After the UK voted to leave the EU in 2016, the country left the trading block and entered an 11-month transition period to adjust, prepare, and gradually finalize deals for the Brexit. This 2021, the new trade deals negotiated during the transition period will take effect. Let’s take a look at these changes and how it will affect UK businesses.
Trading and Finance
Businesses can continue buying and selling goods across the border without taxes (tariffs), nor are there any set quotas for trading between the UK and EU. However, some new checks will be introduced at the borders, such as safety checks and customs declarations. Business owners should prepare for an increase in paperwork for cross-border trading.
Moreover, there will be additional restrictions on specific UK animal food products.
Both parties have agreed that in order to level the playing field, these shared rules and standards on workers’ rights, and the many social and environmental regulations, are necessary.
Transaction on Brexit
Online transactions, whether personal or for business, it will become a bit tricky. British customers will still have 14 days to return items bought from the EU, but other problems that may arise might be more difficult to sort out. Starting Jan. 1, Brits can no longer avail of the services of the EU Online Dispute Resolution Scheme. Experts advise that credit cards are a wiser, and more practical choice when doing online transactions because Section 75 protection applies to credit card transactions.
It is also prudent to start coordinating with your banks. UK banks will no longer be allowed to provide services to customers in the EU without proper licenses. Some banks have decided it isn’t in their commercial interest to go through with the paperwork.
Brexit: Business Services Factor
Businesses offering services will also lose their automatic right of access to EU markets. There will be no automatic recognition of professional qualifications for some professions. Instead of following one set of rules, the UK will have to comply with the regulations of each individual country that is part of the EU. However, the UK and EU have agreed to keep talking to try and improve access granted to the service sector in the future.
Travel is an important part of business, and it is also affected by the Brexit deals. UK nationals will need a visa if they plan to enter EU countries and stay for more than 90 days, in a 180-day period. EU pet passports will no longer be valid, and European Health Insurance Cards will be honoured until its validity expires. The UK Government have announced that the UK Global Health Insurance Card will replace travel insurance with health coverage, but full details are yet to be announced.
Roaming charges are now applied, and both parties urge operators to provide transparent and reasonable rates for roaming.
Businesses involved in fishing should take note that access to British waters will gradually increase in the next five and a half years. The UK can choose to ban EU fishing boats starting in 2026, but the EU would be allowed to introduce a tax on British fish as a response. Most UK fishers are unhappy with the current arrangements. Both parties have agreed to talk more about better fishing arrangements in 2026.
European Court of Justice and Other Disputes
The European Court of Justice (ECJ) will play no role in disputes in the UK. An independent tribunal will handle disputes that can’t be resolved between the UK and the EU. This way, the UK can regain control of its laws.
Northern Ireland is an exception.
The UK and EU have agreed to make Northern Island an exception to many of the Brexit deals. Lorries can still travel across borders without being inspected. However, some new checks will be needed on certain goods arriving in Northern Ireland from the rest of the UK. In order to reduce any potential disruption, supermarkets will be given a 3-month grace period, and certain meat products will have a 6-month grace period. It remains unclear and a subject for negotiation what happens after these grace periods have elapsed.
Now that the UK is no longer part of the EU, it is free to set its own trade policy and negotiate deals with other countries, such as the US, New Zealand, and Australia. While there will be much of adjusting to do, especially in terms of additional paperwork, checks, and restrictions, the government is hopeful that the Brexit deals will bring exciting revival to the British economy.
If you are seeking more Brexit updates and how you can repurpose your business or more business planning so that it would snugly fit into the present world situation, Annette & Co. is here to offer you a FREE consultation. Annette Ferguson – Chartered Accountant and Certified Profit First Professional – can help you unlock financial strategies to improve the profitability of your business amidst an economic crisis.
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