TO STUDY THE IMPACT OF BREXIT ON TAXES AND HOUSEHOLD INCOME

In 2016, the British citizens participated in a referendum and voted to leave the European Union by a small margin. This referendum was a mandatory requirement according to the laws of European Union as it is part of the process when a member country intends to leave the European Union. Immigration control and more autonomy for decision making within the country were two of the major triggers. There were various free and preferential trade agreements in place as UK was in a single market, post Brexit, depending on a deal or no deal Brexit, all of those agreements have to be revised. In case of a no-deal Brexit additional taxes and tariffs would be placed. This would add to the cost of products and services which would discourage consumer purchase ultimately creating a domino effect that will have an impact on the whole economy. The added tariff would result in a decrease in the purchasing power of the consumer which would mean the real household income will decrease. UK leaving the EU without a deal gives rise to a number of tax related changes. Commercial and operational changes are being made by businesses as a response to this. These tax impacts needs to be managed effectively in order to avoid unexpected tax costs. The indirect taxes like VAT are harmonized at EU level however it varies from country to country in how they are implemented. Direct taxes on the contrary are largely governed by individual member states although there are some EU directives affecting corporate tax and social security rules. If there were to be a no deal Brexit, these wouldn’t apply any longer to the UK giving rise to additional tax costs for individuals and businesses. This study focuses on the Impact of Brexit on United Kingdom, in particular this study assesses the impact on Household income and trade taxes and tariff as a result of UK leaving the EU. On December 24, 2020 the UK successfully negotiated a deal with the EU. Although the agreement leaves the critical parts of the relationship to be worked out later but for the purpose of this study I will be reviewing studies already made in this area covering a few different scenarios.