Brexit has finally become a reality after three years of indecision and road blocks. It feels like yesterday when 30 million people voted 51.9% to leave and 48.1% to remain in a referendum that changed the course of UK history. The UK has been a proud member of the European Union (EU) for the past 47 years, but now the country is preparing to enter uncharted territory with its exit from the EU at 11pm tonight.
If you’re wondering what Brexit means for you as an expat, repat or UK citizen, read our blog and contact Headway Wealth. We’ll tell you what you can expect from the UK economy, trade and legislation after 31 January!
Upcoming Brexit Transition Period
Once the clock strikes midnight, the UK will have officially left the EU and entered into an 11-month transition period. During this period, the UK will abide by EU laws and work to negotiate a fair trade deal that satisfies both parties.
What Brexit Means for Expats and Repats
Did you know that roughly 1.3 million UK citizens currently live in the EU? If you fall into that category, don’t panic. Nothing will drastically change during the upcoming transition period. What you will see is:
- The UK will still remain in the Single Euro Payments Area (SEPA), which means you can send money across borders without having to pay a substantial fee.
- You don’t have to get a new passport right away. You can use your Great Britain/EU passport during the transition period until 31 December 2020.
- If you’re an EU citizen living in the UK, you may need to register to stay in the UK after 30 June 2021. You’d need to register with the European Settlement Scheme and file for settle status (if you lived in the UK longer than five years) or pre-settle status (if you haven’t lived in the UK for more than five years).
- You’ll still be protected up to £85,000 per person by UK-regulated banks should your financial institution file for bankruptcy. Foreign banks will now have to obtain a UK licence to continue operating in the UK after Brexit.
- UK pensioners who live in the EU after the transition period will still be covered by their EHIC, or European Health Insurance Card, which entitles them to free healthcare like back in the UK.
- You may need to ask your car insurer for a “Green Card,” which allows you to take a UK-insured vehicle into the EU. This card proves that you have the minimum amount of car insurance.
- If you’re living in the UK and plan to expatriate to the EU, be sure to exchange your driving licence for an EU licence before the transition period ends. If you don’t exchange your licence for an EU one before 31 December 2020, you’ll have to retake your driving test in January 2021.
- If you’re repatriating back to the UK from the EU, you’ll want to exchange your EU driving licence for a UK one. If you originally passed your driver’s test in the UK, you won’t have to retake your driving test.
What Brexit Means When Claiming UK State Pensions
Under the current withdrawal agreement, both the UK and the EU will continue to increase payouts for pensioners and retirees living overseas until the transition period ends. After that, increased payouts will depend on the outcome of UK and EU negotiations. Only expats living in the Republic of Ireland, Gibraltar, Switzerland and other countries with reciprocal agreements will continue to enjoy increased payouts whether a deal is forged or not.
Brexit won’t change the current process of applying for a state pension while living overseas. As it stands now, an expat can apply for a UK state pension in the last country he or she lived and worked in, with that country having to coordinate his or her claim. An expat would need to contribute to National Insurance for a minimum of 10 years to claim a UK state pension. If you happened to work in the UK for six years and the EU for four, you could still claim a UK state pension, as you’d reach the minimum requirement of 10 years. This is all subject to change depending on the outcome of UK and EU negotiations, but as it stands now nothing has changed.
What Brexit Means for the UK Economy & Trade
As previously stated in our blog entitled, “The Election Results are in, What’s Happening in the Markets?” Brexit and the general election caused a significant rise in sterling and the value of the pound. The government is set to continue spending and investing in the national economy post-Brexit, with foreign investors still anticipated to return as talk of new trade deals begin to swirl. We’re even hoping to see the price of houses rise by 1-3% once the UK enters this new transition period!
Read more about our January 2020 market predictions here and book a meeting with an advisor to discuss your investment and savings options post-Brexit. We’re here to help bring your finances to life.
