What will Brexit mean for you?

Challenges and opportunities for British businesses

The UK and the European Union (EU) have agreed a Trade and Cooperation Agreement, where both parties have agreed to the removal of tariffs or quotas on the movement of goods produced between the UK and the EU. However, despite the liberal stance on tariffs, companies will have various challenges and opportunities to consider as we’ve now moved out of the EU Single Market. This means there are some non-tariff barriers to trade and some changes for those who trade in services.

Brexit presents a wide range of challenges and opportunities for British businesses, and with both sides already talking about making adjustments to the deal, there will likely be continued changes to keep up to date on.

How can we help?

With changes to the regulatory regime as a result of the UK’s departure from the EU we have a range of solutions tailored to help businesses overcome the challenges they face. We have partnered with a number of international trade experts to offer a range of solutions to businesses to help them Identify, Educate, Implement and Support the processes that will allow the smooth continuation of trade with the EU. The cost of not getting this right, could be very costly to a business.

Our solutions are designed to answer any questions businesses may have and help them understand the actions they need to take and how they can integrate these into their business operations. The solutions include the following.

  • Identify – An hour of one-to-one bespoke diagnostic support focusing on the individual business’ requirements and devising a plan of action to help identify the requirements. The aim is to put actions in place to help you understand and overcome the regulatory compliance requirements.
  • Educate – A series of trade compliance training courses aimed at providing businesses with a detailed overview on how to action and implement processes across all key trade compliance areas. Topics covered include completing a customs declaration, rules of origin, commodity codes and Incoterms terms. These courses are designed to provide business with a detailed understanding of regulatory process, and the actions you should be taking to overcome each step of the process. 
  • Implement – Working with a specialist provider who will act as your Customs Agent and complete the required customs documentation on their behalf. 
  • Support – A 30 minute or an hour one-to-one trade compliance solutions session, where you can discuss your specific regulatory requirements with our trade compliance partner. They'll be able to provide guidance on what actions you should consider to meet your requirements.

We’ve partnered with Export Unlocked, the trade compliance experts and CPD approved training provider to run a series of trade compliance training courses, aimed at helping your business get up to speed with the new regulatory environment in which we now operate and avoid any potential disruption to your trade with the EU.  

The training courses are available for both individuals and businesses to join. We have a series of dates available. For more information on the courses available please click on the register link below. 

Register for any of the above training courses or for more information on the courses or our other solutions please email international@santander.co.uk.

In addition to our support, the UK Government is offering grants to UK businesses to support their preparations. This money can be used for training, recruitment and systems development. Please note the grant application process will close on 30 June 2021 or as soon as the funds are utilised. Visit Customs Grant Scheme for more information on the support available and how to apply.

The Government has also published guidance for both importers and exporters via its Check, Change and Go webpage

Practical guidance

Exporting to the EU after 1 January 2021

As of the 1 January 2021, all UK goods exported to the EU have to follow full EU import procedures. UK exporters will need to have all the correct processes, documentation and systems in place to enable them to continue to move goods into the EU. 

The Government is offering grants to support UK businesses with training, recruitment and the implementation of systems.

If you export, you’ll need to take the following actions.

  • Obtain an Economic Operator Registration and Identification (EORI) number.
    As of the 1 January 2021, an EORI number will be required to move goods between England, Scotland and Wales and the EU. This may also be needed to move goods to or from Northern Ireland. If you don’t already have an EORI number, apply via the government portal
  • Check your commodity/tariff codes. These will be required on customs declarations and using the wrong codes could lead to costly delays at the border.
  • Check your commercial invoices. This paperwork details key information about your export sale and is also required for customs declarations.
  • Secure access to Government customs declaration platforms - Customs Declaration Service (CDS) / Customs Handling of Import and Export Freight (CHIEF). Exporters are entitled to access these platforms but will require specialist software to use them.
  • Hire a Customs Agent. If you don’t have CDS or CHIEF access, you can appoint a Customs Agent to act on your behalf.
  • Check your customs declarations. These must be completed and submitted ahead of goods leaving the UK.
  • Check your INCO terms. International trade contract terms (INCO) must be added to all contracts. These set out the legally binding terms on which goods are purchased.
  • Review commercial contracts and communicate with your EU customers. Agree future trading terms including INCO terms.
  • Check your origin of products and certification. This will be required to determine the percentage of goods/components/ingredients originating in the UK or from other global sources.
  • Check whether free trade or preference agreements and duties are applicable. This will depend on the outcome of the UK’s negotiation with the EU & UK Trade and Co-Operation Agreement. 
  • Check special procedures. Do these apply to your goods?

