business owners scratching their heads wondering what to do next, but this does not mean you should put things on hold whilst we await the outcome.
Brexit has caused a huge amount of uncertainty for business owners across the country and beyond, but there are still many things you need to attend to regardless of the ongoing wild speculation on the topic.
In this guide, we will talk about some of the key activities you need to embark upon in the run-up to the country’s supposed exit from the EU. Your accountant can help you gain much of the clarity you are seeking and handle much of the ‘pain’ linked to the uncertainty.
- As Things Stand
- Why Brexit could work
- How SME’s are reacting
- Facing the music
- Brexit contractor checklist
- Get expert help and advice
“Do or die, come what may”?
Prime Minister Boris Johnson states that his Government is still aiming for a deal with the EU. The supposed deal will outline how goods, services and people will move across UK and EU borders after Brexit. At the time of writing, Britain remains part of the EU single market and customs union. This union allows each of the 28 member states to trade without tariffs or border checks. Johnson has recently been pleading with other parties to agree to a General Election – though leaders including Jeremy Corbyn are refusing to accept this until an extension to the Brexit deadline is in place. The PM has said that the UK will be leaving the EU on the 31st October 2019, ‘do or die, come what may’.
What happens in the event of a deal?
If a withdrawal agreement is made – and the Government aims for this to happen by the 31st October, the way the UK trades with the EU might not change dramatically. However, as time is running out, it looks increasingly likely that the country will leave the EU without a deal. If an agreement is made, it’s likely that there will be a transition period, with most current EU leg islation still applying to the UK and negotiations continuing. It’s possible that the transition period could last for around two years. However, some documentation suggests the period could end on the 31st December 2020 if we come out on the 31st October this year.
As a footnote to this, Boris Johnson was recently ruled to have closed down parliament illegally, with his critics accusing him of attempting to shut down debate and force through no deal. Parliament has now reconvened and the debate continues.
Preparing for no deal
The UK and EU governments are continuing to plan for a scenario where the UK does exit the EU without a deal. Should ‘no deal’ happen, the UK will be regarded as a “third country” by the EU, with “all rights and reciprocal arrangements with the EU” coming to an end. The UK would be treated the same way as other countries that have no free trade agreements with the EU, and there would be no transition period. The way the UK trades with the EU could change completely on the 1st November 2019. There are major concerns that many businesses remain unprepared for this scenario.
Operation Yellowhammer: potential turmoil
If you don’t have contingency plans in place for a no-deal Brexit, the time to act is now. ‘Worst-case scenarios’ outlined in the Government’s leaked Operation Yellowhammer include blockages at EU ports slowing down the movement of goods into and out of the country, business travel being impacted by new immigration checks, increases in gas and electricity bills, disruption for cross-border financial services and problems with data currently protected by GDPR under EU law.
Could I be unaffected by no-deal?
Even if you only have UK customers and clients, it’s likely that you will still be affected by Brexit. For instance, many of the resources that you need to do business may be manufactured in the EU, which means you may face difficulty with sourcing them. It may also cost you more to source them due to new custom import duties and other overheads, and you may need to take action to ensure your intellectual property remains protected outside of the UK. If you employ EU citizens, they may decide to head back overseas. You may also face significant problems with fuel availability as well as prices.
Increased flexibility but slower growth
The uncertainty around Brexit has already had a considerable effect on the economy, with property price growth slowing down and imports and exports being hampered. Fewer EU citizens are coming to the UK, and there have been notable changes to the job market.
However, some UK workers have noted increased flexibility and opportunity as a result of the declining numbers of overseas workers setting up home in the UK, whilst some employers have expressed frustration over this, saying they are finding roles increasingly hard to fill.
It’s possible that many businesses will benefit from Brexit. Some manufacturers may be able to service more customers that normally depend on EU imports, with UK data storage companies also expecting to fare well due to issues with data transfer between the UK and EU. It’s likely that you will still be able to employ EU citizens that are already living and working here after Brexit. It’s expected that EU citizens will need to apply for settled status once they have been living in the UK for five years and wish to remain in the country. They will need to have either started residing in the UK by the day the country exits the EU without a deal or possibly by the 31st December 2020, the date a transition period would be expected to end.
Many UK contractors have been able to command higher pay rates due to the reduced competition from other workers. In addition, growing numbers of businesses are paying more to create more flexible workforces that can be scaled up or down in line with their needs.
