Brexit is 'done', as the slogan goes, and begins officially on Friday 1 January.We have rounded up the most important changes to personal finances aft
Brexit is ‘done’, as the slogan goes, and begins officially on Friday 1 January.
We have rounded up the most important changes to personal finances after Brexit, so you can enter this new era feeling well-informed and confident on money matters.
Leaving the EU: What will Brexit mean for your money from January 1?
Under the Brexit deal, holidaymakers will still get free healthcare in EU countries, plus Switzerland, Iceland, Liechtenstein and Norway.
Those with European Health Insurance Cards can use them until they expire, but the UK will launch a Global Health Insurance Card to replace them.
From January 1, Britons will be allowed to visit Europe for up to 90 days out of 180.
But the EU is looking to introduce a new visa called the European Travel Information and Authorization System (ETIAS) by the end of 2022.
It will be similar to America’s Electronic System for Travel Authorization (ESTA) pass, and is expected to cost €7 (around £6) and cover multiple short trips over a three-year period.
You might also pay mobile roaming charges when travelling to the EU as they could be reintroduced, though the Government has legislated to cap them at £45 per month, the same level as for non-EU countries.
With regards to flying, in the event of a qualifying delay or cancellation from 1 January 2021, you will be eligible for rerouting or a refund if you are departing from an EU airport.
You will also be eligible if you are travelling from a non-EU airport and flying into an EU airport on a ‘community carrier’.
However, if you are travelling with a non-EU based airline flying from a non-EU destination, the airline does not have the same duties.
New rules: Many expats in the EU have been told by their banks that their accounts will be shut and credit cards cancelled
Brexit could be a bumpy ride for the finances of thousands of the 1.3million British expats who live in the EU.
For months the likes of Barclays, Lloyds, Halifax and Nationwide Building Society have been writing to customers in Belgium, Italy and Holland, among other countries, to tell them their bank accounts will be shut and their credit cards cancelled.
This is because these institutions lack licenses to operate overseas when EU-wide financial passporting rules expire on 31 December.
The news is a blow for those who have their state pension or other income paid into a UK bank account, or simply like to keep a financial footprint in the UK, although all customers should have been given two months notice ahead of any closures.
This is Money has a guide to the options for those facing account closures here.
State pensions: British expats in the EU will continue to get annual increases, plus healthcare rights, as long as they moved there before the end of 2020.
The impact Brexit will have on the housing market is very difficult to call, as people’s decision to buy a home is tied to other current unknowns such as employment rates and the availability of mortgages.
Mortgage rates are already low thanks to Covid-19, and if the Bank of England takes the base rate into negative territory to help the country cope with the shock of Brexit – as some are predicting – they will probably stay that way.
That means that if you’re on a variable or tracker rate, your monthly payments could well decrease. It would also be good news for first-time buyers and those looking to remortgage.
However, if the interest rate was increased due to inflation, again a possibility, it would have the opposite effect. Plenty of people have signed on to fixed-rate deals this year to avoid this uncertainty.
The housing market has performed strongly this year, with transaction levels and values climbing since the market reopened after the first lockdown.
One school of thought is that, if people are confident enough to buy a home in the middle of a global pandemic, they will also be confident enough to buy post-Brexit.
However, there are already signs of that slowing. House prices are likely to fall – or at least stop growing so quickly – next year as the impact of the pandemic catches up on the economy and the Government’s stamp duty holiday ends on 31 March.
If Brexit results in significant job losses, this could compound the situation and lead to a drop in activity and therefore a fall in prices.
Holiday homes: People who do not have residence in an EU country will only be allowed to stay there for 90 days out of every 180
UK nationals who own holiday homes in Europe will be among the most immediately affected.
Those who own a property in the Schengen area but do not have residence in that country will only be allowed to stay there for 90 days out of every 180 – and if they rent out their property while they are not there, they may be subject to higher taxes.
Although originally an EU invention, the Financial Services Compensation Scheme will not disappear after 31 December.
