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1 August 2021
23 Brexit Need-to-Knows
After years of wrangling, the UK has made a final break from the EU - and it did so with a trade deal agreed at the last minute. It's a once-in-a-generation event with far-reaching implications for everything from travel and consumer rights to property prices. Here we tell you in plain English what it means for you.
In a landmark referendum held on 23 June 2016, those who took part voted by 52% to 48% to leave the European Union.
While this referendum was legally only indicative (so it didn't in its own right have the force of law), it was seen as politically binding.
However, as Martin Lewis says: "Some cared about immigration, others sovereignty, some the economy – yet the disgrace is we had a black-and-white vote on a rainbow of issues." Other than the phrase "leave the European Union", there was no definition on the ballot paper of what Brexit meant, leading to huge arguments since about how far the UK separates from the EU.
On 29 March 2017, the Government triggered a rule known as 'Article 50', which started the UK's withdrawal from the EU. It was passed through the UK Parliament and dictated that we'd leave exactly two years later, on 29 March 2019.
But huge political uncertainty followed, and our departure date was delayed multiple times. After months of parliamentary gridlock, there was a general election on 12 December 2019. It resulted in a clear victory for the Conservatives, who had stood with the promise to "get Brexit done" – and as a result, we left the EU on 31 January 2020.
We were in a transition period until the end of 2020, during which we followed EU rules but weren't a part of its decision-making processes.
The UK Government negotiated what our future partnership with the EU would be after the transition period ended on 31 December 2020, and on 24 December 2020 announced that a trade deal had been agreed. This deal was approved by the UK Parliament on 30 December 2020.
In Martin's original 'How to vote in the EU referendum' blog, the impact of Brexit on the economy was one of the most hotly debated issues. Some who voted 'leave' believed it would mean new opportunities for the UK economy. Others have predicted it will lead to economic devastation.
But right now the economic impact of Brexit is being overshadowed by the financial fallout of the pandemic:
After Brexit was first voted for in 2016, there were fears a house price crisis could be just around the corner. In November 2018, the Bank of England made headlines with a report warning that in a worst case scenario a no-deal Brexit could lead to the economy shrinking and house prices falling by close to 30% - but these predictions shifted once the withdrawal deal was agreed and a more orderly Brexit process emerged.
Over the past year, house prices have been driven by a pandemic-prompted stamp duty holiday. This has acted like rocket fuel on the housing market, seeing a 7.6% rise over the past year – and all that at a time when people know the transition period is ending.
Of course, whether the stamp duty cut has actually been of benefit (other than for those who have been waiting to shift their houses) is debatable. The price rise has likely negated the gain from the stamp duty holiday for many, and seen a shortage of supply of smaller deposit mortgages.
But for now, for most, Brexit is a secondary question compared to whether prices shift downwards once the stamp duty holiday ends, and to the pandemic's long-term impact on people's jobs and incomes.
After years of no change leading up to 2016, the Bank of England dropped the base rate – its official borrowing rate – to 0.25% in the wake of the EU referendum, to stave off a recession. Since then, the base rate has risen, but only up to 0.75%. Now due to the pandemic it's at its lowest rate in history, just 0.1%.
There's also been some talk of the risk of negative interest rates – in fact, earlier this year the Bank of England gave banks six months to prepare for that eventuality. Brexit is likely to feed into this – yet even if it has a short-term negative economic impact, as most economists predict, its impact is still for now likely dwarfed by the pandemic's, and negative rates are still a possibility more than a probability.
Rather than trying to second-guess economic shifts, the safest approach may be to simply focus on your own personal finances, which are more controllable and predictable. Plan for the worst; hope for the best. Ensure you've the cheapest mortgage and the top savings accounts and do a money makeover.
The impact of coronavirus on travel this year has been massive, and is still by far the biggest issue at the moment. Yet Brexit undeniably means big changes – before Brexit and during the transition period, UK citizens could travel, live, holiday and work anywhere in the EU without any special permits, but that is no longer the case. Here are the Brexit travel need-to-knows:
Leading up to Brexit, the Government warned of cancelled flights and major disruption to ferries, coaches and the Eurostar if we didn't agree a deal with the EU. But once the withdrawal agreement was negotiated with the EU, those fears receded and travel continued as normal following Brexit Day.
When the coronavirus pandemic hit, it put an almost immediate stop to most travel – and while some travel has now resumed, it's still massively disrupted.
While the EU is restricting non-essential travel for some, individual countries within the EU are also allowed to set their own rules – making the situation really complicated. Some countries, such as France and Spain, are allowing fully vaccinated UK holidaymakers to enter without having to quarantine, while others, such as Austria and Germany have closed their borders to UK travellers altogether.
