Brexit and What It Means From An Accountant’s Point of View
Brexit has dominated the headlines over the past 2 weeks. Now no one really knows what is going to happen and it’s all totally up in the air at the moment but Rachael Savage from Simplified Accountancy has shared her view on what Brexit could mean for small businesses.
Brexit and Small Businesses
So, on 23rd June the UK voted out and what a roller-coaster it’s been since then. The result of the referendum has thrown the country into a spin with Westminster appearing to be in chaos, the pound and stock markets taking big hits and a huge amount of economic instability that isn’t going to disappear in any time soon either.
If you are selling to Europe then your £100 item has just become cheaper for your European purchasers, but if you need to buy goods from Europe then they have just become more expensive … likewise with the US Dollar. As a consumer it can only lead to higher prices and in turn higher inflation.
If you are VAT registered and buy/sell in Europe then for now, you need to keep on with your Intrastat returns, when the exit does happen then EU sales/purchases will all be imports and exports so more complex and the Intrastat return will cease. The recovery of VAT on expenditure in Europe could also become harder too.
There will of course be more autonomy for the Government in setting VAT rates and deciding whether some items should be zero rated that it couldn’t change before, but VAT rates could just as easily go up too. VAT is a huge money generator so don’t expect too many concessions or drops in rates!
Before the vote, George Osbourne was saying that if the decision was in favour of leave then there would be an emergency budget and it was highly like that the rates of income tax would rise and the spending cuts would be extended beyond 2020, with David Cameron standing down it is looking unlikely that there will be a budget until the new leader of the Conservative Party is elected.
The coming days, weeks and months (and even years) will undoubtedly see a lot of change in the economy, how we trade with Europe and the rest of the World. What might happen is anyone’s guess and I’ve seen lots of people trying to cash in and sell guides to “What a Brexit means to your business”, please don’t buy these .. they don’t have any answers and are speculating as to what might happen, only time will tell. Even as I type this the headlines are changing and it is impossible to keep up with all that is happening.
Whatever the varying sides of the press are saying, an exit cannot happen over-night and so as businesses we can make plans and contingencies.
For now – keep on working hard in your businesses and on your businesses and your strategy going forward so you can assess what this means to you and what you can do to minimise the impact. If you buy and sell cross border then now is the time to look at minimising currency impacts on your business.
It’s likely that the public will tighten their purse-strings over the coming weeks and months and will cut back on spending … make sure you are ahead of the game and spot what is coming and the trends.
Good luck and anything you want to chat through then give me a shout.
Rachael Savage is a chartered accountant with over 15 years’ experience and has been running her own practice looking after small businesses for the last 5 years, she prides herself on having a no jargon and friendly approach and ensures clients understand the numbers behind their businesses whether they are start up or established. When not working, Rachael either can be found pounding the streets in her trainers in preparation for the 10k events she’s entered this year or sat watching her daughter snowboard at one of the UK’s indoor slopes.
Thank you for guest blogging for us Rachael!
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