There’s also evidence to suggest that attitudes towards freelancers and contractors are improving. With the growing demand for the services of talented freelancers, it’s thought that around half the UK workforce could be freelance by next year. The flexibility freelancers and contractors can offer is of high value to businesses with ever-changing needs.
Filling the skills gap
Many high-skill industries are seeing a labour shortage. This means many skilled workers are currently able to charge more for their services. Surveys suggest the vast majority of companies and organisations are finding it hard to recruit talent for high-skill roles.
The HR sector is just one industry that seems to be seeing a boom in the current climate. With businesses working harder to recruit and retain the best talent, there is growing investment in HR services, with growing opportunities available for recruitment specialists working on a freelance basis.
Small business owners are adopting a wide range of approaches as they defend themselves from the uncertainty related to Brexit. Some companies are adding more funds to their cash reserves in case they see a substantial drop in trade. It’s also increasingly common for small businesses to set up operations in the EU in addition to their UK bases. This is enabling them to serve companies and customers within the EU and be much closer to the needs and demands of their client base.
Some businesses have also decided to start increasing their prices now to protect themselves from the pound dropping further in value. Import tariffs are also proving a big concern for many SMEs, with companies holding back on making purchases until more clarity is available.
Plans put on hold
Brexit uncertainty has made companies from various industries show reluctance in taking on more permanent staff. A potential drop in business post-Brexit has led to more companies enlisting the support of contractors as opposed to full-time in-house staff. Many companies are simply carrying on as they normally would until more clarity is available, feeling they have no choice but to do so. Some businesses are also finding it harder to enter into long-term contracts with other companies due to Brexit uncertainty.
EU national rights
In late 2018, Britain decided to end special treatment for EU nationals, announcing that it will give priority to skilled workers and treat EU and non-EU citizens as the same. The news left some small business owners worrying about how to recruit the staff that they required.
Under the new proposals, skilled workers coming to the country would need to meet a minimum salary threshold, although this figure is yet to be decided. They would also need sponsorship from a company. The Migration Advisory Committee suggested the minimum figure should be set at £30,000. However, many businesses claimed this was an unfairly high sum. A decision has yet to be agreed on this.
Loan Charge worries
EU. Should the UK exit the EU without a deal, it’s likely that EU businesses will prefer to use contractors from countries that remain in the union. Should a deal be reached, the ensuing transition period will mean that contractors can still live and work freely around Europe until December 2020. Growing numbers of contractors are now working hard to boost their online presence and make it easy for employers in and out of the UK to find them. LinkedIn has been a valuable platform for contractors over recent years.
The Loan Charge has been fiercely debated within parliament and the UK Government has now announced that an independent review into the Loan Charge would be taking place. This review has been commissioned by Chancellor Savid Javid, who said the review “will consider whether the policy is an appropriate way of dealing with disguised remuneration loan schemes”.
The review is expected to be completed by mid-November 2019 and should hopefully provide certainty to contractors in advance of the self-assessment deadline on 31st January 2020.
A defiant spirit
These are certainly challenging times and it’s understandable why many businesses have become frustrated by the very mention of the ‘B’ word. However, many entrepreneurs have decided to plough on regardless in the face of adversity, equating scaling back to ‘giving up’. Whilst many SMEs are predicting sizeable changes to their industries, we do not know what form these will take and only time will tell.
On a more positive note, it is hoped that there will be increased levels of inward investment following Brexit from entrepreneurs based outside of the UK despite the hesitation to invest felt by many currently. It is perceived that investors who are prepared to take a longer-term view of the UK economy, stand to benefit the most.
Despite all the speculation on Brexit, it’s also vital that other key issues are not ignored by contractors and SMEs at this point in time. It’s essential that companies and contractors don’t delay essential tax and accountancy decisions because of Brexit. The country’s supposedly imminent exit from the EU is far from the only issue on the minds of contractors and businesses, with topics such as IR35 also causing a great deal of worry.
Though working on a self-employed basis comes with a whole host of benefits including freedom and flexibility, it can also deliver frequent uncertainty – and this has been compounded for many contractors by the lack of clarity on Brexit. Contracting may be heavily associated with freedom and opportunity, but it also strongly linked with instability and insecurity. At the One Click Group we are acutely aware of this and we are here to guide our clients through the maze of uncertainty.
Greater resilience needed?
Chances are that you are currently faced with incredibly important decisions on accounting and budgeting as we speak. By failing to address these, you could be risking bigger problems further down the line. Contractors and SMEs are advised to work hard and to carry on as normal despite Brexit-related uncertainty. Many experts say the most determined contractors and SMEs will be resilient enough to weather the storm regardless of what happens further down the line.
