Great, you are self-employed and doing well for yourself, an accomplishment in itself in a difficult economy, but wait… the government is throwing a wrench into the works with Brexit. But what does it mean for the self-employed?
The first to lose out when companies decide to move their operations out of the UK or hold back on investment would be self-employed. What about us who are in finance and tech? These are 2 industries that have the largest potential to see a drain in investment and people when the UK becomes an international hostile environment.
I find it interesting that 63% of the five million self-employed individuals, in the UK, don’t think that Brexit will impact their businesses. Do you realise that almost £300 billion annually is contributed by the self-employed, which will be hugely impacted by Brexit?
The UK government consulted and provisioned for large companies with complex supply chains and ensured that provisions will remain free-flowing.
Do you realise that not once have freelancers and the self-employed been involved or be on the forefront of media discussions or negotiations? The total disregard for an industry that plays a huge role in the growing UK economy is something that is strikingly evident, annoying and even downright disrespectful.
What do the self-employed want?
Obviously, we want a non-disruptive Brexit that includes freedom of movement for people, and access to the customs union and the single market.
What are some issues the self-employed might face?
World Trade Organisation Tariffs
Both the buying and selling of services and goods have a high potential of being a lot more expensive when the UK exits the EU without a deal. This is due to the World Trade Organisation tariffs. For those that have any form of trade with the EU, it could make providing their services less competitive compared to the same industries on the continent.
If your clients are not EU based, they could be in the UK, but EU-owned. Prior to the EU referendum, research and modelling undertaken by the Treasury showed that there could potentially be 820,000 unemployed as a direct result of WTO tariffs.
Freedom of Movement
One of the key pillars of the EU has been the freedom of movement for both skilled and unskilled workers. In the EU referendum, the freedom to work and move as you choose was a highly controversial aspect with prime minister Theresa May confirming that this will end after Brexit. It was a freelancing dream marketplace that opened up 28 countries to the self-employed, with equal access to work in any and all of these nations.
While tourism might not be influenced as badly all other industries, expressed concern is regarding the movement of their workers across the continent. If you have clients based in any of the other 27 countries, you will certainly face challenges. Sponsorships and work visas will become a consideration that could be cumbersome and expensive for clients.
This will make freelancers and the self-employed contractors based in the UK unappealing to work with. When we get the no-deal Brexit, any UK passport holder must have six months or longer passport to enter the EU. If you are an EU self-employed currently in the UK, you will have to apply via the EU Settlement Scheme to be in the UK after June 2021.
Employment and Tax
If you wonder why I bother with tax and employment since it is a national government issue, try this one. The UK provided for sickness and pensions through paying into the EU contributory benefits system. Now, when the UK leaves the EU, what do you think will happen to the EU citizens that are self-employed in the UK? These citizens will be paying a double set of national insurance. Currently, EU citizens can live and work freely in the UK, but what is going to happen post-Brexit?
When we face a no-Brexit deal, the UK could change legislation and diverge from EU member states, but how would we know? In addition, taxation can also be indirectly affected. The UK currently has an £85.000 vat exemption threshold. When leaving the EU though, the single market could drop to £76.000. This is bad for small and medium businesses as you might need to add VAT to products and services.
Regulations
Okay, so the UK is said to be leaving the EU single market, even so, 60% of the UK legislation is still coming from the EU. This has allowed for the ease of trade across all industries that range from finance to data and chemicals. This Brexit calamity means that when you own a company in the UK and trade with the EU, you could be facing two different sets of regulations. You will fall under direct UK regulations including complying with whichever country you are doing business with regulations as well.
Everybody speculates and nobody is certain about what lies ahead. While it is easy to say, “Oh don’t worry! It should be…fine!”, that is not quite what the hardworking self-employed individual in the UK wants to hear.
A recent article by Professor David Collins from the University of London where he dissects the WTO rules, clearly proves the self-employed have reason to worry. He reckons that there are no grounds for the EU to exclude the UK’s goods and services from its market.
But his very next sentence agrees that the WTO coverage of services is incomplete and that it will not grant firms in the UK at the same level of single market access they currently enjoyed with the EU.
This is, in particular, a major headache for independent professionals in the UK that have contracts with EU companies that are currently in the UK and export products and services to the EU single market. The moment that the single market has reduced access, there is only one option left, these companies will relocate. This is going to lead to fewer opportunities to freelancers in the UK.
The only thing I can say, regardless of what happens, one thing rings true; we will have to adapt to whatever world we find ourselves in post Brexit.