Separately, the UK government has introduced a 'traffic light' system of rules for international travel, which means those returning to England, Northern Ireland, Scotland, and Wales from most European destinations need to take several Covid-19 tests and self-isolate for 10 days. For the latest on travel, see our Coronavirus Travel Rights guide.
If you're on a flight to or from an EU country which – due to the airline's fault – is delayed by more than three hours or your flight is cancelled altogether, under EU rule 261/2004 you're entitled to between £110 and £540 per person in compensation. Full details on this can be found in our Flight Delays guide.
Although the UK has now left the EU, UK passengers' right to flight delay compensation isn't supposed to change as a result of Brexit. The Government insists the rules remain the same, as it's written EU261 into UK law.
We've put various complex scenarios under which flights would currently be covered by EU261 to the Department for Transport – such as if you flew from the US (a non-EU country) to France (an EU country) on British Airways (a British airline) – and it's adamant that with EU rules copied into UK law you'll still get the same cover you would if the UK had remained in the EU.
We still don't know how this will work in practice though, or if, for instance, there may be problems thrown up by how different governments and lawmakers enforce the rules. We'll be keeping a close eye on it. You can read the small print here.
As above, in the short term most travel to Europe is seriously disrupted anyway as a result of coronavirus. But even once those restrictions are lifted, there are a number of changes which will apply now the Brexit transition period has ended:
If you've a UK passport, it'll likely be burgundy with the words "European Union" stamped on the front. Yet this is changing – all new or renewed passports are now blue instead, and the "European Union" has been dropped.
You DON'T need to get a new passport straightaway though, and can continue to use your current one as normal until it's close to its expiry date (see below for why you may not want to wait until it actually expires).
Pre-Brexit, you could travel to EU countries on your passport right up to the point it expires. However, the rules have changed. These changes were announced prior to the trade deal but they haven't changed following the deal being agreed upon.
Under the new rules, when you visit most EU countries and Iceland, Liechtenstein, Norway and Switzerland, your passport will need to both:
This means some will need to renew their passport earlier than normal. It's worth noting though that it won't apply when visiting every EU country (for example, you won't need to do it when going to the Republic of Ireland).
It's also worth noting that to prepare for Brexit, the Passport Office introduced some under-the-radar changes in September 2018 – first revealed by MoneySavingExpert.com – which mean that travellers who renew their passports now get up to nine months' less validity.
See full info in our Passport applicants given shorter renewals MSE News story.
Before Brexit, and during 2020's transition period, most UK residents qualified for a free European Health Insurance Card (EHIC). This entitled you to the same treatment at state-run hospitals and GPs that locals are entitled to, at the same cost, when travelling in the EU (plus Iceland, Liechtenstein, Norway and Switzerland and some overseas territories – see our country-by-country EHIC guide).
Prior to the trade deal being announced, it was expected that EHIC cover would end for most on 1 January 2021. However, the story isn't as bleak as was expected - here's what's happened.
UK nationals living in the UK who currently have an EHIC can continue to use it in the EU after 1 January 2021 until the card expires, even if that is years away. However, from 1 January 2021, you'll no longer be able to use your EHIC in Switzerland, Norway, Iceland or Liechtenstein, which are not part of the EU, but had accepted the EHIC from UK nationals.
If you're an EU national living in the UK, your existing EHIC ended on 31 December 2020. You can, however, continue to get a new EHIC rather than a GHIC.
The Global Health Insurance Card (GHIC) will take over for UK nationals living in the UK but you will need to apply for it - and you can now get one as a new user or if you're renewing your existing EHIC via the NHS website.
You can no longer get a new EHIC (incl via a renewal) if you're a UK national living in the UK, with some small exceptions – see who can still apply.
Like an EHIC, the GHIC will entitle holders to emergency or necessary state (not private) medical care for the same cost as a resident in the EU country they're visiting; but it won't cover you in Iceland, Liechtenstein, Norway and Switzerland.
Neither card is a replacement for travel insurance though – they do not cover everything, such as mountain rescue or being flown back to the UK for treatment - see our Cheap Travel Insurance guide for full help.
As Martin explains in his Buy euros now? blog (written in July 2018, but still relevant now), currency moves are complex, and affected both by economics and the whims of City traders trying to second-guess those movements.
Without a crystal ball, no one knows if the pound will be stronger or weaker in future – or what the impact of the end of the transition period will be. Anyone who tells you otherwise is merely speculating.
