If there’s one thing that’s certain about Brexit, it’s uncertainty! At the time of writing, the UK is scheduled to leave the European Union on 31 October 2019, assuming no deal is agreed on before then...
But what exactly will happen on that date is anyone’s guess - particularly if a no exit deal is struck. And because of this, how a no-deal scenario will affect self-employed and contract workers in the UK is still a little foggy. This is slightly unsettling for all you self-employed professionals, of which we understand accounted for 15% of the UK workforce at the end of 2018. There’s quite a few of you, so if you’re feeling on edge about the whole Brexit situation, it’s safe to say you’re not alone!
So what happens if there’s no deal? Will it be cause for celebration and champagne, or hiding under a rock for a few years? Well, it’s hard to say. But we’re going to take a look at what self-employed Brits may face if the UK crashes out of the EU without a deal.
While some people are concerned for the welfare of their summer holiday, and we’d be lying if we said that we weren’t - after all, who doesn’t love some time in the sun?! - the new freedom of movement will also impact business.
If the UK leaves the EU without a deal, it’s widely predicted that freedom of movement will end - at least in the short term. This is because the UK will also exit the single market, which is predicated on the principle of freedom of movement. There are four ‘freedoms’ to consider: goods, capital, services and labour.
No longer being part of the single market is a big concern for many contractors, as it can restrict their ability to work and trade overseas. One of the main draws of becoming self-employed in the first place is that it affords workers flexibility as to where they work, and now there’s a chance this could change!
At the moment, freedom of movement means that self-employed Brits can provide their services anywhere in the EU without any red tape, and otherwise engage freely with any clients on the continent. They can even up sticks and take up residence in other EU countries without a huge deal of fuss.
This is likely to end in the event of a no-deal Brexit, at least until alternative arrangements are drawn up between countries. If a deal is struck, there’ll be a transition period which will give those working abroad a time to adjust. If there’s no deal, this won’t apply. Confusing, right? We know!
If you’re a contractor from the EU currently living in the UK, the government has developed a tool to see what steps you should take next.
Some Brexiteers have argued that restricting movement into the UK from overseas contractors should mean more work for UK nationals. In fact, one of the positives of the 2008 recession for independent workers was that it saw a boom in contractors hired, so who knows - it could be a good thing!
So time to break open the bubbly? Perhaps not, as this benefit could be offset if the overall amount of work available plummets. And bearing that in mind...
In addition, a significant number of big tech, finance and manufacturing firms have said they’ll relocate their UK operations in the event of no deal. Airbus, for example, has threatened to leave in the absence of a ‘suitable deal’. And, given the restriction to freedom of movement mentioned above, it seems unlikely that they’d take their British contractors with them! Unfortunately, when companies have to start making budget cuts, those not permanently on the books tend to be the first to go.
So, time to find a large, comfy rock? Well, maybe not just yet either. It may be of some comfort that parliament is committed to securing a deal, which is why an extension has been sought to prevent leaving the EU without one. Nobody knows exactly what’ll happen at this stage, but many people are working to ensure the transition is as smooth as possible - even if it hasn’t been such smooth sailing up until this point!
In these frustratingly uncertain times, it’s good to know there are still some things you can rely on. That’s why we provide a rock-solid, easy-to-use accountancy service to bring stability to your finances! Whether you need help filling out your self assessment tax return, or with any financial matters concerning running your own business and how Brexit might affect you, feel free to contact us.