In addition, if your business operates in certain sectors, you’ll have to meet other regulatory requirements. These include the following.

  • Export health certificates. These are required for certain animal-based products and certificates must be signed by an approved veterinary professional.
  • Third country rules EU labelling. Food and drink, and a number of other products, will need an EU address on the product label. There must be a representative available at this address to deal with any product queries. 

Importing from the EU after 1 January 2021

For imports from the EU, the UK Government has announced a three-stage approach to the implementation of the UK’s customs requirements.

  1. From 1 January 2021, all controlled goods (goods that require import licences) require standard customs declarations to be completed.
  2. From 1 April 2021, all products of animal origin (POAO) and all regulated plants and plant products require pre-notification of import and the relevant health documentation also needs to be submitted.
  3. From 1 July 2021, all goods require a full customs declaration at the point of import and the relevant duties need to be paid (subject to duty deferment).

If you import, you’ll need to take the following actions.

  • Obtain an Economic Operator Registration and Identification (EORI) number. From 1 January 2021 an EORI number is required to move goods between England, Scotland and Wales and the EU. This may also be needed to move goods to or from Northern Ireland. If you don’t have an EORI number, apply via the government portal
  • Check your commodity/tariff codes. These will be required on customs declarations and using the wrong codes could lead to costly delays at the border.
  • Check your purchase invoices. These need to include your EORI number and commodity code.
  • Check your Incoterms. International trade contract terms must be added to all contracts. These set out the legally binding terms on which goods are purchased.
  • Check import duties and import VAT. These need to be paid before goods are released from the port of arrival unless a deferment account is in place. VAT can also be deferred using the customs declaration entry on the Government customs platforms CDS or CHIEF. 

Depending on the Incoterms, where the seller is responsible for goods clearing customs, they also need to take the following actions.  

  • Secure access to government customs declaration platforms (CDS/CHIEF). Importers are entitled to access these platforms but require specialist software to use them.
  • Hire a Customs Agent. If you don’t have CDS or CHIEF access, you can appoint a Customs Agent to act on your behalf.
  • Check customs declarations. These need to be completed and submitted ahead of goods arriving the UK.
  • Apply for the Simplified Customs Procedure. This may enable you to delay your declaration and payment of import duties and VAT.
  • Check your origin of products and certification. This is required to determine the percentage of goods/components/ingredients originating in the UK or from other global sources.
  • Check special procedures. Exports of certain products require special procedures.
  • Review commercial contracts and communicate with your EU customers. Agree future trading terms including INCO terms.
     

What does Brexit mean for your sector?

Manufacturing

Manufacturing is a resilient sector that gets on with the job in hand. According to our latest Trade Barometer, 36% of manufacturers have seen Brexit uncertainty affect their trade with the EU and 60% of manufacturers warn Brexit will have a negative effect on their business in the next 12 months.

 

From working with UK manufacturers, we understand they will need to prepare their business for the new customs rules that have come into force. Manufacturing will remain crucial to UK trade and we would encourage businesses to seek out new opportunities, both within the traditional markets of the EU and the wider global market.

Competitiveness remains key and it will require continued investment in modern plant and equipment, improved process flows and upskilling at all levels if companies are to prosper and, ultimately, if the UK is to win the global race.

Paul Brooks

Head of Manufacturing

 

Our view

Manufacturing will increasingly be the UK’s link to the world. Manufacturing already generates £191billion of output and 5% of total UK exports. The sector is also a crucial innovator, accounting for 65% of the UK’s total research and development spending.

Its contribution on employment is equally impressive, with over 2.7 million people working within the manufacturing sector across the country.

Please visit MakeUK for more Brexit information.

