What is Brexit and what is it’s impact on economy and taxation ?
Brexit, a portmanteau of “British exit”, is the impending withdrawal of the United Kingdom (UK) from the European Union (EU).
- It follows the referendum of 23 June 2016 when 52 percent of those who voted supported withdrawal.
- The UK joined the European Communities (EC) in 1973, with membership confirmed by a referendum in 1975. In the 1970s and 1980s, withdrawal from the EC was advocated mainly from the political left, while from the 1990s, the main advocates came from the right, in particular the new UK Independence Party.
- Prime Minister David Cameron held a referendum to fulfil a 2015 manifesto pledge. Cameron, who had campaigned to remain, resigned after the result and was succeeded by Theresa May. She called a snap general election less than a year later, in which she lost her overall majority. Her minority government is supported in key votes by the Democratic Unionist Party.
- On 29 March 2017, the UK government invoked Article 50 of the Treaty on European Union. The UK is due to leave the EU on 29 March 2019 at 11 p.m. UK time, when the period for negotiating a withdrawal agreement will end unless an extension is agreed.
- May announced the government’s intention not to seek permanent membership of the European single market or the EU customs union after leaving the EUand promised to repeal the European Communities Act of 1972 and incorporate existing European Union law into UK domestic law. A new government department, the Department for Exiting the European Union, was created in July 2016. Negotiations with the EU officially started in June 2017, aiming to complete the withdrawal agreement by October 2018. In June 2018, the UK and the EU published a joint progress report outlining agreement on issues including customs, VAT and Euratom. In July 2018, the British Cabinet agreed to the Chequers plan, an outline of proposals by the UK Government. In November 2018, the Draft Withdrawal Agreement and Outline Political Declaration, agreed between the UK Government and the EU, was published.
The real impact of Brexit – deal, no-deal or no-brexit will become clear with time. The economic and tax implications will vary depending on the outcome.