The guarantee protects up to £85,000 in savings held with banks and building societies if they go bust, as well as money held with investment platforms and in some insurance and pension schemes.
The limit will not change after Brexit and it could stay at £85,000 until 2025, despite a falling pound meaning British savers benefit from a lower level of protection than those on the continent.
Some overseas banks like RCI and Triodos, which are French and Dutch respectively, have previously set up UK branches ahead of Brexit which mean UK savers’ money is protected under the FSCS.
Consumer rights: Advice may change on goods and services bought from retailers in the EU, depending on whether the UK leaves with a deal
Meanwhile those who still hold money with the European branch of an EU bank after Brexit should not see their deposit protection change, the FSCS has said.
Deposits are still covered by an EU scheme safeguarding up to €100,000, or around £92,500.
The Brexit deal gives consumers protections when buying from businesses in either the UK or the EU, including for shopping online. But there might be rule differences between the UK and EU in future, which are not clear at the moment.
The right to get a refund within 30 days for a faulty product is UK specific so this will not change.
Tariffs won’t be applied to goods from EU, so there is likely to be minimal impact on prices. However, those buying goods from EU that cost more than £390 will have to pay customs duties.
British expats in the European Union will continue to get annual increases in the state pension, plus healthcare rights.
That also covers those living in Switzerland, and countries which are in the European Economic Area but not the EU – Iceland, Liechtenstein and Norway.
When it comes to private pensions and other financial services, the Association of British Insurers says of the Brexit deal: ‘While this agreement doesn’t directly cover the insurance and wider financial services industry, it provides a good foundation for positive future cooperation with our European neighbours.
‘We hope that this will also allow for outstanding issues to be resolved quickly.’
The ABI says the industry has done ‘everything possible’ to prepare for Brexit, including transferring insurance contracts and establishing EU subsidiaries and branches to minimise disruption to customers.
Expats should contact firms directly if they are concerned.
For those living in the UK who have a pension or insurance product from an EU or EEA based firm, Government guidance is that your coverage should not change.
In the Brexit agreement, the UK and EU agreed to develop and implement new energy trading arrangements by April 2022.
Interim measures are in place in the meantime, but the knock-on effect on people’s utility bills is not yet clear.
Conventional advice to savers with cash invested for the long term is always to ensure you are well diversified, and avoid knee-jerk decisions.
But reviewing where you are invested and whether to do some rebalancing due to a seismic event like Brexit isn’t an over-reaction.
Investing experts are upbeat about prospects for the UK in 2021, although the recovery might not kick in until the late spring or summer when enough people should be vaccinated against Covid-19 for economic activity to resume.
Brexit uncertainty will lift now there is a deal with our former European Union partners, and UK stocks remain cheap.
Pundits are hailing recent bids for UK companies as a sign of resurgent interest from overseas investors.
British businesses importing and exporting goods within the EU will need to make some changes when doing so from 1 January.
As is the case when importing and exporting goods with the rest of the world, business owners will need to make customs declarations.
These ensure the right import duty and VAT are applied. Import and export licences or certificates may also apply for certain types of goods.
For business owners selling to customers from the EU, you can charge VAT at 0 per cent – known as ‘zero rate’ – on most goods.
Businesses will also need an EORI number that starts with ‘GB’ to import and export goods from England, Scotland, Wales and the Isle of Man, to the EU.
To move goods to or from Northern Ireland, you may also need a separate EORI number. Read about the rules here.
There are new rules for hiring EU nationals to work for your business including registering as a licenced visa sponsor. For more information, read our guide here.
The UK is leaving the Erasmus scheme, which gives students opportunities to live, study and work in other EU countries, and provides financial support.
The Government has promised to replace this with a ‘Turing scheme’ for UK students which will cover universities worldwide.
Students in Northern Ireland will still be able to participate in Erasmus under a deal with the Irish government.
Compiled by Tanya Jefferies, Angelique Ruzicka, George Nixon, Grace Gausden, Jayna Rana and Helen Crane.