Sources: Santander Trade Barometer 2020/21 – MakeUK and Santander: UK Manufacturing Facts 2020/21, September 2020

Food and drink

Food and drink exports are a UK success story, and the EU is a vital market. In 2019, exports to the EU represented 59.9% of the sector’s total overseas sales, rising to 67.6% for branded food and drink products. However, all the UK’s markets within the EU saw a decline during 2019, reinforcing anecdotal evidence that key buyers were starting to look elsewhere due to Brexit uncertainty. More positively, we exported 8.7% more (in value terms) to non-EU countries (led by the USA, China and Australia) lifting the share of total food and drink exports going to non-EU territories by 1.6% (Source: FDF Export Snapshot 2019/2020).

Our latest Trade Barometer report highlights regulatory changes post-Brexit, increased requirements and the challenges of accessing new markets as the biggest hurdles ahead for 50% of food and drink manufacturing companies operating internationally. However, many businesses believe that Brexit can be a trigger for increased international sales, both to the EU and globally.

 

It’s crucial to make as many practical preparations as possible in readiness for trade with the EU. However, it’s equally important to recognise that many elements of export bureaucracy have always existed when trading outside the EU. New UK priority trade deals with third countries such as Japan, Australia and the US may offer more advantageous trading conditions to exporters and the ‘Made in Britain’ label is a powerful endorsement of our global reputation as leaders in food and drink innovation, quality, safety and security.

Evaluate the new global landscape and put plans in place to take full advantage of emerging opportunities as a springboard for diversification and de-risking your business in the future.

Andrew Williams

Head of Food and Drink

 

Our view

As our Trade Barometer highlights, continuing Brexit uncertainty, particularly around bureaucracy and regulatory change, is impacting businesses in the sector. As new requirements become clearer, the sector will need to make changes quickly so it can continue to trade frictionlessly with the EU. Equally, while the sector still sees the EU as a key area for future potential growth, our Trade Barometer suggests many will also look to build more balanced portfolios of overseas customers. Non-EU territories such as the USA, Canada and Australia are attractive targets for the UK’s food and drink sector.

Visit the Food and Drink Federation for more Brexit information.

Sources: Santander Trade Barometer 2020/21, Food and Drink Federation UK food and drink export statistics 2019/20
 

Transport and logistics

The transport and logistics sector plays a critical role in the domestic and international supply chain and sits in the front line of Brexit impacts, such as changes to the customs process. Planning for the post-transition regime is therefore vital.

Our latest Trade Barometer report suggests the sector is performing well in this regard. It reveals that while 40% of businesses overall are concerned about the impact of regulatory changes post-Brexit, amongst transport and logistics providers – who will help their clients overcome these challenges – this figure falls to 14%. Similarly, while 55% of all businesses surveyed have concerns about the impacts of Brexit, only 33% of transport and logistics respondents’ express concern, while the majority believe the EU still offers opportunities for growth.

 

The majority of British goods exported to Europe currently transit through the UK’s key cross channel transit ports. It’s therefore important that UK transport and logistics operators are prepared and have the systems in place to make sure goods move smoothly through borders. With the new regulatory requirements in place, the UK’s transport and logistics sector will continue to play a critical role in providing guidance and solutions for UK businesses – and therefore in ensuring that the UK continues to trade with businesses across the EU and beyond.

John Simkins

Head of Transport and Logistics

 

Our view

Despite the challenges faced by transport and logistics businesses this year, both Brexit and coronavirus related, 66% of businesses in this sector are confident of growth over the next three years according to our latest Trade Barometer. Europe will continue to be a key trading partner for UK business and the transport and logistics sector will play a critical role in facilitating that trade, while also helping businesses forge new links to the wider global market.

Please visit Logistics UK for more information.

Source: Santander Trade Barometer 2020/21.

Retail and wholesale

Retail and wholesale businesses are doing their best to plan for the post-Brexit trading environment, including ensuring that stores have the goods that consumers need. However, it’s important to recognise that the UK imports two-thirds of its fresh produce and while retailers continue to work with their suppliers to maintain stocks of non-perishable goods, it’s not possible to stockpile fresh foods.

As Santander’s latest Trade Barometer report highlighted, 71% of wholesalers and retailers say a satisfactory conclusion to the Brexit uncertainty is a key factor that will impact their ability to grow over the next three years. 

