Avalara Survey Finds Brexit is Costly, Complex, and Driving Down Profitability for UK Businesses

Since the Brexit decision in 2020, enterprise businesses report a loss of £143,870, according to new research commissioned by Avalara, a market leader in tax compliance software26% of businesses report supply chain challenges when trading with the European Union (EU)Most businesses in the United Kingdom (81%) face increased cross-border complexity compared to 2020, and 68% are actively expanding into non-EU markets

BRIGHTON, United Kingdom, Jan. 31, 2024 /PRNewswire/ — Avalara, Inc., a leading provider of tax compliance automation software for businesses of all sizes, has today published new analysis exploring the impact of Brexit on businesses based in the United Kingdom (UK). The findings reveal that leaving the European Union (EU) generated additional costs for UK businesses, costing £96,281 on average since 2020. The survey also revealed that 73% of UK businesses report being less profitable in the wake of the decision.

“Businesses in the UK are feeling the negative financial impact of Brexit on their bottom line. Thousands of businesses are reeling from the customs and tax obligations imposed on trade across Europe,” commented Alex Baulf, Vice President of Global Indirect Tax and E-Invoicing at Avalara. “At a time when the UK economy needs to repair itself, encouraging business growth and expansion is key. Unlocking cross-border trade should be central to this.”

Businesses report disruptions post-Brexit
One of the main drivers behind Britain’s decision to leave the EU was its trading relationship with the customs union. However, 78% of UK business leaders claim that the UK did not experience a trade boom. Most UK businesses (81%) believe they face more cross-border complexity today than they did before Brexit. Further, 26% of UK businesses have reported disrupted supply chains post-Brexit.

Three-quarters (75%) of UK businesses saw their sales into the EU fall or become more complicated, driven by the increased complexity when trading with Europe. As a response, over two-thirds (68%) of businesses have explored trading into non-EU markets following Britain’s exit. Businesses are actively expanding and investing into the US (45%), Canada (41%), New Zealand (27%) and China (26%). Overwhelmingly, 82% of British businesses would support the UK Government’s efforts in improving trade across Europe.

Business have turned to technology to navigate the post-Brexit landscape
British businesses continue to feel the effects of Brexit. Brexit has forced almost half (43%) of UK businesses to invest in technology to improve their operations. Nearly a third (29%) of Scottish businesses have had to reduce exports to the EU, and companies in the South East of England have had to pivot their operations (26%) in order to succeed. In Wales, 29% have had to refocus away from customer experience to combat Brexit’s fallout.

With only 18% of British businesses reporting no impact from Brexit, it is no surprise that three-quarters (74%) of business leaders believe Brexit created more stress for businesses. More businesses reported stress across the arts and culture (94%), healthcare (90%), and HR and education (both 88%) industries.

Avalara provides an end-to-end platform to address cross-border tax compliance — from tariff code classifications to customs duty and import tax calculations and more. To learn more about how Avalara automates cross-border tax compliance requirements for businesses, visit avalara.com. 

About Avalara
Avalara makes tax compliance faster, easier, more accurate, and more reliable for 41,000+ business and government customers in over 75 countries. Tax compliance automation software solutions from Avalara leverage 1,200+ signed partner integrations across leading ecommerce, ERP, and other billing systems to power tax calculations, document management, tax return filing, and tax content access. Visit avalara.com to improve your compliance journey. 

Methodology
The research was conducted by Censuswide, with 1001 senior business decision-makers (aged 18+) in the UK within businesses / retailers that trade and / or sell goods cross-border (priority) and at the following companies: E-commerce businesses, Manufacturing businesses and Digital services businesses. The research ran between 15.01.2024 – 22.01.2024. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles. Censuswide are also members of the British Polling Council.

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