Currently, around a million Britons live and work in the EU. This includes a mix of people, from families to students. There are also significant numbers of pensioners living in Europe – 1 in 5 expats is retired. For anyone who has made their life in the EU, the state of Brexit is worrying. With a deal in place many benefits and rights will continue. However, if the UK ends up in a “no deal” situation then there may be no consistent treatment of expats. Instead, each individual experience would depend on how the country in which that person is living treats UK nationals. Life is likely to change for expats in the EU either way – there are some key rights and benefits that could be affected.
The right to work
As EU citizens, British nationals currently have the right to work anywhere in the EU. However, even with an agreed deal on the table, when Brexit happens this could be replaced by a system of work permits. There are also issues that may affect individuals in non-traditional circumstances. For example, Brits living in EU states and providing cross border services – such as a British translator, based in Berlin providing services to Spanish and Italian businesses – may struggle to continue. The original Brexit withdrawal agreement does not allow Brits who are resident in EU member states to provide cross border services to companies in other EU states. This is just one way in which Brexit – with a deal or not – could be devastating in business terms for some expats.
The social services sections of the existing deal would ensure that benefits continue to be paid largely as they currently are. It’s highly unlikely that the UK government would allow a situation to arise where benefits being paid to expats in the EU are simply stopped if there is no deal. However, the confusion that could ensue post-no deal Brexit may mean payments are delayed and access to entitlements temporarily lost.
Access to healthcare for EU based expats would continue if there is a deal. However, a no deal situation may mean that restrictions are introduced and private health insurance may become essential. This would be particularly problematic (and expensive) for retired expats who may not be able to get insurance based on their age, or who may have to pay a high price for it. Without a deal, the Healthcare International Arrangement Bill would provide the legal basis to fund and implement vital reciprocal healthcare schemes after the UK leaves the EU. However, this won’t be in place by the time the current arrangements come to an end.
The right to remain
The government has indicated that, even in a no deal situation, EU nationals in the UK would have a right to remain. Although the EU hasn’t confirmed the same for UK expats in Europe, it’s unlikely that EU countries would risk a mass exodus that could damage the local economies that benefit from UK expats. Complicated situations could arise in relationships that involve two partners, one from the UK and one from an EU member state. Restrictions on the right to work could affect families like this, depending on where they are based after Brexit.
There are a number of different issues that may affect pensions.
The triple lock. Thanks to reciprocal agreements between the UK and EU, pensions for expats living in Europe currently increase in line with inflation as if the pensioner lived at home (called “the triple lock”). If there is no deal then pension payments would still be made but may not be inflation-proofed.
Financial services. There is a potential issue with a no deal Brexit that could mean that payments from British companies, including pension and insurance companies, being made to expats in the EU may be disrupted or not be made for some time after Brexit happens.
Aggregated pensions. For anyone who has worked in multiple EU countries, a system currently exists that aggregates pension pots as if the individual had lived in one country. This can be crucial, as the length of time spent in one country may not have been long enough for pension rights to vest. The aggregated arrangement means that pensions rights accrued in different countries are combined. Loss of access to this aggregated system as a result of a no deal could mean loss of contributions.
Pensions for Britons who worked abroad. Brexit with an agreement most likely means that the social security parts of the deal will ensure Britons who worked abroad and then moved back to the UK will still receive pension payments from EU employers. If there is no deal then this will require bilateral agreements with 27 different countries, each of which could end up being slightly different.
Studying abroad will become more costly and complicated for expats and their children. For example, if there is no deal then British citizens who aren’t EU members will have to pay “foreign student” fees to study. It could also mean the loss of access to the ERASMUS programme which provides funding for an EU study year abroad.
British expats looking to return to the UK could have issues disposing of properties acquired in EU member states where they have lived. In addition to attracting capital gains liabilities, these properties may not provide enough equity to buy in the UK given the disparity between UK and EU house prices.
The value of sterling
A no deal situation will likely see the pound take another plunge. If that happens then UK expats could actually be at an advantage, especially those planning to return – as long as they are being paid in Euros. The value of any savings would increase if transferred into pounds and UK property would be more affordable with more Euros to the pound.
Perhaps the biggest issue that expats face is the chaos that could ensue in a no deal situation. It would require negotiation with 27 different countries to sort out all of the above and, unlike in the UK, Brexit is just not such a pressing priority for other nations.
Amanda Gillam is Solution Loans's General Manager and has been since 2009. She is also a prolific writer on personal finance issues, and has been quoted numerous times in articles published on 3rd party websites and in press releases. Her...Read more about Amanda Gillam