A Brexit deal was agreed on Christmas Eve 2020 and the transition period ended on 31 December. The UK has now left Europe. As news of the deal reached markets, the FTSE 250 jumped 1.15% and the pound rose against the dollar.
The deal brings certainty, which in itself is great news for business, but there are still gaps to close and questions to answer.
Here’s what Brexit might mean for you in 2021.
Pensions and Investments
How the stock market reacts will have a bearing on your finances
Overall, the FTSE fell by more than 14% in 2020. Certainty created by the Brexit deal should help international investors return to the UK this year, with some forecasters expecting the index to rally by as much as 10% by the end of 2021.
Your investments are long-term propositions so unless you are due to retire soon, we would advise you to ignore the political ‘noise’ and stay focused on your long-term goals.
If you think your plans have changed or you are tempted to rebalance an investment portfolio get in touch.
Your State Pension will still be payable if you live in the EU
State Pension rules will stay the same for those living in the EU post-Brexit.
You will continue to receive the State Pension, and benefit from State Pension increases in line with those given to UK citizens, even if you moved to the EU after 2020.
The State Pensions is set to rise by 2.5% on 12 April 2021, meaning a full State Pension rise to £179.60 per week (£9,339.20 per year).
European residency
You might need to apply for residency if you lived in an EU country before January 2021 and intend to go on living there post-Brexit
If you were living in an EU country – and had an official residency there – before 1 January 2021, you are still a resident of that country post-Brexit.
Be sure your residency is registered correctly and that your children have their own residency papers if they live with you.
If you were living in an EU country before 1 January 2021 but without full residency status, you can apply for legal residency up to 30 June 2021.
Spain, for example, will then issue you with a biometric residence card called a Tarjeta de Identidad de Extranjero (TIE) which confirms your Spanish residency and expressly confirms your right to stay under the Withdrawal Agreement.
If you have overseas property but not official residency status, new rules will apply
If you didn’t live in an EU country before 1 January 2021 you can’t apply for official residency status. Having a property overseas doesn’t automatically make you a resident, so if you don’t qualify for residency, tourist rules will apply.
You can travel to Spain, plus all other Schengen area countries – including France, Germany, Greece, Portugal, and Italy – for up to 90 days in any 180-day period without a visa, for purposes such as tourism. This means you could stay for three months in the summer and then another three months in the winter, for example.
To stay longer than 90 days in any 180-day period, to work or study, or for business travel, you must meet the entry requirements set out by the country you are travelling to. This could mean applying for a visa or work permit.
Slightly different rules apply for Bulgaria, Croatia, Cyprus, and Romania.
There could be potential tax implications
The tax rate on income for UK-based owners of Spanish property has risen post-Brexit, from 19% to 24%. The old rate expired at the end of the transition period so is payable from 1 January.
There has also been a change in the way taxable income is calculated in Spain. Expenses can no longer be deducted from income, meaning gross income will be taxed, potentially resulting in a huge jump in the amount payable.
European tourism
You will need a new dark-blue passport, but possibly not yet
You won’t need a new passport if your current one is less than ten years old and has at least six months left on it. If you do need a new – dark blue – one soon, be sure to apply in plenty of time.
Your European Health Insurance Card (EHIC) remains valid until its expiry date
If you currently hold a valid European Health Insurance Card (EHIC) issued before the end of 2020 it is valid until its expiry date. The government is set to launch a new UK Global Health Insurance Card (GHIC) although there is no word yet on when this will be available.
EU free roaming has ended but fees might not apply
Free roaming in the EU, plus Iceland and Lichtenstein, ended on 1 January 2021, though the main UK operators are not currently looking to reintroduce roaming fees.
There is currently a £45-a-month cap on mobile data used abroad, after which you must opt in to use more. You’ll also be informed when you reach 80% and 100% of your allowance.
Your pet’s passport is no longer valid
UK-issued pet passports will no longer allow your pet to travel to the EU.
From 1 January 2021, you will need to have an animal health certificate (AHC), issued by a vet. The same rules will apply if you are taking your pet to Northern Ireland.
Get in touch
If you’re concerned about the effect Brexit might have on your finances Fingerprint Financial Planning can help. Get in touch by emailing hello@fingerprintfp.co.uk or call 03452 100 100.
Please note
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation which is subject to change.