However, if you're really worried about the value of the pound going down to make your holidays unaffordable, you could try following what Martin's suggested in the past and buy roughly half of what you need at today's best rate, then half nearer the time.
If you're really nervous, you could ask yourself: "Would I be content with today's euro rate for my holiday money...?" If so, and your real fear is that the rate worsens so your holiday would be unaffordable, play it safe and buy more than half now.
But if you do that, it's best to close your eyes afterwards. If the pound strengthens, you'd have been better off waiting – and you don't want that knowledge to ruin your holiday.
In 2017, 'Roam Like At Home' rules were introduced by the European Union across the EU (plus Iceland, Liechtenstein and Norway).
These meant that when travelling in the EU, you could make calls or send texts to anywhere else in the EU, or use data, and it would come out of your UK allowance (or you'd pay UK pay-as-you-go rates) just as you would at home, subject to 'fair usage' rules.
However, there's now no guarantee of free mobile roaming in the EU – and we've already seen one provider announce it's ending the current free roaming arrangements.
On 24 June 2021, EE announced it would start charging new and upgrading customers a flat £2/day mobile roaming fee if they use their phone in Europe from January 2022.
Elsewhere, O2 and Three are are limiting their 'fair use' data caps, although other providers including Vodafone told us in June 2021 that they had no plans to change their current mobile roaming policy. See our Roaming charges return news story for more.
If you're not sure what you'll be charged, it's best to check with your provider directly.
Another feature of the EU roaming rules was that there was a default €50 (£44) cap on monthly data usage when you travel anywhere in the world – not just within the EU. The idea was to protect travellers from huge unexpected mobile bills.
The Government has now written a similar measure into UK law, which is now in effect, so this will continue to apply. The default cap has been set at £45 per monthly billing period.
Under EU law, which applied until the end of the transition period, travel firms from outside the UK that targeted UK consumers had to provide protection to them in the event of their company going bust.
This has continued as the Government has now amended UK law so that EU traders selling package holidays or 'linked travel arrangements' in the UK, or specifically targeting these at customers in the UK, must comply with insolvency protection requirements. This was already the case before the trade deal was agreed.
Until and including 31 December 2020, owners of dogs, cats and ferrets could travel with their animals to and from EU countries under the EU Pet Travel Scheme, provided they hold a valid EU pet passport. To get a passport, pets had to be taken to a vet before travel, microchipped and vaccinated against rabies.
But if you're travelling to the EU or Northern Ireland in 2021 or beyond, you’ll need to take the following steps on your first trip. These steps are similar to the previous process, but you’ll need an animal health certificate (AHC) instead of a pet passport:
As long as you keep your pets' rabies vaccinations up-to-date, you will not need to get repeat vaccinations for subsequent trips to the EU or Northern Ireland (other than for tapeworm treatments for dogs visiting those countries listed above). But you will need to visit your vet to apply for a new AHC for each trip. Full details can be found in our Taking Pets to the EU or Northern Ireland news story and on the Government website.
Previously, if you had a UK driving licence you could drive in the EU, Iceland, Liechtenstein, Norway and Switzerland without any extra documents.
Prior to the trade deal being announced, the Government had warned international driving permits (IDP) could be widely required by Brits driving in the EU. However, the Department of Transport's now told us that in most cases you DON'T need an IDP to drive in the EU, Switzerland, Norway, Iceland or Liechtenstein.
The only scenarios where you may need an IDP are:
If you do need an IDP, it costs £5.50 and it's possible you may need more than one - you can check which kind of permit is valid in which country on the Gov.uk website.
If you're taking your own vehicle, you also need a 'green card' – though this is changing. A green card is an international certificate of insurance issued by insurance providers in the UK, guaranteeing that the motorist has the necessary minimum level of third-party cover (you may need to pay if you want a higher level of cover). To get one, contact your insurer. It will send you your green card and you need to carry the physical document when you travel. You'll also need a GB sticker. The green card itself is free but insurers may charge an admin fee to issue them.
The requirement for UK drivers to show a green card will be scrapped from 2 August – but until then, you still need one if driving your own vehicle in the EU.
If you're a UK licence holder living in the EU, the UK Government says you should exchange your UK driving licence for a local EU driving licence. The deadline for doing this depends on which country you live in. You may also need to retake your driving test depending on the country you're based in. See Gov.uk for full country-by-country info.
If you return to live in the UK, you'll be able to exchange your EU licence for a UK licence without taking another test, so long as you got your initial licence from passing a test in the UK. EU licences will continue to be exchanged even after the transition period, so there shouldn't be a rush to exchange them during the transition period in particular.
