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Are UK businesses prepared for Brexit?

Iain Leaman
26/03/19

As the UK finally prepares to leave the EU, employers and employees have lots of questions about the impact on the future of work. EU nationals currently play a significant role in UK businesses, with recent ONS figures showing there are 2.28 million EU citizens working in the UK, representing 7% of the total workforce in the UK. And it’s not only employees that your business should worry about, there will be import charges and business funding too. While we’re yet to find out exactly what will happen when the UK leaves the EU, there are certain things businesses can do to prepare.

New regulations for employees

When the UK leaves the EU – whether that’s at the end of the month or later in the year – a transition period will run for European nationals living in the UK to apply for settled or pre-settled status. Settled status is for EU citizens and their families who have been living in the UK for at least five years by the end of 2020. Applying for settled status ensures they are able to remain and work in the UK indefinitely. Pre-settled status is for those people who have been living in the UK for less than five years, at which point they can apply for settled status. As an employer, support your staff. Communicate with them and look at how you can take away any stresses, by helping them through the application process and beyond. You may also want to seek legal advice if you have any specific concerns.

Import tax changes

Over 130,000 small businesses will be forced to pay VAT upfront on all goods imported from the EU after Brexit. Currently, the cost of VAT is passed along the supply chain when importing from the EU, but from 2020 these costs will have to be paid immediately, which will undoubtedly impact the bottom line. In this case, you could look at seeking new suppliers within the UK.

Funding

The European Investment Fund (EIF) has been fostering innovation through significant funding to small and medium sized businesses since 1994. Post-exit this source of funding – over £2 billion in the UK to date – will be lost. If you need funding, it’s important to look at other options to finance your business now. The Enterprise Investment Scheme and Seed Enterprise Investment scheme could both help in terms of ensuring a flow of funds to qualifying companies by using tax breaks to de-risk investment, for example. Alternatively perhaps crowd funding could be an option – it has provided a cash lifeline for many a new business – or look into platform lending.

Brexit will have a huge impact across industries, on the economy, to trade and to individuals. If you haven’t already, it’s time to start preparing now for the impact on your employees and your business.

Read our related blog: How can the UK overcome its tech talent shortage

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