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Possible Impact of Brexit on Contract Roles in the UK and Europe


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Nearly half, or 44%, of UK freelancers and contractors do not believe their business will be affected by Brexit. The research, which polled 1,350 UK freelancers and contractors, also showed that 18% of freelancers and contractors believe Brexit will have a positive impact on their business. Meanwhile, 38% expect Brexit to negatively impact their business. While 70% of freelancers asked currently do not work, or do not have any plans to work on projects in the rest of Europe.

What does it all mean for the UK’s contractors who want to work in Europe? Unfortunately it is too early to say at this stage as this will largely depend on the results of the exit negotiations. Until the British government has set out its negotiating position, we won’t know whether UK residents will be able to work in the EU without restriction. Since free movement of EU citizens to the UK was a hot topic during the campaign, it is possible contractors may face new hurdles when wanting to work in the EU.

What sectors will be most affected?
It is believed that Oil and Gas contractors are most likely to be affected by Brexit as they tend to have an international focus. Due to the international nature of technology, it is also likely that IT contractors will also be affected. For contractors with clients in the EU, many will need to travel to meet their clients after Brexit is finalised. However this should not be a problem as EU member states set their own immigration rules so even if there is a “hard” Brexit with no freedom of movement, countries are unlikely to place significant barriers to entry for temporary working visits. Obviously we won’t know exactly what will happen until Brexit happens, this is only what is predicted to happen.

Contracting and Brexit
Although the single market for goods is well-established in the EU, there is no such single market for services – and there are complex rules relating to how services are taxed. If you supply services from the UK, you may be liable for VAT. If you travel to the EU, your customer has to account for any VAT-equivalent. But you may still have to pay foreign VAT to the relevant authority – and thresholds are often lower than the UK. Brexit is unlikely to make these rules any simpler. Britain’s economy is dominated by services so the government is likely to make negotiations about freedom of services a priority.

Negative Implications
We are still unsure on how Brexit will impact the free movement of people in and out of the UK and the rest of Europe. Contractors and consultants who were previously able to work freely across Europe may find more difficulty and complication in working, living and receiving payments abroad.

Positive Implications
Although there is much negativity surrounding Brexit, there are some positives for contractors and consultants. As we saw in the 2008 recession, many larger businesses often turn to contractors and consultants over full time employees. Since the referendum there has already been a boom in legal services and it is likely that businesses will require consultancy in dealing with the upcoming changes and handling areas that previously fell under EU legislation.
The falling pound against the dollar and euro could also bring opportunities for clients and contractors. A falling currency may attract international clients whose purchasing power will increase. Brexit could also lead to significant changes in employment rights and Agency Workers Regulations, which may free up smaller businesses to hire more contractors.

Summary
The effect Brexit will have on contractors and consultants will largely depend on the results of the exit negotiations. While this leaves a large amount of uncertainty, we do know that any changes are unlikely to be immediate. Though there may be a period of instability, many new opportunities and benefits are likely to arise for contractors and consultants. This article is for general information only and if you do have any particular questions then please contact your tax advisor, or if we run your payroll then please contact us and we can clarify on a case by case basis.

How TCP can help?
TCP is a European Professional Employer Organisation and compliance specialist with over 20 years’ experience. Our expertise lies in the employment of skilled temporary/contract workers on behalf of clients across 11 European countries. We are always aware of changes in legislations in all countries we operate, meaning we can provide the most suitable solutions per contractor.

If you are a contractor TCP Solutions can help. When employed by TCP Solutions, as a contractor you don’t need to take on any responsibilities such as ensuring accounts and tax returns are submitted on time and the correct amount of tax is paid, as this will be done by TCP Solutions. We are also able to provide Visa sponsoring in most of the countries we operate (except the UK).

TCP’s comprehensive service in the provision of payroll and flex services can help you. We are closely monitoring the Brexit situation and will be able to help regardless of the outcome of negotiations. Would you like to know more? Get in touch with a member of our sales team on +44 (0) 208 5 800 800 or send us a message via our contact page.