Much of the UK's financial services legislation comes from EU directives. These allow banks and other financial services firms to offer banking, saving or lending services across the EU without needing to be regulated by each individual country's financial regulator.
Some of the most important consumer rights laws in the UK – such as the Consumer Rights Act, which provides protection when you buy goods online and in store – are also based on EU directives.
In the event a bank goes bust, the Financial Services Compensation Scheme means you are protected for up to £85,000 per person, per financial institution, provided that it is a UK-regulated bank. See Are your savings safe? for more info. While much of the UK's financial services legislation comes from EU directives, the FSCS has continued post-Brexit, and will continue to apply.
Almost all main savings accounts are UK-regulated, including the likes of Santander (which has a Spanish parent company) and ICICI (which has an Indian parent company). And in the run-up to the UK leaving the EU, more foreign banks, such as RCI Bank (which is French) have got UK banking licences.
There is likely to be little change on this in future, regardless of Brexit.
Firms authorised in the European Economic Area (the EU plus Iceland, Liechtenstein and Norway) can offer most of their services in the UK under a system known as 'passporting' – where a firm in one EU member state can provide services to customers in other member states without having to get direct authorisation in those other states.
It means that banks such as Fidor Bank – regulated by German regulators – are able to offer savings accounts to UK customers.
The Government is running a 'temporary permissions regime' after Brexit, which allows firms already in the UK to continue to operate for up to three years. This was already the case before the trade deal was agreed, and city regulator the Financial Conduct Authority has confirmed this will continue to be the case following the announcement of the trade deal.
In the meantime, many EU-regulated banks are applying for UK licences, which mean that if you bank with them, your money will protected by the Financial Services Compensation Scheme (FSCS) – up to the value of £85,000 – in the unlikely event that the bank went bust. This is the same protection you get with a UK-based bank. Some overseas service providers, such as RCI Bank, have been given UK licences already.
If your firm is part of the temporary permissions regime you'll be protected under the FSCS for now. You may need to confirm the firm is within the regime either via the FCA register or by contacting the firm directly.
Some of the most important consumer rights laws in the UK, such as the Consumer Rights Act which provides protection when you buy goods online and in store, are UK laws in their own right – so are unchanged by Brexit, even though some of their content is based on EU directives. The Consumer Contracts Regulations remain part of UK law and the 14 day cooling off period for items bought online remains as before.
However, if you're buying from a trader based in the EU post-Brexit, things may get a bit trickier.
EU consumer protection legislation ensures consumers across the EU can buy goods and services from other EU countries, knowing that the protections and safety standards are the same or similar in every EU member state.
For example, previously if a UK consumer bought an item from an EU-based trader and the item did not arrive or there is a problem, the UK consumer could use UK law and the UK courts for redress, and judgment was recognised in the EU member state in question.
The Government now says you need to contact UK European Consumer Centre for help with problems buying from an EU country.
Before Brexit, Brits could generally buy items online from Europe at no extra cost (aside from delivery fees of course). And this remained the case until the end of 2020 during the Brexit transition period.
However now, if you order items online from a company based in Europe, you may face extra charges - though what these will be depends on how big the total order is (not counting shipping and handling fees).
You can read our Buying online from Europe guide for more details on this.
UK-based payment service providers have access to central payments infrastructure such as the Single Euro Payments Area (SEPA), which allows customers to make cross-border payments at a low cost, or sometimes for free.
In March 2019, the UK's application to remain in the geographical scope of SEPA schemes was approved, meaning that euro SEPA payments can continue to be made through existing arrangements - and this isn't affected by the newly agreed trade deal.
Thousands of Brits living abroad in Europe were told late last year that their UK bank accounts or credit cards would be closed as a result of Brexit. That's because so-called 'passporting' arrangements came to an end on 31 December 2020, although UK banks can still operate abroad after this date if they meet the separate laws and regulations required by individual countries.
Lloyds, Halifax and Barclaycard are among the big names that have told customers that due to rule changes linked to Brexit they will be closing accounts – though the situation may depend on which European country you live in. Many other banks have refused to rule out closing accounts, saying they're closely monitoring the situation.
If your account is being closed, you may still be able to open another with a different UK bank or to use a local bank instead. See our More UK banks to shut British expat accounts MSE News story for full help and the latest on who's doing what.
The major banks we spoke to all told us account closures would go ahead regardless of whether the UK reached a deal with the EU. Now that we have a deal, Barclaycard, Halifax and Lloyds have confirmed their positions on closing accounts remain the same.
