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How might a no-deal Brexit in 2021 affect Britons living in the EU who hold UK bank accounts, investments and other financial arrangements?

Since the Brexit referendum, the focus for many British expatriates living in the EU has been the larger issues like residence, healthcare and pensions rights. But as we approach the end of the transition period, other practical challenges are coming to light.

Brexit's effect on UK banks

The big issue to hit the news recently is whether UK banks can continue to provide services to EU residents after Brexit. It has been widely reported that high street banks are writing to clients in some EU countries to advise that their accounts will be closed by the end of the year. 

Financial institutions need to be authorised and regulated to provide services to clients in their country of residence. So far this has been relatively easy since, as part of the EU, UK regulated banks and financial advisory companies can ‘passport’ their services into the bloc.    

The UK will lose these passporting rights from 1 January 2021, unless an agreement is reached to allow the current pan-EU rules to continue. So far it does not look encouraging. If the UK and EU fail to agree a deal, UK banks will need to apply for a banking licence in each country where they have clients. This would be very expensive and time consuming and, considering their overseas client base is relatively small, many (perhaps all) will opt not to. 

The British banking industry body, UK Finance, told the Times newspaper that each bank is deciding whether to apply for the appropriate regulation to operate UK bank accounts or close accounts instead. A spokesman explained that “the impact on each customer will vary depending on the operating model of their bank or provider, the product or service being provided, and the legal and regulatory framework in the country in which they are resident”.

So currently much remains uncertain, particularly as we do not yet know if the UK and EU will reach an agreement or not, and some institutions may take steps to be able to provide services to EU clients while others will not. You need to speak to your bank to establish what their plans are. 

Brexit's effect on other UK financial services 

It is not only banks which are affected, other regulated financial advice and services too. So if you continue to use a UK-based financial adviser, you need to ask them if and how they can continue to support you after Brexit if the UK and EU do not reach agreement on cross-border financial services.

Download our 10 key questions to ask your UK adviser

Likewise, if you have UK investments, will you be able to retain them, and will there be restrictions? For example, you may be able to keep a UK policy and withdraw money but prevented from adding or moving funds and applying for new services.

And find out if you can continue to have a ‘long-distance relationship’ with your adviser in the UK, or will you have to fly to Britain to receive advice and sign paperwork there?

While this may be unwelcome news, and you may have a good relationship with your UK-based adviser, this could be the perfect opportunity to review your investments and financial planning and consider whether an adviser based in your country of residence would actually be much more beneficial for you. 

The benefits of local advice

Advisers living in your country of residence have first-hand experience of the complexities of the local tax and succession regime. They keep up to date on the frequent legislative changes and can react fast where necessary.  They can advise on the compliant tax and estate planning opportunities available within the local regime – the way you hold assets can make a considerable difference to how much tax you pay and how easily they can be passed to heirs. 

You also need to ensure your investment portfolio is suitable for your current, personal situation. Is it designed to meet your objectives and risk profile today? Does it have enough global diversification? Are you holding some assets in Euros to avoid exchange rate risk?

With very limited time left before the end of the Brexit transition period, now is the time to talk to an experienced, locally based adviser to secure financial peace of mind for 2021 and beyond.

At Blevins Franks we are prepared and ready for Brexit. Our financial advisers live and work in the local EU countries where our clients are and have in-depth knowledge of their financial planning needs and the local tax and succession regimes. We are authorised and regulated to continue providing advice after Brexit, regardless of whether the UK and EU reach agreement or not. Please do not hesitate to get in touch to find out how we can help you with your investments, pensions and cross-border tax and estate planning. 

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All advice received from any Blevins Franks firm is personalised and provided in writing. This article should not be construed as providing any personalised taxation and/or investment advice. All information is based on Blevins Franks’ understanding of legislation and taxation practice, in the UK and overseas at the time of writing; this may change in the future.