Brexit red tape squeezes out record £4.5 billion from UK businesses

Brexit rules squeezed out a record £4.5 billion out of UK businesses in the year to 31 January 2022, it has emerged.

According to City A.M., a 64 per cent increase has been registered compared to the previous year, when they paid an extra £2.9 billion in custom duties.

In the past five months alone, figures from accountancy firm UHY Hacker Young revealed the highest individual months on record for customs dutie paid – more than £2.1 billion, reportedly reached through business delaying filling in new paperwork caused by Brexit.

Increase in costs ‘really biting’ for UK imports

Michelle Dale, senior manager at the firm, said: “This shows how the post-Brexit increase in custom costs to UK consumers is really biting.

“Over the past year custom duties have been a hugely significant additional cost for many businesses.”

“For a lot of them, custom duties have taken a big bite out of their profitability. Businesses who import and export goods between the UK and EU might be questioning whether their business models are viable.”

Dale told the website that the new red tape is “causing serious difficulties for many businesses”, already struggling because of the Covid pandemic hit.

Post-Brexit ‘Rules of Origin’

But because of Brexit, British companies now also have to worry about ‘Rules of Origin’, which mean anything sold in Britain by EU firms have to fully or mostly originate from the bloc in order to not require customs duties when arriving in the UK.

Since 1 January, the rules have become even stricter, after the government brought in a further requirement asking importers to provide a declaration about the goods’ origin upon their UK entry – or face being asked to pay the full rate of customs duty and even penalties.

Among the food products which have been affected by the “Rules of Origin” since 2021 were Marks & Spencer’s Percy Pig.

The rules reportedly show that free trade deals are not cost-free to UK businesses. Thousands of businesses have discovered they have to pay taxes if the products they import are not sufficiently manufactured in the EU.

UK exporters also feel Brexit pain

Earlier this month, it emerged that just under three in four UK exporters think the Brexit deal struck by Boris Johnson with the EU is not supporting them in growing their sales.

The results, which saw 71 per cent of businesses admitting the deal is not helpful to them, were revealed by a British Chambers of Commerce survey.

And the poll also found that the majority of businesses think Brexit “pushed up costs, increased paperwork and delays, and put the UK at a competitive disadvantage”, according to City A.M.

Andra Maciuca

Andra is a multilingual, award-winning NQJ senior journalist and the UK’s first Romanian representing co-nationals in Britain and reporting on EU citizens for national news. She is interested in UK, EU and Eastern European affairs, EU citizens in the UK, British citizens in the EU, environmental reporting, ethical consumerism and corporate social responsibility. She has contributed articles to VICE, Ethical Consumer and The New European and likes writing poetry, singing, songwriting and playing instruments. She studied Journalism at the University of Sheffield and has a Masters in International Business and Management from the University of Manchester. Follow her on: