Small firms get financial support as Brexit changes bite

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Date: 16 February 2021

A port controller inspects shipping containers

The UK government has announced a £20 million SME Brexit Support Fund to help small businesses that trade with the EU.

The SME Brexit Support Fund is intended to support small and medium-sized businesses (SMEs) adjust to new customs, rules of origin and VAT rules when trading with the EU.

Small businesses who trade only with the EU - and are therefore new to importing and exporting processes - will be encouraged to apply for grants of up to £2,000 for each trader to pay for practical support including training and professional advice to ensure they can continue trading effectively with the EU.

The fund will be administered through the pre-existing Customs Grant Scheme and will open for applications in March. It has been established to help businesses prepare for stages two and three of the new import controls which come into force in April and July, as set out in the Border Operating Model.

New import controls are to be introduced in three stages up to 1 July 2021 to allow traders and hauliers time to adjust to new processes. It means businesses do not have to complete new import declarations for up to six months, unless they are moving controlled goods.

Members of the Brexit Business Taskforce have welcomed the additional support. Mike Cherry, national chair at the Federation of Small Businesses (FSB), said: "Small businesses, often with few cash reserves, are for the first time facing complex new customs processes, VAT requirements and rules of origin … The new fund will make a significant difference, and we are pleased that ministers have really engaged with us on this, and come up with an excellent response."

Allie Rennison, head of trade policy at the Institute of Directors (IoD), said: "Smaller firms simply cannot manage many of the processes themselves and require experts across a range of areas to assist with trade continuity, and we commend this government for responding to our call."

The new fund comes as the latest survey by the British Chambers of Commerce (BCC) finds that 49% of UK exporters and 51% of manufacturers have reported difficulties adapting to changes relating to EU-UK goods trade.

Commenting on the findings, BCC director general Adam Marshall said:  "The late agreement of a UK-EU trade deal left businesses in the dark on the detail right until the last minute, so it's unsurprising to see that so many businesses are now experiencing practical difficulties on the ground as the new arrangements go live.

"For some firms these concerns are existential, and go well beyond mere 'teething problems'. It should not be the case that companies simply have to give up on selling their goods and services into the EU. Ministers must do everything they can to fix the problems that are within the UK's own control, and increase their outreach to EU counterparts to solve the knotty issues that are stifling trade in both directions."

Written by Rachel Miller.

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