 

The retail and wholesale sector has demonstrated resilience amid what has been unprecedented uncertainty for businesses across the sector. Servicing demand and managing supply chains remains critical over the next quarter for retail and wholesale businesses. For wholesalers with exposure to imports and exports, picking a path through these uncertainties is undoubtedly challenging, but international trade continues to offer exciting opportunities, both as a source of products for domestic sales and as a generator of overseas revenues.

Sukh Nat

Head of Retail and Wholesale

 

Our view

Our latest Trade Barometer report highlights the key challenges that wholesalers and retailers will face in the next 12 months. There’s particular concern about supply chain disruption, while operational challenges for international businesses include regulatory change post-Brexit. It’s crucial that retail and wholesale businesses are supported if they are to grow and succeed across global markets.

Source: Santander Trade Barometer 2020/21.

FAQ’s

The UK left the European Union on the 31 December 2020. A new trade agreement has been reached and came into force on the 1 January 2021.

Santander UK plc is a long-established UK bank, and we remain committed to the UK. We’re subject to and comply with the requirements of UK regulators such as the Financial Conduct Authority and the Prudential Regulatory Authority.

Like any prudent organisation, we’ve undertaken contingency planning and we’re well positioned to continue to help both individuals and businesses to prosper in the weeks and months ahead.

We have no plans to make changes to our products but if we do need to make changes to any of our products in the coming months, we’ll provide as much notice as possible.

How is the UK government supporting businesses with Brexit planning?

The UK Government continues to publish technical guidance notices that provide detailed guidance for businesses. These cover a wide range of topics across a number of different sectors.

What Regional Brexit support is available?

The devolved governments and their agencies, including the Scottish Enterprise, Welsh Government and Northern Irish Assembly, have published extensive information:

What does Brexit mean for importing and exporting?

We’re not able to accurately predict the effect of Brexit on trade flows, there may be some disruption at UK ports and airports, which may affect businesses such as just-in-time manufacturers. More information is available from the Government.

If you’re looking to expand into overseas markets or create new relationships with our partner banks, contact us today to hear more about our global banking presence and how our international teams of experts can help your business. We know entering a new market can be a long process, so let us help you on your journey.

Will Brexit affect my business if I don’t currently trade with the EU?

Where the UK Government hasn't yet agreed a trade agreement, the UK will replicate the terms of the existing EU Agreements.

For more information, please view the Government’s guidance on existing trade agreements.

How can I transition better into Brexit?

The British Chambers of Commerce believes that all firms should be undertaking a Brexit health check. It has produced a useful checklist to help you with Brexit planning, covering workforce implications, cross border trade, taxation and regulation.

What help can Santander provide if I'm worried about the impact Brexit may have on my cashflow?

If you’re looking to borrow to provide your business with more flexibility, visit our lending options page or speak to your relationship contact.

Is my money secure in the UK?

Within the UK, Santander customers’ deposits should be protected by the Financial Services Compensation Scheme, subject to eligibility criteria. This applies to eligible deposits held in the UK up to £85,000 per customer.

Visit the FSCS website for more information on Brexit and the FSCS.

I make payments to suppliers in the EU, how will payments be affected?

Your business will still be able to make payments to EU countries and there will be no change to payment processes.
 
However, since 1 January 2021, some banks in the European Economic Area (EEA) have started to take deductions from payments that are sent from the UK, and also from payments inbound to the UK, and this can affect payments in any currency, including pounds sterling.
 
To be clear, Santander UK is not taking deductions from any payments, but some banks within the EEA may take deductions.
 
In order to avoid this, you may want to consider using Single Euro Payments Area (SEPA) as the payment method for sending and receiving payments in euros.  Regulations do not permit any deductions to be taken from SEPA credit transfers.
 
If you would like to speak to an international payments specialist about your business, please contact your relationship team in the first instance.

Can I still use my debit or credit cards in the EU?

Yes, there is no change to how you use your debit or credit card following Brexit.

Will standard payment methods, such as standing orders and Direct Debits, be affected?

No, standard banking payment methods such as standing orders and Direct Debits works in the same way as before.

What impact will Brexit have on lending options for EU-based businesses?
  • Businesses borrowing with us must be registered in the UK, there’s no change to eligibility and therefore no change to the service provided.  For those customers in the EU who already have lending with us (which is still with Santander), then there will be restrictions in what activities we can carry out in respect of such lending going forward.
  • Please speak to your relationship team for further information. 

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