Business after Brexit: understanding tax and tariffs
The Department for International Trade has released a series of new regulations outlining how trade must be conducted between the UK and the EU from 1st January 2021. Of course, these new rules are complex and pose their own challenges for UK retailers. That’s why in the coming weeks we will be outlining some of the key rules and regulations to help you understand exactly what Brexit will mean for your business.
Naturally, one of the biggest changes for UK businesses moving goods through the EU will be surrounding tax and VAT. The EU operates on a “single market”. This means that businesses moving goods within the EU do not have to pay duty on those goods, however, VAT still applies.
Post-Brexit, the UK will no longer be part of the EU single market. This will mean that businesses, including UK retailers, will have to pay duty on any goods they import or export on top of VAT. This means that along with the 20% VAT you would normally pay on any goods you import, you will also be liable for duty just as you would be if you were importing from USA, China or the rest of the world.
To mitigate the impacts of these tax changes, the UK Government have introduced the UK Global Tariff, which will come into effect on 1st January 2021. The UK Global Tariff will replace the EU Common External Tariff, which previously applied. The key changes are:
- Tariffs will now be in GBP rather than Euros.
- The average customs duty tariff rate will be reduced from 7% to 6%
- More goods categories will be tariff free or have simplified tariffs. You can find out if the goods you import will be subject to new tariffs here
- Tariffs under 2% have been abolished
In order to provide our retailers and exhibitors with the most up to date information surrounding Brexit and trade we will be publishing a series of bitesize guides surrounding the points above. Please keep up to date with the Spring Fair blog for all the latest updates.
Discover more Brexit guidance here:
- Business after Brexit: applying for an EORI number
- Business after Brexit: 5 things you need to know about new import rules