While Brexit affects everyone in the UK, the most immediate direct impact is on the 3+ million people living here who are citizens of other EU countries.
If you're one of them, here's what you need to know:
If you're a European Economic Area or Swiss citizen living in Britain and you arrived on or before 31 December 2020, you won't have to leave the UK because we've left the EU. But you and your family may have to register with the EU Settlement Scheme to continue living in the UK.
Most can still apply online for FREE via the Gov.uk website.
The official deadline to do this was Wednesday 30 June. However, you can still apply if you had "reasonable grounds" for missing the deadline (for a list of examples, see the Gov.uk website.) It's best to do this as soon as possible.
Provided you lodge an application, all the existing rights you have to work and access housing, benefits and services should be protected until the application is decided. You don't need to do anything else or let any other organisations know, although you're likely to be asked to prove your settled or pre-settled status (once confirmed) if you're renting a new place, applying for new benefits or starting a new job, for example. You can prove your status via Gov.uk.
Full details on what you'll need to apply can be found on Gov.uk, but in brief, you'll need information such as proof of identity and proof of residence in the UK. If your application is not successful, you won't be able to stay in the UK – although you can appeal a decision and reapply.
If your application is successful, you'll be given one of two statuses:
Having either settled or pre-settled status means you can:
If you haven't yet applied, and you have no other right to stay in the UK, you will technically have been left without lawful status from Thursday 1 July – so it's best to apply online as soon as possible.
As set out above, settled and pre-settled status give many of the same rights – but there are some differences.
If you get pre-settled status, you can:
If you get settled status, you can:
If you're an EU citizen who currently lives outside the UK, but you have a family member living in the UK and want to come to the UK to live, there are extra rules to consider:
Before Brexit, all UK citizens were also EU citizens, which meant they could go live and work anywhere in the European Union – from Seville to Stockholm – without needing to apply for a visa.
If you do live abroad, here's what you now need to know:
If you were a UK national lawfully residing in another EU country by 31 December 2020, you should be able to stay. However, crucially, depending on the individual country's rules, you may have to apply for a residence permit by a specific date – if you don't, you could face losing your rights to live there.
That's because European countries have taken one of two approaches to protecting citizens' rights after Brexit:
1. Formal application needed to secure residency status. Here, generally speaking, you MUST apply for a permit or risk losing your right to live in the relevant country.
You'll typically need to submit documents such as your passport and proof you were lawfully resident in the country before the end of the Brexit transition period on 31 December 2020.
This is the case for UK nationals living in France and the Netherlands – see more info on the France and Netherlands government websites. It also applies for those in Austria, Belgium, Denmark, Finland, Hungary, Latvia, Luxembourg, Malta, Romania, Slovenia and Sweden.
Important: The deadlines for applications vary by country and some may have passed already – so if you're a British citizen living in one of these countries, check urgently with the local authorities what you need to do to protect your rights.
2. Residency status granted automatically. Here, in theory you don't need to apply to keep your rights. But in practice, it's likely to be worth doing anyway as it means you'll get a document proving your status. Plus, even where you don't have to lodge a formal application, you may still have to take other action such as notifying the authorities of your residence – so check with the authorities where you live to be sure.
Germany and Spain are among the countries operating this second kind of system – see the German and Spanish government websites for full info. The other countries are: Bulgaria, Croatia, Cyprus, Czechia, Estonia, Greece, Italy, Lithuania, Poland, Portugal, Slovakia.
Here are some other points to bear in mind:
Erasmus+ is a programme for education, training, youth and sport. The best-known aspect of it is the university exchange programme, which allows students from the UK to study at European institutions for a year during their degree.
Students who qualify receive an Erasmus+ grant provided by the European Commission – this is paid through your institution. This grant contributes towards the extra costs you may encounter from studying abroad.
If you were awarded funding for the Erasmus+ scheme by 31 December 2020 then you'll be able to participate fully for the duration of your exchange, even if it runs into 2021.
However, beyond that the UK Government has now announced it will no longer be participating in the Erasmus+ scheme, and will instead be establishing its own overseas study scheme named after the computing pioneer Alan Turing.
The Department of Education says the Turing Scheme will provide funding for around 35,000 students to go on placements around the world from September 2021. The new scheme will be targeted at students from disadvantaged backgrounds.
Schools, colleges and higher education providers apply for funding for projects on behalf of their pupils, students and learners. If you are based in one of these organisations you may be eligible to take part. It does not matter if you are a full-time or part-time student. Ask your school, education provider, college or university for more info.
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