Financial planning post Brexit. How does this impact me?

Now that Brexit is here, EU-resident Britons with UK bank accounts, investments, insurance policies, or a UK-based financial adviser may be restricted in what they can do.

In these times of extensive restrictions and lockdowns, our worlds have become much smaller. Whether or not this will have a long-term impact on your lifestyle, travel and shopping habits as restrictions increase will be a personal matter. With Brexit now in full swing, British citizens living in the EU have valid reasons to “think locally” when it comes to financial plans.

Just as British citizens lost automatic freedom of movement in the EU when Brexit took effect on 1 January, many British financial firms lost the right to offer banking and investment services within the EU.

If you reside in Malta, Spain, Portugal, France, Cyprus or any other EU state, but continue to use a UK bank account, other financial products or a UK financial adviser, ensure you check where you and your money stand.

British financial services and Brexit.

Prior to Brexit, UK firms providing financial services to Britons living in the EU could legally do so through ‘passporting’ arrangements. This meant UK providers– imposed by the Financial Conduct Authority (FCA)– were dedicated to meet the same minimum requirements and consumer protections for EU residents as other EU states.

Now that the UK (and the FCA) are free to set their own policies, the EU has no guarantee that UK firms will meet their requirements. On 1 January, the EU withdrew passporting rights for UK firms– including banks, insurance companies, investment providers and financial advisers.

Presently, some could even break the law by dealing with EU residents.

Does this impact all British financial firms?

This depends on many factors, including how a company is structured and where it is located. Those with headquarters in an EU country can retain their passporting licence and continue to operate as before.

Wholly UK-based firms who want to support EU-resident clients will likely need to restructure and form agreements with the financial regulators for each EU/EEA country they operate in. This is a highly intricate, costly, and time-consuming process, which is not an attractive option for all.

Discussions on financial services are ongoing, so it is feasible that the UK and the EU could still reach an agreement in this area. Some firms may be holding out for this before going through the potentially unneeded expense of restructuring. Others have already withdrawn from the EU markets.

Some major UK banks have notified EU-based clients that they can’t provide them with services after Brexit, and have closed their accounts. Other providers have maintained accounts/policies suspended, but open activity, or are allowing them to continue until the end of their term.

How could this impact you?

If you have a British bank account, insurance policy, investment or other financial product, and your provider has not gotten in touch with you about limited services, ask them what arrangements they have in place for your country of residence.

If your account has not been closed, has it been frozen?

In several cases, while you may retain existing accounts and make withdrawals as an EU resident, you may be limited from adding or moving funds or renewing policies. You may also be unable to apply for new services, like term deposits, bonds, foreign currency management, loans, credit cards and mortgages.

Check if they have the authority to continue to support you as an EU resident if you still use a financial adviser from the UK. In addition to the legal implications and whether you are protected if things go wrong, some financial institutions have stopped accepting instructions from UK (unregulated) providers. If you hold EU-based investments, your planning options can be significantly limited with a UK adviser.

Financial planning after Brexit

Regardless of whether the problem of financial services does not impact you, there are other key benefits in thinking more locally for your finances.

Are you still holding on to UK investments and savings?

Now that UK assets are no longer EU/EA assets, they could potentially attract a higher tax bill within the EU. ISAs are also taxable for non-UK residents in your country of residence.

Do you own UK property?

Don’t forget: EU residents are still in the firing line for UK stamp duty and capital gains tax.

Residents in Malta, Cyprus, Spain, Portugal and France can access opportunities that offer better tax-efficiency for capital alongside other potential benefits, so make sure you review your options.

What about pensions in the UK?

This is not so simple. If necessary in your host country, you might be better off leaving UK pensions in the UK and drawing income. Brexit does not impact the ability to deposit UK pension income into an EU account. It will always be paid in sterling, so the value could be impacted by exchange rates and conversion costs.

Look into whether it might be more advantageous for you to transfer funds from the UK into a tax-efficient structure for your country of residence. This could also unlock currency flexibility and estate planning benefits, but be sure to seek expert, regulated advice to do what is right for you.

Lawsons Equity – Financial Advisors Malta

Considered that Brexit has brought such a seismic transformation in the landscape, it has never been more crucial to ensure that your financial plans are suitable and compliant for your life abroad. Speak to a Lawsons Equity advisor today. We can help you take advantage of well-suited opportunities there are and secure financial comfort for you and your family.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.

The value of investments and income from them may go down. You may not get back the original amount invested

Lawsons Equity Limited is a company registered in Malta with company number C49564 and licenced by the Malta Financial Services Authority as Enrolled Insurance Brokers under the Insurance Intermediaries Act 2006, and to provide Investment Services under the Investment Services Act, 1994.

Lawsons Equity Ltd have passported their services across the EU. To see a full list of countries click here

In the United Kingdom, Lawsons Equity Limited is deemed authorised and regulated by the Financial Conduct Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.