19 Aug Will Brexit impact on UK business start-ups?
Many business start-ups have expressed considerable concern over Brexit and the ways it could impact on their trading and profitability.
So, we’ve taken a few minutes to round up some key aspects of Brexits to provide some degree of reassurance for existing small businesses and planned start-ups.
Will Brexit impact on my start-up?
First off, it’s important to recognise that if the UK leaves the EU with an agreed deal, there will be a transition period lasting until at least 31 December 2020. This will enable businesses and consumers to be prepared for the exit, allow new rules to be formulated, and also enable continued free movement of goods and people between the UK and the EU. Crashing out without a deal does seem the most likely scenario under the government led by Prime Minister, Boris Johnson, however.
No-deal Brexit on 31 October 2019 could lead to shortages of some supplies currently shipped from Europe, but it’s not clear how long this might last. The UK sterling currency has taken a beating in global markets since the 2016 Brexit referendum, and this is likely to impact on any start-up that needs to import or export goods. In the simplest terms, importing products from anywhere in the world will be more expensive if the pound remains low, however, low currency exchange rates mean exporting products will be more profitable. It’s difficult to say whether or not the UK currency will start to pick up once Brexit has finally happened.
How will VAT and taxation be impacted?
VAT is a UK-wide tax and is also applied throughout Europe. You will still need to maintain VAT records and register your start-up business if your turnover goes over the threshold, currently £85,000 per year (insert link https://www.gov.uk/vat-registration-thresholds). Furthermore, if you do export goods to the EU it’s likely that duties will be payable once negotiations are finalised. Again, it’s impossible to be any more specific than this at this point in time.
The UK is in the process of making all tax digital, and digital VAT returns are already a requirement for most eligible businesses. Brexit won’t have any bearing on the Making Tax Digital initiative, so you will still need to ensure your business complies with all regulations. You can find out more about Making Tax Digital here.
If you’d like to discuss your start-up accountancy needs or payroll requirements with one of the experts at SQK Accountancy or need more information about how Brexit will impact your new business, don’t hesitate to get in touch today.