The Impact of Brexit on eCommerce

The Brexit debate continues to be one of the most analysed and divisive political events in recent times. Brexit happened when the UK left the European Union on 31 January 2020.

However, there is still an overarching feeling of uncertainty for British e-commerce businesses and overseas senders.

Here's What You Need to Know​- Timeline

• Brexit happened when the UK left the European Union on 31 January 2020.

• Boris Johnson says there is a strong possibility the UK will fail to strike a post-Brexit trade deal with the EU.

• Little has changed from the EU and the UK. This is because both sides agreed many things would stay the same for 11 months, allowing time for leaders to agree on a deal for life after Brexit. 

• However, time is running out to reach an agreement before the UK stops following the EU trade rules on 31st December 2020.

• The new trade rules will come into effect on 1st January 2021, if agreed upon. 

What is This Brexit Deal? 

The EU and the UK have always had to agree on new rules for how to live, work and trade together. 

When the UK was in the EU, businesses could buy and sell goods across the EU borders without paying taxes, known as tariffs.

From 1st January 2021:

- There will be no taxes on goods (tariffs) or limits on the amount that can be traded (quotas) between the UK and the EU. 

- New checks will be introduced at borders, such as safety checks and custom declarations. 

- There may be some restrictions on certain UK animal food products. For example, some meat products cannot enter the EU unless they are frozen to -18C.

Brexit and Online Shopping

The UK’s annual revenue from online retail and e-commerce is currently more than €150 billion; and with Great Britain accounting for 33% of all online sales in the EU, a no trade-deal has the potential to majorly disrupt current market trends on both sides of the English Channel.

As the largest online market in Europe, the UK has had a leading role in the success of European e-commerce since the rise of online shopping. Equally, the tech boom and the emergence of British e-commerce have evolved hand-in-hand with access to the barrier-free trade EU membership ensures.

Here at Parcel2Go, we thought we’d put together some practical advice for online businesses and overseas senders on what no trade-deal may mean for them.

Impact on Trade

Trade would have to be in terms set by the World Trade Organisation (WTO) with 162 member countries. Taxes and tariffs will apply to most goods that UK businesses send to the EU. This will harm the competitiveness of some businesses goods. Trading within the WTO would also mean border checks for goods which will cause major traffic increases at ports such as Dover. 

Since leaving, the UK has already made deals with 50 of the 70 countries that they originally traded with, in order to continue trading in the same way. 

Is Your Business Importing Goods? 

The process of importing goods for your business will change on 1st January 2021. 

Trade imports by post will need to complete the following customs documents: Single Administrative Document (SAD) 

If you are importing goods from outside the EU, you will need to find out how much tax you need to pay or if you need to get a licence or certificate.

Is Your Business Exporting Goods to the EU? 

The process for exporting goods to the EU will change too. 

If you need to declare goods, you may need to complete a customs declaration form so that you can export goods to the EU. If you are unsure if you need any certificates or licenses, find more information on exporting to the EU.

You will be required to have an EORI number starting with GB, get an EORI number now.

Making Exporting Easier for Your Business

Taking goods outside the EU may be a tricky task from 1st January 2021 but there may be an easier way. 

Your business may be able to transport goods to the EU using common transit. Common transit is a process that allows the movement of goods to and from the countries that have signed the Common Transit Convention without the need to: 

• Complete a customs declarations until they end their transit movement
• Pay custom duties until they end their transit movement.

Transit can help your business move goods more freely and quickly from the UK to the EU,  without paying UK duties where those duties have already been suspended. 

In short, customs declarations and duties are not required at each border crossing. You can complete some customs processes away from the border. 

Find out more about how you can make exporting easier for your business. 

Impact of Online Shopping After Brexit

So, how will Brexit affect online shopping? 

eBay After Brexit

When shipping internationally on eBay, eBay asks you to choose whether you would like to ship your item through their Global Shipping Programme (GSP) option. This option takes over the responsibility of shipping the item and handling both customs import documents and tax or duty. 

If you are an avid eBay seller, click here to read Ebay's preparation steps.

Amazon Brexit

You might have heard or be involved with Fulfillment by Amazon (FBA). There are several international programmes, each with different processes for holding and fulfilling your goods. With these programmes, very little is expected to change as it is ultimately Amazon's responsibility to ship the product.

However, if sellers hold inventory in warehouses across the continent, you will now face some tax implications that go beyond the current requirements to register for VAT in the individual country.

If you enjoy selling on Amazon, click here to read Amazon's Brexit guidance. 

Marketplace Fees and Taxes

In regards to Brexit online shopping and UK marketplace fees, it is likely that marketplace giants eBay and Amazon will see an increase from 20% VAT as opposed to the current 15%.

Additionally, small businesses may have to register for VAT in EU countries, something that larger companies are already doing. If you export goods outside the EU, you may be entitled to apply zero-rated VAT. Find out if your business is eligible. 

If you are still unsure about how much tax you will pay, check the UK trade tariffs from 1st January 2021.

Impact on Shipping

• While leaving has caused imports to the UK to become more expensive, British exported goods have become cheaper to European consumers.
• For anyone importing commercial goods from outside the EU – including Britain - they will need an Economic Registration and Identification (EORI) number.
• Now, VAT is now due before goods can be released.
• This will increase shipping delays and will likely lead to increased costs to account for border control complexities- especially at the UK ports.
• Courier services will require more information about a parcel’s contents –producing and attaching relevant customs forms and HS codes to accompany the parcel.
• These extra procedural steps will increase both costs and resource for UK e-commerce businesses.

Relevant Information for Sending Overseas 

To assist with planning, we've compiled a checklist for online businesses, e-commerce companies and overseas senders to bear in mind before shipping.

Customers sending parcels from the UK to EU countries should be aware of the following:

1. All goods will need customs clearance
2. All senders to EU countries will now be required to complete a commercial invoice and attach a HS code to their parcel to identify the goods
3. Goods sent across EU borders will be liable to duties and taxes
4. Increased procedural requirements will result in delayed transit times

What Has Changed on 1st January 2021? 

• People planning to move between the UK and the EU to work, live or retire will no longer be able to do so automatically. 
• The UK will implement a points-based immigration system for EU citizens.
• As travel rules are changing, check your passport is valid, check your health insurance and that you have the right driving documentation with you.
• The UK will no longer be making annual payments to the EU's budget.
• Arrivals from the UK will stand in a different queue at passport control.
• Businesses who choose to trade within the EU will face a lot more paperwork.

If you need any further information on Brexit and the changes occurring on 1st January 2021, see our Brexit page.