What are contractors doing to protect themselves?
Many contractors are worried that they will be unable to work in other EU countries after Brexit. The freedom that they have enjoyed up until now has only been possible because Britain has been part of the EU. Should the UK exit the EU without a deal, it’s likely that EU businesses will prefer to use contractors from countries that remain in the union. Should a deal be reached, the ensuing transition period will mean that contractors can still live and work freely around Europe until December 2020. Growing numbers of contractors are now working hard to boost their online presence and make it easy for employers in and out of the UK to find them. LinkedIn has been a valuable platform for contractors over recent years.
Embrace the world of networking
Contractors are also being advised to start saving more of their earnings if possible so they can be more protected from any difficulties arising from Brexit. If you have never attended any business networking events before, now would seem a great time to begin. If networking events didn’t help people make valuable new connections and win more custom, they simply wouldn’t be as popular as they are. The more you network, the more you can prepare yourself for a future after Brexit. If you have other skills that you haven’t been using as much as your main talents but suspect you could make a living from these, it could be time to start monetising them. Even moving away from your main line of work for a short period can help you avoid becoming insolvent during periods of uncertainty.
There are several things contractors can do right now to prepare themselves for any eventuality. One of the biggest fears for contractors is the prospect of losing work. Here are some key tips on protecting yourself from even a ‘no-deal’ Brexit:
- Polish up your CV – The more impressive your CV is, the easier it will be to stand out from the crowd should competition for roles become fiercer. Make sure all your qualifications are included on your CV
- Read up on your clients – Are the clients you have been working for likely to scale down or cease their UK operations? Have they announced any changes to their current strategy due to Brexit? Could a no-deal Brexit actually benefit them? It’s important to do this whether you’re currently working for a client or are interested in doing so in future.
- Learn new skills – The more skills you have, the easier it will be to remain in gainful employment. If you can provide a wider range of services, you will be more appealing to employers, even if this means shifting the focus away from your main skill for a period of time.
- Networking – Attend networking meetings, business conferences/exhibitions and local meet-ups. Make yourself more visible to local businesses and raise their awareness of your skills.
- Build your portfolio – If you haven’t already, build your portfolio to showcase your skills. Improve your online presence by bolstering your business -related social media activities such as improving your LinkedIn profile or creating your own personal website. Create a professional profile to make you more attractive to potential clients
- Be prepared – if there is a downturn, it’s wise to prepare now. Try to save enough money to cover at least 3 months living expenses to give yourself a buffer if you need it.
- Talk to One Click Group – We can offer a wide range of tax planning services to help you maintain a clean financial bill of health. Whatever happens, we are confident we can help you weather the storm and help you avoid falling behind with tax.
Get the guidance you need
We offer a range of contractor services to meet various needs. Our clients include a wide variety of freelancers, contractors, consultants, locum doctors and other self-employed individuals. Our services are designed to give you the tax and contractor guidance that you need and minimise the pitfalls of going it alone.
When you have the support of market-leading contractor and umbrella specialists behind you, you can focus on what you do best, safe in the knowledge that everything is being handled by competent and highly knowledgeable professionals. This is the case not only when the economy is performing well but at times of great uncertainty too.
The Umbrella service
Our Umbrella service is the easiest way to get paid. When you become an employee of One Click Group, we will invoice your agency on your behalf, calculate your tax and National Insurance, and make net payments direct to your account each month or week. This means you don’t have to worry about paying too much or too little tax and always know where you stand financially.
Our services reduce your paperwork burden considerably and give you the benefits of working with a large company without losing the freedom of picking your own assignments. What’s more is that you’ll receive statutory payments including sick and maternity pay, and there’s a valuable rewards scheme available.
Limited companies and agencies
We can also come to your assistance if you’re operating as a limited company to take advantage of things like lower dividend tax rates, the Flat Rate VAT scheme and more. It’s well known that limited companies have considerably more paperwork to deal with than sole traders, but we can step in and complete the vast majority of this on your behalf.
We can give you access to online bookkeeping software and also have robust links with a range of reputable recruitment agencies, who are part of our lifeblood. Many recruitment agencies refer their candidates to us to ensure all liabilities are covered and they can focus on making placements whilst we reduce the admin burden in the background.
If you need advice and support regarding Brexit and want to know how to be fully prepared, we’re here to help. You can reach us right now by giving us a call on 0345 557 1287, sending an email to firstname.lastname@example.org or complete the form on our website.