How Does Brexit Affect UK Businesses in 2021?

Brexit, the fun-sounding name for the United Kingdom leaving the European Union, hasn't been too fun for many businesses.

Brexit impacts both businesses based in Britain and businesses elsewhere in the world that do business with UK-based clients or contractors. Here's our outline of the impact of Brexit, and how to work in a post-Brexit world.

Quick refresher: What's Brexit?

Brexit is the result of a national referendum, in which UK citizens voted to leave the European Union. The UK technically left the EU in January 2020, under the Withdrawal Agreement, but it had a Brexit transition period where things were kept mostly the same until the end of December 2020. On January 1, 2021, the U.K. and EU entered into a new relationship based upon the EU-U.K. Trade and Cooperation Agreement.

Because the UK is no longer part of the EU, there are new rules about how to work, trade, and live. This has greatly impacted importers and exporters of goods in particular because leaving the EU’s single market and customs union has altered trading relationships.

Effects on UK businesses

Review new requirements for business travel outside the UK

Britons will be treated like any other non-EU national when traveling to the EU. An employee may need a visa or work permit if they stay for longer than 90 days in a 180-day period, transfer to another branch of the company, or conduct business in a country where your business does not have a presence.

Otherwise, you may be able to travel for business without a visa or work permit. You'll need to review the entry requirements for each country.

You will need to make a customs declaration if you take goods to sell or use in business.

You will need to make a declaration if you bring more than £10,000 in cash with you.

Further reading: Gov.uk guidance: Using personal data in your business or other organization

Check if you need a sponsor licence to employ workers from the EU, Switzerland, Norway, Iceland, or Liechtenstein

Workers who move to the UK will need to meet the UK's immigration policy and must be eligible to work in the UK. You may need to obtain a sponsor license.

Instead of requiring relocation, many businesses find success with remote positions. Hiring an employee or contractor to work remotely does not require a visa or work permit. An international payroll and compliance solution like Deel can help you easily hire and onboard remote workers.

Further reading: Gov.uk guidance: Recruiting skilled workers from outside the UK

Accessing personal data from the EU, Norway, Iceland or Liechtenstein may not be allowed

Data that can identify someone, like names, addresses, and payroll details, need to be appropriately managed if they flow from the EU. You may not be able to access personal data without the proper arrangements in place.

The EU formally adopted an 'adequacy decision' in June 2021, which means that they consider the UK GDPR to be adequate. You can generally continue to use the UK GDPR to safeguard data flowing from the EU. Some types of data, like data used for immigration control, are covered under different rules. There is no regulatory change for transfers of data out of the UK.

UK businesses that process personal data of EU residents should consider:

Updating documentation, policies, and procedures
Updating contracts governing UK-EU data transfers to incorporate standard contractual clauses (SCCs)
Appointing an EU representative
Identifying a lead supervisory authority in the EU

Further reading: Gov.uk guidance: Using personal data in your business or other organisation

Check the rules for providing online services to the EU, Norway, Iceland, or Liechtenstein

If you provide services online, you will need to ensure you are complying with the requirements of any European Economic Area (EEA) country you operate in. You used to be exempt from these rules under the eCommerce Directive.

Further reading: Gov.uk guidance: The eCommerce Directive

You may need to change your accounting and reporting

You must now follow UK-adopted international accounting standards (IAS) instead of EU-adopted standards. Currently, for 2021, there are no differences between the two. You will also need to use UK-registered audit firms.

If you have a subsidiary or a presence in an EU member state, you must follow the reporting requirements for that country.

Further reading: Gov.uk guidance: Accounting for UK companies

Review design and trademark protection in the UK and EU

Registrations of Community designs (RCDs), unregistered Community designs (UCDs), international designs, and trademarks in the EU are no longer protected in the UK. The UK government will automatically re-register many existing designs under UK law. Business owners should review these changes to ensure that their IP is protected.

Further reading: Gov.uk: Changes to EU and international designs and trade mark protection

You may need to pay tax when importing or exporting

You may need to pay VAT and import duty on imported goods.

UK VAT usually does not apply to exported goods, but the receiving country may apply their own VAT.

There are differences in trade with Northern Ireland due to the Northern Ireland Protocol.

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Effects on businesses working with UK-based entities

Note new identity documents when hiring remote UK workers

UK-based workers who have EU nationality had to apply for the EU Settlement Scheme in order to remain in the UK. If you hire a UK resident remotely for your company, you may need to ask for a document confirming their Settled or Pre-Settled status to prove they can work in the UK. You can use Deel when hiring compliantly to ensure your remote worker has the correct documentation.

Check if there are new trade restrictions for goods or services

Countries that had trade agreements with the EU had to renegotiate them with the UK. For the most part, the existing agreements were rolled over to the new ones, so there are few changes. However, if you import or export goods you should review the regulations in order to comply with UK customs, value-added tax (VAT), and sanitary and phytosanitary measures.

You can check with your country's foreign trade department to see if a bilateral free trade deal exists. The EU and UK Trade and Cooperation Agreement (TCA) has made it so there are zero tariffs applied on goods traveling between the EU and UK supply chains, though there is paperwork involved in claiming the tariff-free status. As of June 2021, the BBC reports that the UK has rolled over EU trade agreements with 66 non-EU countries, including Canada, Switzerland, and Turkey.

Additional resources

Using Deel

Whether you're in the UK, elsewhere in Europe, or on the other side of the world, you can hire contractors and employees in any country with Deel. Deel helps you hire, pay, and onboard your international team and takes care of the legal and compliance work. Deel's built for all companies, from small businesses to enterprises. Schedule a product tour with a specialist to learn more.